- What is foreclosure?
Foreclosure is the process in Florida by which a lender enforces a promise to repay a loan secured by a lien through a mortgage on your home. The lender asks the court to allow the sale of the property at a public auction in what is known as a foreclosure sale. A foreclosure complaint is typically filed after four to six payments are missed.
- What is the foreclosure process and how long does it take?
In Florida, mortgages must be foreclosed by filing a lawsuit (called a “complaint”) in court. As in any lawsuit, the borrower and any other owners of the home must be served with notice of the lawsuit and given an opportunity to appear and defend his or her rights. In its complaint, the lender will state that the borrower is in default, usually for failure to make the required payments under your loan documents, and that the lender can therefore force its sale.
- Do I have any options when served with a foreclosure complaint, and if so, how much time do I have to exercise my options?
There are several options available to you as long as you have not already lost your home in the foreclosure process. Before you get to that point, knowing your options will put you in a much stronger position to deal effectively with the foreclosure process. Armed with the right information, you may be able to save your home from foreclosure and, in some instances, avoid the foreclosure process altogether. You should consult with a lawyer to discuss your options, which vary depending on many factors.
- I receive letters and notices from people claiming they can help me save my home, can I rely upon all of their assurances?
When foreclosure documents are filed, they become a matter of public record. Many people review these records for various purposes such as compiling lists to sell to bankruptcy attorneys, investors, real estate professionals and others interested in purchasing your home or possibly helping you save it. Some of these offers are probably legitimate, others are not. Typically, the best recourse for saving your home is through expert legal defense.
- So, how can I keep my home?
One good place to start is to familiarize yourself with the state foreclosure process and discuss your options with a qualified attorney. The lending institution doesn’t necessarily have your best interests in mind, and, therefore, may not suggest your best options or properly advise you about your rights in the foreclosure process. Do not agree to anything without first discussing your situation with a foreclosure defense attorney.
- I don’t want to keep the house or bother trying to sell it. What would happen if I just walked away?
Walking away from your home can have serious legal consequences. You should first seek the advice of an attorney knowledgeable in this area of the law.
- What are the final steps in the foreclosure process?
The court enters a final judgment which provides a sale date for the property. The sale is published in the local newspapers and includes the names of the lending institution and the borrower(s), the total indebtedness, the assessed property value, the case number, the property address, the plaintiff’s attorney name, and the location, date, and time of the sale. Bidding occurs, but normally the lending institution is the only bidder and purchases the property for a nominal amount. After the sale, the high bidder has the right to request the sheriff issue a Writ of Possession for removal of the occupants and their property from the house.
- Do I really stand a chance in saving my home from foreclosure?
Yes! A knowledgeable foreclosure defense attorney can review your case and discuss your options. Many recently filed foreclosure complaints are defective, so success depends on the timely implementation of an appropriate strategy. As a general rule, it is important to seek advice from a qualified lawyer prior to receipt of the foreclosure complaint. Although bankruptcy, forbearance, and mortgage modification are possible options, the proper defense of the foreclosure by an attorney experienced in these matters may be the best one.
- I received a letter from my lender advising me of its intention to begin foreclosure. What should I do?
Contact a foreclosure defense attorney immediately to explore your options. Do not ignore the letter! Do not move out of your home! Moving from your home may be considered abandonment and result in disqualification for available assistance programs.
- Once I’ve received a foreclosure letter from my lender, what are the most common options?
The most popular options are:
- Special Forbearance: Your lender may be able to arrange a repayment plan based on your financial situation. Your lender may even provide a temporary reduction or suspension of your payments. You must usually furnish information to your lender to show that you would be able to meet the requirements of the new payment plan.
- Mortgage Modification: You may be able to refinance the debt and/or extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem but your net income is less than it was before the default (failure to pay).
- Partial Claim: Your lender may be able to work with you to obtain an interest-free loan from The Department of Housing and Urban Development, or HUD, to bring your mortgage current.
You may qualify if: Your loan is at least 4 months delinquent but no more than 12 months delinquent; Your mortgage is not in foreclosure; and You are able to begin making full mortgage payments.
When your lender files a partial claim, HUD will pay your lender the amount necessary to bring your mortgage current. You must execute a promissory note, and a lien will be placed on your property until the promissory note is paid in full. The promissory note is interest-free and will be due if you sell or leave your property, or when your mortgage matures.
- Pre-foreclosure Sale: This will allow you to sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating. An additional benefit to this option is the assistance you may receive through seller-paid closing costs.
- Short Sale: The lender may cooperate with you for a period of time during which you try to obtain a contract to sell your home. Since the selling price is often less than the outstanding balance of your mortgage, the lender must agree to accept a reduction in the mortgage—the amount by which the proceeds of the sale are less (“short”) of mortgage balance—so you can finalize the sale.
While you attempt a short sale, however, your lender may still commence a foreclosure. And if a short sale is successful, your lender may not release you from liability for the amount of the shortage (the “deficiency”). Because the process can often take as long as six months and it presents numerous legal issues, you should consult with a qualified attorney before commencing a short sale.
- Deed-in-lieu of foreclosure: You may be able to voluntarily “give back” your property to the lender. This won’t save your house, but it MAY avoid harm to your chances of obtaining another mortgage loan in the future. Depending on your situation, the lender may request additional monies due on the loan.
- Bankruptcy: Consider this option carefully.
- What about foreclosure scams?
You can sometimes spot a scam because it sounds too simple or too good to be true. As a practical matter, you must determine the identity of the company or person you are dealing with and their qualifications. You should be leery of paying a fee to anyone until you are thoroughly satisfied with their qualifications.
- What is the actual foreclosure process?
It’s a two-step process: pre-foreclosure and formal foreclosure. The process is similar in most states.
Pre-foreclosure
- You miss payments (usually 3 or 4)
- The lender sends you late notices, and if you fail to respond, it attempts to contact you (in writing or by phone) to resolve the situation.
- You continue to miss payments. You and the bank fail to agree upon payment arrangements.
- The lender sends you a notice which provides your last period of time in which to pay the delinquency and states that your failure to make such payment will result in the automatic “acceleration” of your obligation for the full amount of the mortgage plus interest, late fees, and any legal fees and costs incurred by the lender.
- You have made no payments or arrangements acceptable to the lender.
Note: Once you reach this stage, the lender will not accept your regular monthly payments but will instead, demand much higher payments to bring your loan current.
Florida’s Formal Foreclosure Process
- The lender begins foreclosure by filing an action (complaint) in court.
- Legal notices are published in local papers.
- You receive a summons and complaint personally delivered by the local sheriff or other qualified person called a “process server.”
- You still have not been able to reach a payment or settlement arrangement with the lender.
- You do not respond to the complaint or file some other document with the court within a period of 20 days from the day you receive the complaint from the sheriff or process server.
- The clerk of the court enters a default against you.
- The court holds a hearing regarding the lender’s claim, unless you or your foreclosure defense attorney filed a proper and timely legal document in the court proceeding.
- The court issues a final foreclosure judgment which contains a date upon which the clerk of the court has the legal right to sell your home to the highest bidder.
- Legal notice of actual foreclosure sale and advertisements are published in local papers.
- You still have not been able to reach a payment or settlement agreement with the lender.
- The house is sold at auction to the highest bidder, which is typically the lender.
- You move out or the bank or new owner dispossesses (evicts) you.
- You may receive notice of any debt still outstanding as a result of the sale (i. e., the “deficiency”) because the home is sold for less than you owe.
- What is the Soldiers’ and Sailors’ Civil Relief Act?
The Soldiers’ and Sailors’ Civil Relief Act is a law passed during World War II that protects active duty military members from financial difficulty. One portion of the law may be able to stop foreclosure for anyone on active duty, if they meet certain requirements outlined in the Act.
- What is a “servicing agent,” and is it different from my lender?
A servicing agent is the firm that receives the mortgage payment, keeps the payment records, provides borrowers with account statements, imposes late charges when the payment is late, pursues delinquent borrowers and authorizes foreclosure proceedings when they default. In many instances, servicing agents also pay property taxes and insurance with money placed in escrow by the borrower. Traditionally, the lender serviced its own mortgage loans. Today, however, most lenders sell their loans in creative ways, and it is unusual for the original lender or even the current owner of the loan to act as the servicing agent. As a result, servicing agents generally have very limited authority or incentive to make significant loan modifications.
- Are there any federal income tax issues involved with the delinquency process?
One of the most often overlooked details in loan modifications, deeds in lieu of foreclosure and short sales, is a borrower’s potential liability for the payment of federal income taxes on the amount of any indebtedness forgiven by the lender. Although a recent change to the Internal Revenue code provides an exemption from the income taxation of forgiveness of indebtedness related to a personal residence, the amount of any other debt reduction for which the lender agrees not to pursue liability against the borrower is subject to federal income taxation. Therefore, a borrower should seek competent tax advice from an accountant or attorney in such instances.
Contact South Florida foreclosure defense attorney John M. Howe
South Florida Law Office of John M. Howe provides cost-effective legal services for business and asset purchases, as well as a variety of other commercial issues. Attorney John M. Howe has helped many homeowners solve their foreclosure problems and avoid losing their homes. From his office in West Palm Beach, Florida, Mr. Howe serves Florida’s southeast region from Vero Beach to the Keys.
To discuss your foreclosure with an experienced foreclosure law attorney, contact us by filling out our online form or by calling us 561-296-7772 or toll-free 866-930-2938.
