Understanding Your Mortgage Foreclosure Rights
Chances are that if you’ve fallen behind on your mortgage payments you are being threatened with the possibility of foreclosure. Many of these homeowners think there is absolutely no way to get out of foreclosure. But that isn’t the case; when it comes to a mortgage foreclosure you may have more options than you probably believe.
Understanding your options during the whole process can help minimize the damage done to your credit as well as overall financial stability. It could also result in you taking actions to keep your home. We went ahead and gathered generalized information that has to do with foreclosure to help you get a better understanding of how foreclosure works. Please keep in mind that state laws vary significantly; it will be in your best interest to talk to Mann Law before moving forward.
Foreclosure Defined
Foreclosure as a whole means that the lender can legally repossess a home due to a lack of payment. After they repossess it, they then can sell the house to help repay the current debt that you owe on it. This stays true whether you are behind on your first or second mortgage. When the lender can begin the foreclosure process is defined inside of your mortgage agreement. Because state laws vary, we recommend calling Mann Law about what steps you should take, but generally in a mortgage foreclosure these are the steps associated with it:
1. The mortgage holder gives the homeowner written notice of default. It is within this statement that they state you have missed payments and are in default.
2. The homeowner is then given time to cure said default and pay back all amounts due. It can include penalties, fees, interest, and attorney charges.
3. Once the time that was given to the homeowner to fix the default has passed, the mortgage holder will give a notice of a foreclosure sale. This is the actual day of the foreclosure.
4. Depending on your state, you may have a redemption period after the foreclosure of the home that allows you to reclaim your house.
Foreclose And Your Home Related Debt
There are foreclosure actions that you can take that can wipe out some of the property owners' debt, such as the original mortgage, home equity loans, and second mortgages. If the proceeds of the foreclosure sale don’t cover all of the costs of the second mortgage or other home equity loans, you may very likely still have to pay them back.
There are some cases in which you are still responsible for some of the mortgage payments, even after losing your house. If the property sells for less than the balance that's owed on the original loan, the lender could then file a deficiency judgment against you in court. This process then requires you to pay the differences. It also gives the lender the right to collect the remainder of the debt that's owed. Not all states allow deficiency judgments in every situation; we recommend you speak to Mann Law about this process.
Lenders Obligations In A Mortgage Foreclosure
The obligations that the lenders have vary from state to state. However, when it comes to mortgage foreclosures generally they all follow the same three standards.
1. Notice Of Defaults: In almost every state, it is required for lenders to supply the homeowner with a notice of default. The lender must also provide notice of the homeowners' rights to cure the default prior to the lender initiating a foreclosure.
2. Written Proof Of Money Owed: Lenders are typically required to file statements that show how much the property owner owes under the current mortgage. The amount that's owed usually includes the principal, interest, late charges, attorney fees, and any other fees or charges that are permitted by the state.
3. Service-member Relief: Lenders must also clarify in writing that the owner of the property is not a member of the armed services before they can initiate a foreclosure action. The Service-member Civil Relief Act was made to protect deployed active service members. If you are a member of the armed services, contact an attorney today about your rights.
Ways To Stop Or Prevent Foreclosure
The best way to stop a foreclosure is to take action, be proactive. If you can, try and take these steps to avoid foreclosure.
• Catch up on your default. In most cases, the first notice of default provides you with a way for you to catch up with what you owe. If you can make up your payments and pay on time moving forward it is a lot less likely that the lender will foreclose.
• Ask for a loan modification. Many lenders are willing to work with you if you need help paying off your loan payments. Modifications made to the loan can help you catch up on late payments or potentially reduce the amount you are paying temporarily if you are going through hardship. Mann Law can help you fill out the modification application.
• Request a short sale. If you can no longer afford your house you can request a short sale. The catch is that the lender must also agree on the short sale, but if they do, you can sell the home to a third party for less than you owe on it. In some states, the difference is forgiven on it, but again we suggest you contact Mann Law to see what it entails in your state. A key factor of a short sale is that a short sale will affect your credit. But it will affect it significantly less than a foreclosure or bankruptcy will.
• Filing for bankruptcy. You can file for bankruptcy that includes your mortgage and that in most cases puts an automatic stay in place prohibiting your creditors from attempting to collect debts. This means that lenders can no longer proceed with any type of collection procedures until the bankruptcy has been resolved or dismissed. Most of the time Mann Law can help you keep your home if that is your desire. Keep in mind filing for bankruptcy can have severe consequences on your credit as well as finances. We suggest you contact Mann Law before you begin this process.
Defenses Against Foreclosure
If a lender has already filed for foreclosure and none of the solutions we’ve already covered for you can help, you still might be able to fight with a technical or substantive defense. Only you and your attorney can determine which process is the best one to take.
Technical Defenses are direct defenses to the foreclosure process. A prime example of a technical defense is when the owner of the property wasn’t given proper notice of the default and the proceedings. However, technical defenses are often not very helpful in preventing foreclosures because of the fact that a mortgage holder can often correct the defense by correcting the procedural defect. In the example of lack of adequate notice, a mortgage holder can more often than not defeat the defense by sending out a new default notice starting the whole process over, which, if you need more time, can work to benefit you.
Substantive Defenses use the terms used in the mortgage itself to halt the foreclosure. Here are a few examples of substantive defenses:
• You aren’t really in default, and the debt, as well as the interest, has been paid on time according to the terms of the mortgage itself.
• The holder of the mortgage committed fraud in obtaining the mortgage itself.
If you believe you have a legal reason to stop a foreclosure, you need to file an objection to the court. The majority of states can allow you to file an objection before the foreclosure sale takes place, after the purchase takes place, or before the court ratifies the purchase if the sale itself was done improperly. We highly suggest you contact Mann Law during this process so we can help determine what the right step is for you.
How Mortgage Foreclosures Affect Your Credit
Short sales and other forms of foreclosure can significantly drop your credit score. It is likely that even if you get back on track and stop the foreclosure you still might end up taking a hit to your credit because the payments would have been reported as late. A foreclosure will generally appear on your credit report for up to seven years.
It is always a good idea to be prepared; because of that Mann Law offers free consultations. If you need help in finding direction when it comes to your foreclosure process don’t waste a second, talk to Mann Law today.