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Top Solutions And Alternatives To Foreclosure

Facing foreclosure is a stressful time in a homeowner’s life; the thought of losing a home is an unsettling one. You took time finding the right place for you and your family. You put the effort in getting it set up and furnished for your needs. You probably looked at several other homes until you found your special one. With these thoughts in mind, you may come to the conclusion that you don’t want to lose your home and you would like to fight foreclosure. Read on to find out alternatives to foreclosure.

Negotiate, Negotiate, Negotiate
In almost all foreclosure cases, the first step is to go and negotiate with your mortgage lender. The sooner you talk to your lender, the more likely it is that they can come up with a solid solution for you to avoid foreclosure. Tell them about your situation and prove to them that you only fell temporally behind and you can stay on top of your payments if they can help you out. The lender may be able to lower the interest rate on the mortgage for you or even extend the length of the mortgage term in order to lower the monthly payments. This is the first step to finding an alternative to foreclosure.

Refinance
Depending on your financial situation and how long your money flow problems are going to last, you may want to consider refinancing your home. If you still have good credit the interest rate on a new loan might be lower than your original mortgage rate. Also if you have enough equity built up in your house you might be able to borrow money from that, in order to pay past due mortgage amounts.

Government Assistance
The federal or state government might be able to provide you with assistance if you want to stay in your home. You do have to qualify for a lot of their programs, but it is worth looking into. For instance, if you have an FHA insured loan, your lender may be able to get a one time payment from the FHA insurance fund that will bring your mortgage payments up to date. Also you will want to look into your personal state laws and assistance programs, some can provide help to homeowners who want to avoid foreclosure.

Transfer ownership
If you have exhausted all options for staying in your home and avoiding foreclosure, you may want to consider giving up your home to stop the foreclosure. Sometimes, to avoid a foreclosure, it means selling your home to pay off you debt. This is a way to get out of your mortgage payments and to keep a foreclosure off your credit rating.

Facing and fighting foreclosure can be an emotional and financial roller coaster. Even if you feel like you have exhausted all your options for saving your home, make sure you talk to all knowledgeable people in the field of foreclosure, before giving up. Sometimes people forget to talk to neighbors, who may have gone through similar situations and may have found a way to save their home that you did not think about.

By: Nick Adama

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Disputing A Mortgage With A Qualified Written Request

As mentioned in a previous article, it can be very difficult for homeowners facing foreclosure to raise certain claims in court when the bank holding their loan has failed and been taken over by the Federal Deposit Insurance Corporation. Case law and federal statute give the FDIC broad immunity against a number of claims that could be raised by borrowers in regards to loans held by the failed institution.

However, there are also a number of exemptions to the broad immunity the FDIC enjoys. Four of them are significant and worth examining here, as homeowners in foreclosure may be able to use them to bring claims against the FDIC or successor financial institutions.

The first is called fraud in the factum, and refers to any case when one party to a transaction reasonably relies on a misrepresentation by another party. The misrepresentation will be as to the character or essential terms of the contract. Examples include alteration of a document or forgery. The FDIC nor its successor institutions are immune to claims of fraud in the factum, so homeowners may be able to bring these issues into court.

Second, Truth in Lending rescission claims are still allowed despite the FDIC’s immunity protection. In fact, the Truth in Lending Act states that a borrower’s rescission rights continue regardless of assignment of the loan or to whom the loan is assigned. This means that, even if the lender fails and the note is taken over by the government, rescission may still be an option if the other requirements under the statute are met. FDIC receivership of the bank’s assets will not affect the claim.

Also, the FDIC does not have immunity protection from any transaction that is void. The federal statute granting FDIC immunity is intended to protect the government’s interests in assets is acquires from the failed banks. A void transaction, though, does not create an interest in an asset, and the immunity protection cannot be extended to assets in which the FDIC has no valid interest. In cases such as fraud in the factum, the transaction may be declared void, for instance.

Finally, there is a rule called the FTC Holder Rule that was designed to protect credit consumers from holder-in-due-course immunity, such as the FDIC has been granted. For this rule to apply, though, an FTC Holder Notice must be included in the consumer credit contract. It will be included in many transactions relating to a sales transaction. This might be a home improvement contract or other similar agreement. If the notice is included in the contract, the FDIC’s immunity may not apply.

While the above defenses to broad FDIC immunity have survived most course, other claims have survived in a smaller number of cases. These include such issues as breach of contract, failure of consideration, challenges to the validity of a lien, homestead issues, unreasonable foreclosure sale, and state statutes regarding Unfair and Deceptive Acts and Practices. Homeowners should do their own legal research to determine if their claims may survive, or consult with a competent foreclosure attorney.

When homeowners find that they have become a mortgage customer of the government, falling into foreclosure can become extremely complicated. While the FDIC has taken some steps to assist borrowers in stopping foreclosure, the agency is granted broad immunity from many claims that may have been used to defend against the loss of the home in the first place. Thus, borrowers should educate themselves in regard to the issues surrounding the FDIC’s administration of mortgage loans and foreclosure.

By: Nick Adama

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Decide How Best To Fight The Foreclosure Lawsuit

Homeowners are encouraged to begin learning about how the legal process of foreclosure works and what role the courts play in forcing the loss of a home. Although there are good arguments that the government does not have any authority to take away someone’s home, the sad truth is that it will if the owners do not defend their home vigorously in court. But the tactic borrowers use to save a house will widely differ depending on what their goals are for both their short and long term financial health.

One reason homeowners may try and defend against a foreclosure is simply to get as much time as possible before they sell the house, refinance with a foreclosure lender, or just save up enough to move out comfortably. The goal is not to win the case, per se, but to drag out the process in the court system through a series of motions that must be ruled upon, hearings that must be held, and a long discovery process that can take months to be resolved. The bank, of course, will be adding more fees and interest to the loan, but this may not matter much to homeowners who already have scarred credit and need the opportunity to repair their finances.

Another path borrowers can take in defending a foreclosure in court is to try and force the bank to negotiate some aspect of the loan or winning a case that indicates the lender has overcharged for a mortgage. Homeowners may try and drag the process out and request the judge to force the bank to consider a loan modification or other solution, or the owners may try and make the case that, while they are behind on the loan, they should have to pay a lesser amount than the bank is demanding for reinstatement. Winning counter claims against the bank may also lessen the damage of the foreclosure by rewarding the owners with some monetary damages.

Possibly the most risky but certainly the most rewarding method to use in court is trying to show that the bank violated major provisions of the Truth in Lending Act (TILA) and that the loan should be rescinded entirely. This means that the homeowners would get to keep and save their home, the foreclosure would be ended completely, the lien on the house would disappear, and the bank would have to pay back every single penny the homeowners have ever paid the lender. Obviously, this is a very serious loss for the bank, and it is up to homeowners to learn more about the types of violations that would result in rescission of the loan.

Even if they know how the court system works and how to file certain documents in the foreclosure case, without really having an end goal, homeowners may have a severely negative experience in the courts. But as long as they have a clear idea of what they want to accomplish, they can usually get some concessions from the court and their mortgage company, either on their own or with the assistance of a qualified attorney. While every borrower may not win their case by defending against the bank’s lawsuit, it is certain that every one who does nothing will lose and the lender will be awarded a swift foreclosure process and auction date.

By: Nick Adama

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Challenging The Lender’s Right To Sue For Foreclosure

Many homeowners are becoming more aware of the defense to foreclosure that has come to be known as the "produce the note" strategy. This involves challenging the foreclosing lender or servicing company on its legal right to sue the borrowers in the first place. Essentially, if the bank cannot prove that it owns the note and mortgage or deed of trust, it does not have the right to bring a foreclosure action against the homeowners.

However, not every challenge to produce the original loan documents has been successful, typically due to procedural errors or other easily correctable mistakes on the part of the borrowers. Homeowners should be aware of certain actions that have been taken in successful cases, so they have a better chance of having their own foreclosure thrown out of court for the bank’s inability to prove legal standing.

First, if the homeowners are being sued by the lender in a judicial foreclosure state, it is important to deny in the answer to the complaint that the plaintiffs own the note and mortgage in the first place. This real party in interest issue can be raised through an affirmative action claim or by filing a motion with the court. However, if the homeowners do not raise the issue, the court will assume the issue of standing is not debated.

It is also important for homeowners to do their homework in checking the local land records for the property being foreclosed on. If there are documents recorded with the county indicating a different chain of title than the one the bank is trying to show through the lawsuit, the discrepancies may be enough to have the case thrown out until the foreclosing company can show it owns the note.

Banks will often submit unsupported affidavits when it will be difficult or impossible to produce the original note. But these documents can be challenged by the homeowners in their answer to the lawsuit. Simply having an officer of the foreclosing company state that it owns the original paperwork is not sufficient if it cannot produce the note upon the borrowers’ request.

Especially if there are other documents indicating another company may be attempting to collect on the mortgage, the issue of standing and who owns the original note become vital. If the court allows the lawsuit to move ahead without proof of standing, the borrowers may be in danger of being sued again by the correct party. Thus, it is important to keep and obtain any documents showing any other company’s interest in the debt.

Finally, homeowners can demand that the lender produce evidence to show how, when, and whether the original documents had been assigned to the foreclosing party. Courts will be likely to look on this type of request as reasonable, especially if there are other questions of which company owns the loan or if there is other evidence (such as documents filed with the county) showing an incomplete chain of title.

In light of all the securitization and chopping up of rights to mortgages, the produce the note strategy of challenging the bank’s right to bring a lawsuit against borrowers is becoming a more wide-spread defense to foreclosure. While it may not solve every homeowner’s mortgage problems, it can delay a foreclosure by a period of months or years while the lender attempts to locate the relevant paperwork, time that the owners can use to save up money for moving expenses or to get back on track with payments.

By: Nick Adama

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What Are Your Foreclosure Rights?

If you are going to fight the foreclosure of your home, you need to know what your foreclosure rights are and how to use them to your best advantage. This means getting educated and if you want to save your home, it means getting educated quickly.

The first thing you need to know is that every state has different foreclosure laws. There is not one universal law that governs all states. What this means is that you need to research the laws for your state to figure out what they are. Because whatever those laws are, that is what governs your foreclosure rights.

A good place to start looking to find out what your foreclosure rights are is the website for your state. Doing a search for foreclosure should point you in the right direction. That should at least give you some information and hopefully a phone number to call. I know that in Colorado, there is a free foreclosure hotline that offers free assistance. Because of the current foreclosure crisis in the U.S., many states are now offering all kinds of different free assistance to homeowners to help them understand their foreclosure rights and stop the foreclosure of their homes.

Another good place to look to understand your foreclosure rights is an attorney. I know that it can be difficult or even impossible to afford an attorney when you are facing foreclosure but there are resources out there that can help. If your income is low enough, you might be able to qualify for free help from an attorney or you may be able to find an attorney that would take on your situation pro bono (for free). You will never find out unless you do a little digging and unless you ask an attorney if they are willing to help you.

Doing some research on the internet can also help you understand your foreclosure rights. Sit down with the documents that your mortgage company’s lawyers have sent you and look up every word or phrase that you do not understand. That is what I did and it helped me get a better idea of what I was dealing with. My one warning here is that be careful who you listen to. There are plenty of people out there who try to take advantage of people who are in the middle of foreclosure. Look at more than one website to get your information. It gives you different perspectives as well as giving you a better idea of whether or not it is actually credible, good information.

By: Jill B

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Stop Foreclosure Using The Law

Here’s an idea some people have never thought about.

In some cases, you can use the law to help you stop your mortgage foreclosure; but you need to know what your options are and what you are looking for.

Your best bet is to contact a real estate attorney to look at the foreclosure documents you received from your lender; as well as the loan origination documents that you signed at closing for any mistakes.

The Truth in Lending Act may be the perfect ally for you to stop mortgage foreclosure if you want to call into question the validity of your mortgage loan.

If you want to go this route, you will need to prove that your originating loan documents were wrong. The area where this really comes into play is if your mortgage company made any mistakes in disclosing vital financial information required by law in your loan documents.

If this is the case, it is possible that your loan itself could be canceled. Here is where it is very important to have an attorney who is familiar with Regulation Z in the Truth in Lending Act.

Common mistakes in the Regulation Z of the Truth in Lending Act that could help you stop mortgage foreclosure that you might want to have your attorney look at on your loan documents include….

– Your mortgage company having more money in your escrow account than they are allowed.
– Not adjusting your ARM (adjustable rate mortgage) correctly.
– Not including referral fees to the originator of the mortgage.
– Not including information in the documents that describes how you can eliminate your private mortgage insurance.

If you are going to try to use the Truth in Lending Act to stop your foreclosure, you are going to need to make sure that your attorney goes through all of your loan origination documents with a fine-tooth comb.

Any errors, mistakes, or discrepancies could mean the difference between being able to stop foreclosure and losing your home.

Some other legal recourses that you may have available to you to stop your foreclosure include…

– If you can prove that your mortgage company lost any of your payments
– If you have an FHA-insured loan, you should have received information about preforeclosure counseling. This is required by law for FHA-insured loans.
– If your mortgage company accepted payment from you after foreclosure was filed on the home.

If you are looking for ways that will help you stop foreclosure, some of these legal avenues may be a viable option for you. Take the time and get a little more information on them to see if they can help you stop foreclosure.

By: Robert Spencer

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This is a complex question and the answer will vary depending on your specific situation. I cannot stress enough, the importance of seeking a qualified consumer attorney familiar with the applicable laws in this area. The wrong advice could cost you thousands of dollars!

Short Sale: A short sale is the process of selling a piece of real property for less than what is owed on the loan(s). Short sales require the approval of the lender who will be affected by the sale, because the funds received will be’short’ of what is owed to the lender. For example, consider a person who has real property worth $500k, with a first mortgage of $400k and a second mortgage of $200k. In this case, the second mortgage holder would have to approve the short sale and agree to accept less than the full balance owed on the loan. Even if the lender agrees to accept this arrangement, the borrower is not entirely off the hook just yet. A short sale by definition is an agreement to sell property for less than what is owed. If the lender agrees to accept a short sale, they are most often agreeing to forgive the remaining debt that is owed so there is no deficiency balance the borrower can be sued for (Read the agreement very carefully. Some lenders may try to hold you responsible for any deficiency balance as an unsecured creditor.) However, the forgiveness of debt is a taxable event that can trigger a 1099-C by the lender requiring the borrower to pay income taxes on the amount of debt forgiven. With the drastic decrease in home values over the last several years, the tax liability on forgiven debt can be thousands of dollars in this scenario! There may be exceptions to this general rule under State and Federal law and consumers are strongly encouraged to discuss their potential applicability with an accountant before moving forward with this option.

Foreclosure: Foreclosure is the process of taking back property, generally pursuant to a deed of trust or other security interest. California is a non-judicial foreclosure state, meaning the lender does not need to get the court system involved in the process in order to recover the property. Judicial foreclosure is an available remedy in California, however it is the rare instance that it is pursued. Borrowers who are contemplating letting their home foreclose need to be aware of exactly what that decision means to them.

Purchase Money Rule- This statute prevents a judgment from being entered against you for any deficiency balance resulting from a foreclosure assuming the following is true:

1) The lender(s) loaned you 100% of the money to purchase the property. (Includes 80/20 loans on 100% financed property).

2) Upon the original purchase, you occupied the home as your primary residence.

3) The loan(s) have not been refinanced, or purchase money HELOC’s have not been paid down and borrowed against.

One Action Rule- Lenders in California are allowed to take but one action against you, either a non-judicial foreclosure (ie. take back the property) or a judicial foreclosure (ie. sue you on the contract/loan.) Because of the uncertainty and costs associated with judicial foreclosures, they rarely take place. The One Action Rule may not apply to a sold out junior lienholder who has not had the option to take their ‘One Action.’ Subject to the Purchase Money Rule above, junior lienholders may have recourse against borrowers in this instance.

Forgiveness of Debt Rule- California and the IRS tax you for the amount of forgiven debt in any given year. Debt is forgiven when the lender gives up all rights to collect the debt or are otherwise leally barred from collection.

Insolvency Exception- California and the IRS both exclude forgiven debt as taxable income, but only to the extent you are insolvent. The insolvency test is met when your debts exceed your assets, and assets include all real and personal property including retirement accounts.

Bankruptcy: For those individuals who have refinanced their original loans, taken out equity lines, or in addition have other significant debts they want to eliminate, bankruptcy may be the choice for them. In this instance, bankruptcy would discharge any money owed to the lender for a deficiency balance and also prevents the lender from suing to collect it. Moreover, bankruptcy would wipe out any tax implications that would normally result from a short sale or foreclosure.

The bottom line here is to do your homework and get competent advice before choosing the course of action that best suits you.

For more information regarding short sales, forecloses, or for any other bankruptcy law questions, contact The Larkin Law Firm at http://www.live-debt-free-now.com

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How To Use The Law To Help You Stop Mortgage Foreclosure

You can use the law to help you stop mortgage foreclosure on your home but you need to know what your options are and what you are looking for. Your best bet is to hire a real estate attorney to look at the foreclosure documents you received as well as your loan origination documents for any mistakes.

The Truth in Lending Act may be the perfect ally for you to stop mortgage foreclosure if you want to call into question the validity of your mortgage loan. If you want to go this route, you will need to prove that your originating loan documents were wrong. The area where this really comes into play is if your mortgage company made any mistakes in disclosing vital financial pieces of information. If this is the case, it is possible that your loan itself could be canceled. Here is where it is very important to have an attorney who is familiar with Regulation Z (has many of the detailed requirements of the Truth in Lending Act).

Some truth in lending areas that could help you stop mortgage foreclosure that you might want to have your attorney verify on your loan:
– Your mortgage company having more money in your escrow account than they are allowed.
– Not putting information in the documents that describes how you can get rid of your private mortgage insurance.
– Not adjusting your ARM (adjustable rate mortgage) correctly.
– Not including referral fees to the originator of the mortgage.

If you are going to try to use the Truth in Lending Act to stop mortgage foreclosure, you are going to need to make sure that your attorney goes through all of your loan origination documents with a fine-tooth comb. Any errors, mistakes or discrepancies could mean the difference between being able to stop mortgage foreclosure and losing your home.

Some other legal avenues that you may have available to you to stop mortgage foreclosure are:
– If you can prove that your mortgage company lost any of your payments. Having clear and detailed records on this will be your best defense.
– If you have an FHA-insured loan, you should have received information about preforeclosure counseling. This is required by law for FHA-insured loans.
– If your mortgage company accepted payment from you after foreclosure was filed on the home.

By: Jill B

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Fight Back Foreclosure – Use Information Against Your Lender

A smart home owner can use a little known fact to their advantage to try to stop foreclosure by their banker. Did you know that it is more profitable for mortgage companies to help you retain your property than actually go through with a foreclosure? On average it costs the mortgage company between $50,000 and $100,000 to foreclose on a property. In the long run, it would be to their advantage for them to negotiate with the home owner to find a solution to the problem than evict them from their home. Many times, the home owner has to be the one to ask for an alternative option from the mortgage company though. It can be a "win-win" negotiating tactic.

What are the costs to foreclose? First there are the expenses of going through the legal process of eviction. The mortgage companies have to hire local attorneys that specialize in these types of procedures. Then there are fees associated with filing the lawsuits and eviction measures. If the home owners fight back, then the lender’s legal fees begin to mount quickly. Once the legal action or eviction notice is final then the mortgage company has to pay the costs of evicting homeowners if they oppose leaving the property voluntarily. A banker with any intelligence would want to work with a home owner to stop foreclosure.

After securing the property from the evicted property owner, the bank is then left to deal with the consequences. Often, if a home owner doesn’t have the income to keep up their mortgage payments, they also didn’t have the cash to repair the property either. And some of them, in anger over the whole situation, destroy the property before they walk away. All of this now falls on the mortgage company to deal with. Whether the property was damaged due to neglect or spite, the mortgage holder will usually not do anything about it. This makes the value of the property fall and the longer it is empty the further the value declines. In the end, the mortgage company will receive far less for the property than what they would have if they had worked with the owners to stop foreclosure before it began.

Even if the mortgage holder doesn’t do anything to preserve the property, they still have to deal with the added expenditures in owning that home. Any taxes that are due on the property have to be handled by the mortgage company. And, some level of home owner’s insurance will be required on the property to protect the lender from accidents to the property. And when they try to market the property, the mortgage lender will need to use local real estate agents. That means they will accrue commission fees when the property is ultimately sold. There is absolutely no profit for a bank to incur those costs when it would be more effective for them to negotiate with the current home owners. This is just one piece of information that can help you to halt foreclosure.

By: Nick Adama

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How To Get More Time From The Bank To Stop Foreclosure

The most important factor homeowners in foreclosure need to remain aware of is how much time they have left to work out a solution, either to save the home or unload it with the least financial damage. The bank, working through its local attorneys, will typically attempt to push through the legal process as quickly as possible, in order for the lawyers to get paid and the bank to have an empty house they can sell on the market. Homeowners, on the other hand, would like more time and negotiating room in which to put together a more beneficial solution.

One of the easiest, most effective ways to get more time to stop foreclosure is just to ask the lender for help. A call to the mortgage company, followed by a written request, can postpone the initial filing of the foreclosure lawsuit, or even convince the bank to delay a sheriff sale just a few days before the property is scheduled to be auctioned. Since the lender is in control of the entire process of taking the house, it can dictate if and when it wants the courts or local government to proceed with certain aspects of the case.

However, simply flooding the mortgage company with delay requests, while effective once or twice, is not a long term solution to foreclosure. In fact, every time the homeowners ask for more time, they should be working on a specific plan that will help get the house completely out of the legal process and pay off the loan or pay back the arrears owed on the loan. Banks are much more willing to extend the time to save a house if it looks as if the borrowers are actively seeking out realistic methods.

Some banks, though, will eventually reach a breaking point at which they will no longer be willing to extend a sheriff sale or help out with any other solution the homeowners present. At this point, there may be two other ways that the borrowers can get more time to save the house, both of which involve entering the court system. The first way is to file bankruptcy, while the other involves defending the original foreclosure lawsuit.

Once homeowners file either Chapter 7 or Chapter 13 bankruptcy and include their house debt in the petition, the lender must cease all collection efforts. This includes halting the lawsuit at whatever point to which it has progressed, and canceling any scheduled foreclosure auction of the property. As long as the property is tied up in the federal bankruptcy court, the mortgage company has no other option other than to work with the trustee to attempt to collect on the mortgage debt. This can tie up the house for several additional months while the owners either negotiate down the debt or work on another final solution.

And while some homeowners may not wish to enter the local courts to defend against the bank’s lawsuit against them, this may be the single most effective way to get more time and prove to the bank that the owners are not willing to go down without a fight. Potential predatory lending or other lender misconduct may be enough to convince the bank that working out a mortgage modification or delaying the auction to help the borrowers sell their home will be less costly than litigation. As well, any motions or defenses the homeowners bring to the courts may take additional months or years to resolve, not to mention possible appeals.

Too often, homeowners in foreclosure are working on a solution that would stop the foreclosure process completely, but they are just running up against a deadline, after which the solution would no longer be viable. It is in these cases that borrowers should do everything they can just to get more time. The easiest way to do this is simply to request the bank to hold off on any more foreclosure proceedings, but bankruptcy and litigation are also quite effective at postponing an eviction. As always, though, it should go without saying that, unless the owners have some reasonable solution, constant delays will only prolong the inevitable.

By: Nick Adama

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