During the difficult economy and through its recovery, many homeowners were unable to pay their mortgage. When a household has a limited income difficult financial decisions need to be made. We understand that this is not the homeowner’s fault, and that is precisely why we defend residential foreclosures.
Homeowners have rights, of which they are often not aware. Many homeowners become ashamed of having foreclosure filed against them and choose to hide instead of fighting back. The first step to overcoming foreclosure is avoiding feelings of guilt and realizing that there is help. The next step is discussing your options with a foreclosure expert.
There are alternatives to foreclosure that will allow the homeowner to keep or surrender their home. Each situation is different, hence why it is important for the homeowner to come in for a free consultation, where we can review their finances, bank statements, correspondence with the mortgage lender, and any other pertinent documents. The most commonly used foreclosure alternatives include: short sale, loan modification, or a deed in lieu of foreclosure.
For a homeowner who cannot afford to keep the property and wishes to surrender the home, a short sale is a great alternative. Short sales can be processed before foreclosure is filed by the bank or anytime during the foreclosure process, prior to the final judgment. This is why we encourage homeowners to speak with a foreclosure attorney as early as possible, even if it is as soon as they decide they will no longer continue making their mortgage payments. Quite often it takes the bank a few months to file the foreclosure suit, giving the homeowner enough time to move forward with a short sale and avoid foreclosure all together.
A short sale is when a home is sold for less than the remaining balance of the mortgage. Banks will not always allow a homeowner to sell the home through a short sale. However, if the debtor can prove financial hardship then the bank will usually consider this as a means to an end. Even after the bank allows the homeowner to proceed with a short sale, each offer will need to be reviewed by the bank, and they retain the right to approve or decline any offer. An advantage to using a short sale as a way of relieving the homeowner from the property is that it usually has a lessor impact on the credit score.
Short sales with the assistance of an attorney are much smoother and will ensure that all legal matters concerning the short sale are taken care of while the realtor can focus on selling the home. A short sale attorney will negotiate with the bank and will often persuade the bank to accept a lower offer. Once the offer is accepted and the home is sold there are still pending issues that need attention, such as the remaining balance and the homeowners association (if there is one). Our attorneys can negotiate a waiver of deficiency with the mortgage lender to relieve the homeowner of the remaining balance. It is crucial to have this contract with the bank and have an attorney scrutinize it, because without it the bank can sue the homeowner for the remaining balance even after the home is sold. If there is a homeowner’s association, our attorneys will also enter into a contract exempting the original homeowner from any responsibility, to the property, after the sale date.
Since the beginning of the real estate-bubble burst, loan modifications became a very common term. Government loan modification programs were created to assist homeowners during times of financial duress. In addition to the government programs, mortgage lenders were being pressed by the government to provide homeowners with financial alternatives that would allow them to keep their property.
A loan modification is basically restructuring the mortgage. In some situations, banks will lower the principal balance, or they may lower the interest rate. While modifications vary widely depending on the bank and the particular situation, the main goal is to lower the monthly payment to an amount that the homeowner can afford. Even though banks are highly encouraged by the government to offer loan modifications, it is still to the lender’s discretion.
Loan modifications are one of our specialties. At Graham Legal, we have dealt with all of the large mortgage lenders and a multitude of small ones. Banks are being overwhelmed by the number of loan modifications they are processing, unfortunately this means that it may take months to have a loan modification application reviewed, documents need to be resubmitted multiple times, and a lot of follow up needs to be done. The process of applying for a loan modification is tedious, which is precisely why we take this burden away from our clients. Once the bank reviews the application, we will review any offers they provide and will assess whether it is a worthwhile offer for our client to accept.
Deed in Lieu
During the recession it has been increasingly difficult to sell homes, through regular real estate sale or short sales. Even as the economy progresses, it’s still difficult for homeowners that are underwater to sell their home. A deed in lieu of foreclosure is a method of surrendering the home to the bank when all attempts to sell the home have failed.
Why should a deed in lieu be reserved as the final option?
Generally the bank requires that the homeowner attempt to sell the home, prior to allowing a deed in lieu of foreclosure to be an option. The reason being that the bank wants to have as little loss as possible. A bank is not legally required to accept a deed in lieu, but an experienced foreclosure defense attorney will usually be able to negotiate it on behalf of the homeowner.
The deed in lieu negotiation:
A foreclosure defense attorney is needed to ensure that all loose ends on the deed in lieu contract are tied. The attorney will review the estoppel affidavit, that is the document the bank uses to detail all the terms and conditions of the agreement, and will make sure that they cannot pursue the deficiency in a lawsuit against the homeowner.
With a dedicated foreclosure defense attorney by your side it is possible to win the foreclosure battle. Winning can have very different meanings as it depends on what a homeowner desires as the final outcome. A deed in lieu is considered a viable option because it will allow our client to leave the foreclosure behind without owing anything to bank.