01) What should you do if you can’t make your mortgage payment?
Nov. 2, 2010
The most important thing to keep in mind if you are having trouble paying your mortgage is that you must be proactive. If you are current with your payments and this is the first month you will miss, then one approach is to contact your lender and try to work something out with them directly. However, if you are not familiar with all of the relevant terminology, it may be difficult for you to negotiate with them. A better approach is to contact a HUD-certified housing counselor who will advise you. You can find a list of HUD-certified housing counselors near you at one of the following web addresses: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?weblistaction=summary or http://www.hud.gov/offices/hsg/sfh/hcc/fc/index.cfm. A Housing Counselor will help to determine whether you are eligible for a modification and advise you as you negotiate with your lender.
If you and your housing counselor cannot reach an agreement with your lender and you are served with a Summons and Complaint, the best thing you can do is contact an attorney who can advocate on your behalf. Call 716-855-0203 x118 to speak with someone at Western New York Law Center who can assist you. If that is not possible, then you will have to proceed on your own (pro se).
If you and your housing counselor cannot reach an agreement with your lender and you are served with a Summons and Complaint, the best thing you can do is contact an attorney who can advocate on your behalf. Call 716-855-0203 x118 to speak with someone at Western New York Law Center who can assist you. If that is not possible, then you will have to proceed on your own (pro se).
02) What is the purpose of a Housing Counselor and why should you meet with one?
Nov. 2, 2010
Housing Counselors educate consumers about homeownership, sound money management and virtually any other housing need. There are “national industry standards for homeownership education and counseling” which have been developed by an advisory council including HUD, Fannie Mae and Freddie Mac, national lenders, local counseling organizations, civil rights groups and a number of other entities. When you work with a HUD approved housing counselor, you can be sure that you will receive counseling from someone who is committed to providing you with the greatest chance for sustainable homeownership.
03) How do you find out who your lender or loan servicer is?
Nov. 2, 2010
The name of your loan servicer (which may or may not be your original lender) and their address and phone number should be listed on your monthly mortgage statement, receipt, or coupon. The name of your original lender will be printed on the mortgage itself or on the assignment if ownership of your mortgage has changed hands since it was executed.
04) What’s the difference between a loan servicer and a lender?
Nov. 2, 2010
Your lender is the bank or financial institution that you worked with when you first began the process of buying your home. They provided the money for the loan to buy your house. The loan servicer collects your monthly mortgage payments and, if you have an escrow account, they also pay your taxes and homeowners insurance on your behalf. The loan servicer may be a bank or financial institution. It may even be the same bank or financial institution as your lender; but a loan servicer does not do the same thing as a lender. Usually, only your actual lender can sue you in a foreclosure suit.
05) What information should you have ready when you call your loan servicer?
Nov. 2, 2010
You should have your account number, be able to briefly explain your situation, have a copy of your paycheck stub or other income information and a list of regular household expenses. You should also note what you speak about with them and be sure to get the name and extension of the agent you speak with at the bank, so that you can verify the exchange that you have with them at some point in the future.
06) What is a pre-foreclosure notice?
Nov. 2, 2010
A recent law was passed in the state of New York that requires all lenders to send you a pre-foreclosure notice when you fall behind with your mortgage payments--even as little as one month behind. It does not necessarily mean that you will lose your home. It simply serves to notify you that, because you have fallen behind with your monthly mortgage payments, you may be sued by your lender for the unpaid debt plus interest, fees and penalties, if you do not take prompt action to catch-up with your payments. The 90-day pre-foreclosure notice informs you that you have 90 days before the lender is allowed to file a foreclosure lawsuit against you.
07) What is a demand for payment and an acceleration letter?
Nov. 2, 2010
Most mortgages executed today have several provisions that create a power in the lender to accelerate the mortgage. If the borrower fails to make payments in the manner stated in the mortgage or otherwise violates a term of the mortgage, then the lender may “accelerate” the note, declaring the entire debt due and payable immediately. There is usually a brief grace period during which the borrower is permitted to catch up with their payments. An acceleration letter may be sent to you by your lender if you have missed one or more payments and you have not reached an agreement with your lender to modify the terms of your loan. After the lender sends the acceleration letter, it is possible that they will no longer accept payments toward the balance due and/or that the payments will not be credited toward the balance due as they were prior to the acceleration.
08) What is a Short Sale?
Nov. 2, 2010
A “Short Sale” is an arrangement that you make with your lender to sell your house for less than you owe on the loan. The lender agrees to let you sell the property for less than the full amount owed and to accept the proceeds of the sale as full satisfaction of the debt.
09) What is a Deed-in-Lieu-of-Foreclosure?
Nov. 2, 2010
A Deed in lieu is an agreement between you and your lender to turn your property over to the lender as an alternative to foreclosure. You are basically giving the property back to the lender in order to prevent the foreclosure. Deeds in lieu will not be accepted by the mortgage holder if there are junior liens on the property, because in that case foreclosure is necessary for the mortgage holder to obtain clear title. It’s best to consult an attorney if you’re considering a deed in lieu of foreclosure. Please call 716-855-0203 x118 to speak with one of the attorneys at Western New York Law Center.
10) What is a reverse mortgage and how can it help you?
Nov. 2, 2010
A reverse mortgage is a loan for homeowners 62 years of age or older who have considerable equity in their houses. Typically, borrowers make no payments during their lifetimes; the loan is paid off at their death, when the house is sold.
If you are 62 or older, you might benefit from taking out a reverse mortgage. Under a reverse mortgage, the lender would essentially buy your home, use the equity to pay off your debts, and provide you with a set monthly payment over your life based on the amount of equity you have in the home. At your death, the lender will deem the loan in default and sell the house to recoup what it is owed on the loan. Because reverse mortgages depend upon stable real estate values, you are unlikely to qualify for one unless you have a lot of equity in your house—at least enough to convince the lender that it will be recovered at your death even if values continue to drop.
If you are 62 or older, you might benefit from taking out a reverse mortgage. Under a reverse mortgage, the lender would essentially buy your home, use the equity to pay off your debts, and provide you with a set monthly payment over your life based on the amount of equity you have in the home. At your death, the lender will deem the loan in default and sell the house to recoup what it is owed on the loan. Because reverse mortgages depend upon stable real estate values, you are unlikely to qualify for one unless you have a lot of equity in your house—at least enough to convince the lender that it will be recovered at your death even if values continue to drop.
11) Should you pay a company to assist you to prevent the foreclosure?
Nov. 2, 2010
You don't need to pay fees for foreclosure prevention help. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD-approved housing counselor will provide free if you contact them. To find a HUD-approved housing counselor near you, go to the following sites: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?weblistaction=summary and http://www.hud.gov/offices/hsg/sfh/hcc/fc/index.cfm.
12) What are the steps of the foreclosure process?
Nov. 2, 2010
In New York State, it currently works like this:
PRIOR TO FORECLOSURE:
A. Customer misses a mortgage payment or two.
B. Bank sends a 90-day pre-foreclosure notice.
C. Customer misses additional payments and does not get current with the mortgage.
D. Bank issues demand for payment under the Note in full, based on the acceleration clause in the mortgage. Most mortgages contain an acceleration clause which basically states that if you fail to pay the bank under the terms of the note with monthly payments as promised they can accelerate the note, meaning that the full amount is due on demand. Once the bank accelerates, you legally owe the full balance plus back interest, late charges and legal fees all at once. Once the Note has been accelerated, the bank will almost never accept monthly payments. Instead, they will demand much more than just the missed payments to reinstate the loan. Though this information is intended for homeowners who are defending pro se, we still advise that if you have not already contacted an attorney before the acceleration process, you should definitely do so as soon as possible. If you are absolutely unable to contact an attorney, contact a HUD-certified housing counselor instead.
FORMAL LEGAL FORECLOSURE PROCESS:
A. Lender files Lis Pendens, Summons, and Complaint with the court.
B. Borrower is served with the Summons and Complaint.
C. Lender files proof of service and request for judicial intervention with the court.
D. Borrower receives notice of mandatory settlement conference which will be set for 60 days after proof of service and RJI are filed.
E. Borrower files Answer to Summons and Complaint, 20 or 30 days after service, depending on type of service.
F. Borrower works to reach modification agreement with the lender, preferably with the assistance of a housing counselor and an attorney.
G. Settlement conference takes place in a court of law.
H. If both parties agree to new terms for a modification, then the foreclosure suit is discontinued. The lender’s attorney has 150 days to file a notice of discontinuance.
I. If both parties do not come to a settlement agreement (i.e. loan modification, repayment plan, forbearance etc.), then the court proceeds with the lawsuit.
J. If the borrower did not file an Answer to the Summons and Complaint, it will be deemed that there has been a default in appearance and the lender’s attorney must make a Motion for Order of Reference.
K. If the borrower filed an answer, the lender may file a motion for summary judgment which permits a party to assert that there are no factual issues that need to be resolved. If the court agrees that there are no factual issues that need to be resolved, then the court will grant the lender’s motion for summary judgment. If the court deems that there are factual issues that need to be resolved, then there will be a hearing and the court will determine whether any of the borrower’s defenses are strong enough to prevent the foreclosure.
L. In some cases, when the borrower filed an answer, the court may find that the borrower had a valid defense to the foreclosure action, and issue a judgment in the borrower’s favor.
M. In many cases, the court will find that that the borrower does not have a valid defense to the foreclosure and will issue a judgment allowing the lender to continue with the foreclosure.
N. The Lender files a Motion for Order of Reference which is signed by the judge.
O. A referee appointed by the court computes the amount owed by the borrower.
P. The Lender files a motion for judgment of foreclosure and sale which the court signs.
Q. Throughout the foreclosure process and until the property is sold at auction, the borrower continues to have the right of redemption, which basically means that the homeowner can always pay off the entire amount owed and keep the property if he or she has the funds to do so.
R. The Lender schedules an auction with the referee, and the house is sold at auction to the highest bidder.
S. If the amount owed by the borrower exceeds the amount paid for the property at auction, the borrower could be sued by the lender for the deficiency.
T. If the amount owed by the borrower is less than the amount for which the property is sold at auction, then the borrower is entitled to receive the surplus.
PRIOR TO FORECLOSURE:
A. Customer misses a mortgage payment or two.
B. Bank sends a 90-day pre-foreclosure notice.
C. Customer misses additional payments and does not get current with the mortgage.
D. Bank issues demand for payment under the Note in full, based on the acceleration clause in the mortgage. Most mortgages contain an acceleration clause which basically states that if you fail to pay the bank under the terms of the note with monthly payments as promised they can accelerate the note, meaning that the full amount is due on demand. Once the bank accelerates, you legally owe the full balance plus back interest, late charges and legal fees all at once. Once the Note has been accelerated, the bank will almost never accept monthly payments. Instead, they will demand much more than just the missed payments to reinstate the loan. Though this information is intended for homeowners who are defending pro se, we still advise that if you have not already contacted an attorney before the acceleration process, you should definitely do so as soon as possible. If you are absolutely unable to contact an attorney, contact a HUD-certified housing counselor instead.
FORMAL LEGAL FORECLOSURE PROCESS:
A. Lender files Lis Pendens, Summons, and Complaint with the court.
B. Borrower is served with the Summons and Complaint.
C. Lender files proof of service and request for judicial intervention with the court.
D. Borrower receives notice of mandatory settlement conference which will be set for 60 days after proof of service and RJI are filed.
E. Borrower files Answer to Summons and Complaint, 20 or 30 days after service, depending on type of service.
F. Borrower works to reach modification agreement with the lender, preferably with the assistance of a housing counselor and an attorney.
G. Settlement conference takes place in a court of law.
H. If both parties agree to new terms for a modification, then the foreclosure suit is discontinued. The lender’s attorney has 150 days to file a notice of discontinuance.
I. If both parties do not come to a settlement agreement (i.e. loan modification, repayment plan, forbearance etc.), then the court proceeds with the lawsuit.
J. If the borrower did not file an Answer to the Summons and Complaint, it will be deemed that there has been a default in appearance and the lender’s attorney must make a Motion for Order of Reference.
K. If the borrower filed an answer, the lender may file a motion for summary judgment which permits a party to assert that there are no factual issues that need to be resolved. If the court agrees that there are no factual issues that need to be resolved, then the court will grant the lender’s motion for summary judgment. If the court deems that there are factual issues that need to be resolved, then there will be a hearing and the court will determine whether any of the borrower’s defenses are strong enough to prevent the foreclosure.
L. In some cases, when the borrower filed an answer, the court may find that the borrower had a valid defense to the foreclosure action, and issue a judgment in the borrower’s favor.
M. In many cases, the court will find that that the borrower does not have a valid defense to the foreclosure and will issue a judgment allowing the lender to continue with the foreclosure.
N. The Lender files a Motion for Order of Reference which is signed by the judge.
O. A referee appointed by the court computes the amount owed by the borrower.
P. The Lender files a motion for judgment of foreclosure and sale which the court signs.
Q. Throughout the foreclosure process and until the property is sold at auction, the borrower continues to have the right of redemption, which basically means that the homeowner can always pay off the entire amount owed and keep the property if he or she has the funds to do so.
R. The Lender schedules an auction with the referee, and the house is sold at auction to the highest bidder.
S. If the amount owed by the borrower exceeds the amount paid for the property at auction, the borrower could be sued by the lender for the deficiency.
T. If the amount owed by the borrower is less than the amount for which the property is sold at auction, then the borrower is entitled to receive the surplus.
13) What should you do when you receive a Summons and Complaint?
Nov. 2, 2010
A Summons and Complaint is formal notification that a law suit has been filed against you. You should contact a lawyer right away. If you’re in Erie County, you can reach a lawyer at Western New York Law Center at 716-855-0203 x118. If you qualify, there is no charge for the legal services provided by the Law Center. If you do not want to contact a lawyer and wish to defend your lender’s action on your own (pro se), then you should consult WNYLC’s Pro Se Foreclosure Prevention Project site, located here http://foreclosure.wnylc.com/, for help with filling out and filing an answer to a foreclosure suit.
When you are sued in foreclosure, your lender is suing you for the amount you owe on the loan that you borrowed to pay for your house. By signing your mortgage, you agreed that if you failed to make your payments on time, your lender could take title to your house to satisfy the debt. You must answer the summons and complaint to avoid a default judgment being issued against you. If you cannot reach an attorney to help you file an answer, you must file an answer on your own. Whether you seek legal representation or try to defend pro se, you must answer within 20 days, if personally served, or 30 days, if served by mail, in order to avoid a default judgment.
When you are sued in foreclosure, your lender is suing you for the amount you owe on the loan that you borrowed to pay for your house. By signing your mortgage, you agreed that if you failed to make your payments on time, your lender could take title to your house to satisfy the debt. You must answer the summons and complaint to avoid a default judgment being issued against you. If you cannot reach an attorney to help you file an answer, you must file an answer on your own. Whether you seek legal representation or try to defend pro se, you must answer within 20 days, if personally served, or 30 days, if served by mail, in order to avoid a default judgment.
14) If you’re being sued by your lender in a foreclosure action, do you have to move out of your house?
Nov. 2, 2010
Not right away. Being sued in a foreclosure action can be a long process and only an order from a court of law can force you to leave your home. Before your lender can sell your home at auction and evict you, they must follow the court procedures for foreclosure and eviction. In New York, the process can take several months. For information on how to handle an eviction proceeding, please visit Neighborhood Legal Services’ website.
15) How long does the foreclosure process usually take?
Nov. 2, 2010 by admin
It varies from one case to the next.
16) What is reinstatement?
Nov. 2, 2010
Reinstatement is an action taken to make a mortgage current by paying all missed payments plus fees and interest charged by the lender. When you miss a mortgage payment, fees pile up on a daily basis and interest accrues. If you have enough cash, you can “reinstate” your mortgage. Usually, the borrower has the opportunity to reinstate the mortgage up until the date of the foreclosure sale.
17) What is refinancing and how can it help you out of foreclosure?
Nov. 1, 2010
Refinancing is the process of paying off an existing loan by taking a new loan and using the same property as security. Refinancing your mortgage basically means paying off your current loan by taking out a different loan. Homeowners who qualify may be able to refinance their currently unaffordable mortgages into affordable longer-term mortgages, if their lenders agree to participate.
18) Can filing for Bankruptcy stop the foreclosure?
Nov. 1, 2010
Filing for Bankruptcy can delay a foreclosure, but it won’t stop it permanently. When you file bankruptcy, the court issues an automatic stay that directs your creditors to cease all collection activities and foreclosures immediately, but the automatic stay only lasts for a short period of time. If your home is scheduled for a foreclosure sale, the sale will be postponed while the bankruptcy is pending.
19) What programs are available to get a loan modification?
Nov. 1, 2010
HAMP (Home Affordability Modification Program) is a major federal program currently available for borrowers facing foreclosure who want to try to get a loan modification. You can read more about how to qualify for HAMP on the Federal government’s HAMP website, http://makinghomeaffordable.gov/. If you don’t qualify for a modification through HAMP, some banks have in-house, traditional modification options for borrowers facing foreclosure.
20) What do you have to do to qualify for a loan modification?
Nov. 1, 2010
It varies according to which modification program you are applying under. Qualifying for a loan modification is an involved process and you should work with a HUD-approved housing counselor in your efforts to secure a modification. The five basic things that you must satisfy to qualify for a loan modification under HAMP are the following:
A) Your home must be your primary residence
B) The amount that you owe on your first mortgage must be equal to or less than $729,750.
C) You are having difficulty making your current mortgage payments.
D) You got your current mortgage before January 1st, 2009.
E) Your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner's association dues, if applicable) is more than 31% of your current gross income.
After you have satisfied these five things, a housing counselor can help you with the more complex issues that arise in any loan modification application. To contact a HUD-approved housing counselor in your area, go to the following site:
http://www.hud.gov/offices/hsg/sfh/hcc/fc/
A) Your home must be your primary residence
B) The amount that you owe on your first mortgage must be equal to or less than $729,750.
C) You are having difficulty making your current mortgage payments.
D) You got your current mortgage before January 1st, 2009.
E) Your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner's association dues, if applicable) is more than 31% of your current gross income.
After you have satisfied these five things, a housing counselor can help you with the more complex issues that arise in any loan modification application. To contact a HUD-approved housing counselor in your area, go to the following site:
http://www.hud.gov/offices/hsg/sfh/hcc/fc/