Archive for the ‘Foreclosure Process’ Category

There are times when it makes sense to contest a foreclosure but not every time. However, if you have a case to contest your foreclosure in court, then you might buy yourself some time to stay in your home longer while you figure out what to do next. You must contest a foreclosure in court. There are many reasons why someone will and can contest a foreclosure even if that person defaults on the loan and fails to keep up with mortgage payments.

When does it make sense to contest the foreclosure?

If the foreclosing party obviously fails to follow the law when they try to foreclose on your home, then you might have a case in court. If by them not following the law, you are deprived of your rights, then the court may rule in your favor when you contest the foreclosure in court. By contesting the foreclosure in court, you could get the foreclosure lawsuit dismissed or delayed. That means, you can stay in your home for much longer than you could have otherwise. By being able to stay in your home longer and stalling the foreclosure process, you will save a lot of money and buy yourself time to find another solution.

Examples of reasons a homeowner can use to contest a foreclosure

Attorneys can help you come up with all sorts of reasons why your foreclosure needs to be contested. For example, you may be able to convince the court that the terms of your loan are too unfair. If the judge agrees with you, then he or she may rule in your favor. If a homeowner can show that the lender took advantage of his or her in any way when signing up for the loan, he or she may be able to convince the judge to rule in his or her favor.

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If a homeowner cannot pay the mortgage payments and is in default, he or she may not have to go through the foreclosure process if the lender accepts a transfer of title of the property or deed in lieu of foreclosure.

What is a deed in lieu of foreclosure?

A deed in lieu of foreclosure is a legal document conveying property to the lender after the borrower defaults on his/her mortgage payment.

What happens when the lender accepts deed in lieu of foreclosure?

When the lender accepts deed in lieu of foreclosure, the right to the deficiency judgement is waived. The lender takes possession of the property and, by doing so, avoids the cost of foreclosure, eviction, auction sale, etc. When this happens, the lender will not come after the homeowner for the difference between the amount owed and the proceed from the sale of the property. Usually the lender will not do this unless the lender feels like the homeowner has little wealth and it is not worth their time and cost in risking coming after the homeowner. Usually, even if the lender manages to file a deficiency judgement suit against the homeowner and successfully won, the homeowner still cannot pay.

Problems with deed in lieu of foreclosure

A homeowner should not expect all problems to go away when the lender decides to accept the deed in lieu of foreclosure. Deed in lieu of foreclosure process may not resolve all claims against the property. This is why the warranty deed is so popular to protect buyers against future claims against the property.

In Judicial foreclosure, you may have heard of the foreclosure complaint. Let’s define what a foreclosure complaint is and then we will discuss what a homeowner can do to answer a foreclosure complaint, how to answer a foreclosure complaint, and what happens if you do not respond to a foreclosure complaint.

What is a Foreclosure Complaint?

A Foreclosure Complaint is usually a document several pages long that is filed with the court in the county where the property to be foreclosed on is located. The document alleges that the borrower willingly signed a mortgage and a promissory note that is now in default.

What is the purpose of the Foreclosure Complaint?

The purpose of the Foreclosure Complaint is to initiate a lawsuit against all party involved including:

• the owners of the property
• tenants (if any)
• lien holders

The Foreclosure Complaint outlines that the plaintiff sues the defendant(s) and alleges the action for the foreclosure of a mortgage on a specified property. The plaintiff is usually the owner and holder of the Note and Mortgage on the home.

What happens when the Foreclosure Complaint if filed?

The Foreclosure Complaint document and a court summons announcing the lawsuit will be served upon all of the defendants (i.e. all parties involved including owners, tenants, and lien holders)

How to answer a foreclosure complaint?

The Summons details what your options are in terms of answering the Foreclosure Complaint. The Summons explains that a lawsuit has been filed against you and you have a certain number of days, such as 30 days, to file a written response with the clerk of the court. If you want the court to hear your side of the story, you must file your foreclosure complaint answer with the court officially as directed in the Summons you receive. Do not call the court instead of filing a written answer.

What happens if you do not respond to a foreclosure complaint?

If you do not file a foreclosure complaint answer or you do not respond on time, then you will lose the case and you will be basically admitting the Foreclosure Complaint. If you lose, then your wages, money and property may thereafter be taken without further warning from the court.

If you need an attorney to help you, you need to contact one immediately. If you do not have an attorney, you can call an Attorney Referral Service or Legal Aid Office to help you. If you are filing a written response yourself, you need to file it with he court as well as mail a copy to the Plaintiff’s attorney whose contact information will be listed on your Foreclosure Summons.

Foreclosure Nation: Mortgaging the American Dream is an informative book that is very detailed. If you want a better understanding of the current foreclosure crisis, this is definitely a book to consider. If you want help understanding how the mortgage and foreclosure processes work in general, this is also a great book. Olefson has laid it all out in the most understandable format.

Buy Foreclosure Nation: Mortgaging the American Dream

When Lenders Wanted to Foreclose

In the past, when home values were high, lenders would not think twice about foreclosing on homes that were in default. When homeowners could not afford the monthly mortgage payments, the lenders would soon send notices to remind the homeowners to pay up. When they still did not get any responses or payments, they sent foreclosure notices. A few months later, if the homeowners could not pay or come up with solutions somehow, the mortgage companies would proceed with the foreclosure auctions. At the auctions, the banks would set opening bids which are roughly the amounts they were owed.

Lenders No Longer Want to Foreclose (most of the time)

When home prices were high and kept rising, there were hopeful buyers looking for homes that they could fix and sell for much higher values. So, the system worked out well for the banks and the buyers or investors. The problem is that now home values are low and many homeowners are upside down, as in they owe more than their homes are worth.

Lenders know that at foreclosure auctions, they cannot set the opening bids as high as they want to in order to payoff the mortgages owed. Homebuyers are looking for real bargains and they are not going to pay as much as the lenders need to recoup all of the money owed on each home. Also, the foreclosure process costs money. The process is risky for the banks as they might end up getting very little money back, or worse yet, end up with the homes that they cannot get rid of or do anything about. Remember, lenders are not landlords and they are not in the real estate business.

Selling Homes at Auctions

Right now, it costs the banks more to proceed with the foreclosure process than what they are going to get back. So, unless your home is in an up and coming neighborhood with real value, then the bank would prefer to work with you to come up with something that works for them and for you. If your home is in a bad condition and homes around you are not selling well then it is likely that you can work something out with the bank. Many banks have shown that they prefer to have the homeowners in the homes and making some payment rather than have them out if the prospect of selling the home is not good. This is why a short sale is attractive to the bank when a homeowner has no way of being able to afford the mortgage payments. By making the bank see that it is better to have you in the home, you can avoid foreclosure or live rent free for a while.