More tips from Alex Speak: One of the biggest mistakes you can make after getting served with foreclosure papers is to do nothing, figuring you’ll ‘just let the house go’. Not only is it probable you’ll lose your home, but the bank will most likely get a deficiency judgment against you; that is, a judgment awarding the bank money for the difference between what you owe on the loan, and what the house sells for after foreclosure.
Do you owe a lot more than your house is worth? If so, you’re looking at a big deficiency judgment. Did you know that in many states adeficiency judgment is good up to 20 years? The bank’s going to be in your life for a long time. It can claim money from your bank accounts, take your income tax refunds, and dip into future assets you accumulate.
What should you do? Either hire a lawyer, or file an answer yourself. (a hardship letter is different from an answer’!) In answering a complaint, many lawyers ‘admit that the borrower (you) own the property, but deny all other allegations of the complaint’. In their answer, lawyers also typically raise certain defenses, such as, since the original note has been lost, and the plaintiff (the company suing you) doesn’t have a complete copy of the original note, the plaintiff cannot maintain the foreclosure action.
For adjustable rate mortgages with interest-only payment periods, or different payment options such as minimum payment, interest only, interest and principal, or have a prepayment penalty, many lawyers assert in their answer that the loan violated state unfair and deceptive trade practices laws because the originating lender didn’t explain to the borrower that negative amortization and payment shock would result from the structure of the loan.
Those same lawyers also file a written request for the court to refer the case to mediation. The biggest advantage to mediation is you get to sit down with a representative of your lender who has the authority to settle the case without foreclosure. Before going to mediation, you should know exactly which solutions are available to you. Find those solutions by making sure you do your homework and research all the options available.
Tags: bankruptcy, credit, finance, foreclosed homes for sale, foreclosures, hardship letter, home loan mortgage, homes foreclosure, lenders, lending, Loan Modification, loss mitigation, mortgage lenders, mortgage-calculator, real-estate, short sale, stop foreclosures