By: Oliver J. Langstadt, Esq.
Legal Brief is brought to you in part by the Caribbean Bar Association of South Florida
FT. LAUDERDALE – We all know that there is an ongoing mortgage foreclosure crisis. The crisis has impacted our entire economy. It is important, however, to know that the foreclosure crisis not only impacts the homeowners who are suffering, but also the lenders and banks who have advanced loans which may now be in default, or are being foreclosed upon.
Despite your best efforts, if you cannot make your mortgage payment, you should not ignore the problem. The more you are in default (further behind in your payments), the harder it will become to reinstate your loan or negotiate with your lender and the likelihood increases that you will be sued for foreclosure and possibly lose your home.
Sooner, rather than later, once you are aware that you cannot make your payments, contact your lender. Be open and honest and advise your lender that you have a problem, namely, you cannot pay your mortgage. Remember, in this volatile and uncertain real estate market, with declining home prices, the lender does not really want your property. Therefore, lenders do have options to help borrowers through financial crisis. There are a lot of homeowners experiencing such difficulties and you have to be patient and persistent. Therefore, if your phone calls are not returned or if you find yourself on hold for an eternity, don’t give up. Be patient and persistent.
Do not ignore mail from your lender. Once you have confirmed that the mail is indeed from your lender, and not someone or some entity attempting to take advantage of your difficult financial situation, read the mail that you receive from your lender carefully. Generally, the initial notices you receive will offer useful information about the possibilities and options available to avoid foreclosure. Future mail may include important information regarding the lender’s desire to institute legal action against you, in the form of a foreclosure. Your failure to open the mail, or simply ignore it, will not be helpful to your cause in a Court of law if a foreclosure action has been filed against you. Unpleasant as it may be, read your mail and deal with the crisis confronting you.
It is important that you find the documents or have, readily available, your mortgage loan documents, and that you read them and are totally familiar with what options your lender has if you can’t make your mortgage payments. Please note that each state has different foreclosure laws and my discussion will be limited to what occurs in the state of Florida. However, it is important that you attempt to obtain information about the foreclosure laws and time deadlines in your state. Clearly, it is wise for you to contact an attorney, even at this stage, before you have been sued for foreclosure and discuss your options.
It would be useful if your finances permit to schedule an appointment with an attorney to discuss the options available to you. Bring your mortgage loan documents to the meeting with the attorney, so that the attorney can review the terms and conditions of your mortgage. Listen carefully to what the attorney has to say and take notes, because you cannot remember everything the attorney says to you during the meeting.
There are foreclosure prevention options available. Important information about foreclosure prevention (also commonly known in the business as loss mitigation) can be found on the internet at http://www.hud.gov/foreclosure/index.cfm .
The US Department of Housing and Urban Development (HUD) provides either free, or at a very reasonable cost, housing counseling nationwide. Since this is the part of the Federal Government, you can be assured of the integrity of the program. Housing counselors are available to help you understand the law and options available to you in this difficult time, as well as to assist you in properly organizing your finances and even representing you in negotiations with your lender. Call (800) 569-4287 for more information regarding a HUD approved housing counselor.
Do not fall into the trap of paying a foreclosure prevention company to assist you. You do not have to pay extra money for foreclosure prevention help. Your precious money may be used to pay your mortgage instead. Do not be surprised if you are contacted by companies promising to negotiate with your lender. While these companies may have a legitimate business, they will charge you quite a bit for information and services which you can either get for free, or at a very marginal cost and remember, you can get the help of a HUD approved housing counselor, perhaps even for free. Thus, the advertisement and information you receive from foreclosure prevention companies, while attractive and promising you an immediate relief from your burden, will cost you dearly, what you do not have, namely money.
Finally, be vigilant and do not lose your home to the predators and “scams” that exist. If you receive any written information or a telephone call advising you that a company or entity can immediately stop your foreclosure if you sign a legal document, allowing them to act on your behalf, you may well be signing a document that renders title to your home to another person or entity. Do not fall in this trap and do not entertain such foolish action. Please remember, never sign a legal document, without reading and understanding all of the terms and conditions and getting a professional opinion from an attorney or without discussing the matter in detail, with a HUD approved housing counselor. When you are feeling desperate, you are much more vulnerable to the many schemes that are out there.
If you have been unable to avoid foreclosure, and have actually been served with a foreclosure lawsuit, you must act carefully and diligently. Generally, under Florida law, you must be served personally with a foreclosure lawsuit or an individual living in your home may also be served, provided they meet certain age requirements. If you have been served with a foreclosure lawsuit, please review the documentation very carefully. In general, there will be a complaint, which states the legal basis for the action filed against you, and there will be copies of certain documents attached to the complaint. Those copies include, but are not limited to, the promissory note, mortgage, and other important documents you sign at the time of closing on your loan.
In Florida, you have 20 days to respond, after being served with a foreclosure complaint. It is important that you keep the 20 day time period in mind at all times. The first thing you should do after being served with a foreclosure lawsuit, is immediately seek the services and expertise of an attorney. There are many competent attorneys who will be able to assist you properly. While there will be attorney’s fees, many attorneys are willing to enter into payment plans and charge you a fair rate to represent you. Having an attorney represent you is essential. An attorney is familiar with Florida law, drafting the correct and responsive pleadings and setting and attending important hearings relating to your case. An attorney can also negotiate properly with the attorney representing the lender.
If you can afford an attorney, during your initial appointment with the attorney (which should be as quickly as possible since you have 20 days to file a response), take all the documents you were served with you to the initial meeting, which should be the complaint and supporting documents. Discuss in detail with the attorney, your specific situation and advise him or her of all relevant facts. Make sure that you and your attorney review the documents that are attached to the complaint to confirm that you did indeed sign the promissory note and mortgage. If you did not sign the promissory note or mortgage, or they are not attached, your attorney will have significant and important legal defenses to the foreclosure actions. Do not wait until the 20th day, when an answer is due, to set an appointment with an attorney. Immediately upon being served with the foreclosure lawsuit, contact an attorney.
If you cannot afford an attorney, all is not lost but your situation becomes more difficult. Read carefully, the documentation that was served upon you, especially the complaint and supporting documents. Remember that you have 20 days to file a response. If you do not file a response in the 20 day time period, the lender may obtain a default against you and thereafter, move on a more accelerated basis to judgment. Therefore, if you have a reasonable basis to deny the allegations contained in the lender’s complaint, prepare a response and file it with the Court. The Summons that accompanies that complaint and supporting documents, in Florida, is in 3 languages, English, Spanish and Creole. Read the instructions carefully. You may either handwrite or type up a response. At a minimum, if you wish to file a response on your own, you should put the style of the case and the case number, and then outline any defense or important points you wish to bring the Court’s attention. File the response personally at the correct courthouse, which should be stated on the Summons. By filing a response, you will generally prevent the entry of a default. You must also mail a copy of your response to the attorney for the lender suing you.
You should still continue to contact the lender and attempt to negotiate. Some lenders are willing to either allow you to give, what is known as a Deed in Lieu of Foreclosure, and some lenders are willing to do what is titled a “Short Sale”. A Short Sale generally means that the property in question (the property being foreclosed upon) will be sold for a price that is lower than the amount owed on the mortgage. In some instances this is of preference to the lender, since the lender really does not want to have the property on its hands. Thus, if the lender can obtain a reasonable amount on the amount owed, it may well agree to a Short Sale.
Surviving foreclosure is divided into 2 parts. The second part of the presentation will deal with addressing a foreclosure lawsuit that has been filed against you.
