Frequently Asked Questions
Q: What is Home Foreclosure?
A: Home foreclosure is a process by which a lender regains a property which they have financed. Typically, this is because the borrower or homeowner is behind on house payments and is unable to catch up, often due to circumstances outside of his or her control. When the lender forecloses on the homeowner, the homeowner must move out of the house, therefore, losing all possession of the property and jeopardizing any possible equity that the homeowner may have in the home. There is a legal time frame, which varies from state to state, which determines how long the foreclosure process can take.
Q: What can loss mitigation do for you?
A: The goal of loss mitigation is to work out an agreement between the homeowner and the lender that will stop foreclosure proceedings permanently. This allows the homeowner to stay in their home and protects their credit history.
Q: How do we stop foreclosure?
A: Our company specializes in resolutions of mortgage delinquencies or home foreclosure claims on behalf of you, the homeowner. We perform a detailed financial analysis and work with you to determine your best alternatives. We review your lenders loss mitigation policies and your state’s foreclosure law to make sure that we give you the best service within the context of your situation. By working with you and your lender we can tailor a resolution to meet your specific criteria and financial circumstance.
Q: How long do I have to act?
A: Time is of the essence when you are behind on house payments. Time is definitely not your friend in this situation. Each day that passes makes it that much harder to get a work out agreement with your lender that you can live with. The home foreclosure process can take anywhere from a few weeks to many months, depending on your state law and the method of foreclosure your lender chooses to use.
Q: How long does it take for you to complete the case once we fill out all of the paperwork?
A: This depends on the stage of foreclosure you are in and your financial position. Typically it takes several weeks to complete a work out agreement and stop foreclosure proceedings.
Q: Do I have enough time to stop my foreclosure?
A: Up until the foreclosure sale occurs there is still hope. If a sale date for your house has been set you need to act fast. We have stopped sales set for the next day but this is very risky and some lenders will not agree to it. Your best option is to take action immediately to stop foreclosure before it goes too far.
Q: I’m currently in bankruptcy. Can you still help?
A: Yes. But we cannot negotiate a work out agreement with your lender until your mortgage has been discharged or dismissed from the bankruptcy proceedings. Our attorneys can still evaluate your case and explain the best options to save your home. Then when the mortgage is out of the bankruptcy we can proceed with the home foreclosure help. Sometimes after bankruptcy it is easier to make a mortgage payment because other debts have been discharged.
Q: Do I need to have a special type of mortgage loan for you to help me?
A: No. We specialize in out-of-court resolutions of government and non-government mortgage delinquencies or home foreclosure claims for homeowners. These can be FHA, Rural Administration, VA, Freddie Mac, Fannie Mae, or conventional loans which have become delinquent.
Q: What if I can no longer afford my home? Can you still help me?
A: Yes. If you are certain that you cannot afford your home any longer and wish to sell, we can help you to secure a short sale payoff or a deed-in lieu of foreclosure agreement with your lender.
Q: Why would a lender accept less than their payoff in order to facilitate a sale of the home? Why would a short sale be preferable to a lender than foreclosing on the subject property?
A: Foreclosure is an expensive process for a lender. Banks are in the business of making loans, in general they don’t want to possess the property. You also must remember that not only is foreclosure a long and arduous process for the bank but it also costs money. If the lender goes through the entire foreclosure process significant costs will accrue including posting the notice of foreclosure and advertising the foreclosure sale.
Q: What does “acceleration clause” mean?
A: It means that once a borrower is in default, the lender can choose to demand payment of the entire balance of the mortgage in one lump sum.
Q: What happens to the property if the lender goes through the entire foreclosure process and no one bids on the property?
A: If no sale occurs the lender will have to pay not only the advertising and notice fees but they will also be responsible for attorney’s fees, trustee’s fees, and title insurance. The lender will then be forced to possess the property which will require them to pay for repairs, maintenance, hazard insurance, and property taxes. Furthermore the lender will have to sell the property which will require them to pay not only real estate commissions but also closing costs.
Q: What is a notice of default?
A: A Notice of Default (N.O.D.) is a formal notification given to a borrower from a lender stating that they have not made payments on the loan as agreed to. As a result, if the borrower does not pay the money owed by a given deadline the lender may choose to foreclose on the borrower’s property.
Q: What’s the difference between Judicial Foreclosure and Non-Judicial Foreclosure?
A: Judicial Foreclosure means that the lender has to go to court to foreclose. Non-Judicial Foreclosure does not require the lender to go to court. This is because the loan instrument the borrower signed contained a power of sale clause, or the instrument is a Deed of Trust. A power of sale clause means that the borrower authorized the lender to sell the property to pay the loan if the borrower defaulted.
Q: What is a “Lis Pendens”?
A: It is a Notice of a Pending Lawsuit and one of the initial steps taken by a lien holder on the path to foreclosure.
Q: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?
A: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work actually completed and applicable to the current default episode may be capitalized into the modified principal balance.
Q: May a mortgagee perform an interior inspection of the property if they have concerns about property condition?
A: Yes, the mortgagee may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the mortgagor’s continued ability to support the modified mortgage payment.
Q: Can a mortgagee include late charges in the Loan Modification?
A: Mortgagee Letter 2008-21 states that accrued late charges should be waived by the mortgagee at the time of the Loan Modification.
Q: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for Homeowner’s Association fees?
A: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.
Q: Are mortgagees required to perform an escrow analysis when completing a Loan Modification?
A: Yes, mortgagees are to perform a retroactive escrow analysis at the time the Loan Modification to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.