If you fall behind in your mortgage payments, the possibility that you may lose your home can make you feel devastated and helpless. The worst approach in that situation is ignoring notices from your lender and doing nothing. Most people don’t realize that if you are the victim of a foreclosure, you have options. In fact, depending on your circumstances, you may be able avoid and stop foreclosure — but only if you take action.
You can and should take steps to protect your rights as a homeowner. But sometimes, despite your most honest efforts to work something out with your lenders, the process ends without a resolution. When that happens, a mortgage defense attorney can help stop foreclosure.
If you know you can’t meet your mortgage obligation, the first step is to call your lender or mortgage servicing company and discuss a loan modification, forbearance, or another loss mitigation option. Then follow up in writing.
Some federally backed mortgage loans are subject to mortgage modification or forbearance requirements. For example, hardship caused by the Covid-19 pandemic led the federal government to step up and help homeowners unable to meet their mortgage obligations. Legislation provided some protection and options in 2020. The Biden Administration already extended the foreclosure moratorium and mortgage forbearance deadlines for most federally-insured home loans through June 30, 2021. It’s extremely important for you to ascertain what help is currently available.
Even if you don’t have a federally-insured loan, many lenders and mortgage service companies offer loan modification and forbearance options for homeowners who can’t make their mortgage payments. The only way to find out if you have specific options is to talk with your lender or mortgage servicer.
Be very careful when you begin to explore your options. Mortgage modifications can be a tricky business and oftentimes the fine print reveals terms you may not be expecting. You also need to watch out for brazen and deceptive loan forgiveness scammers. You should never deal with a company other than your mortgage lender or servicer to try to resolve mortgage delinquency issues.
Do not ever sign documents that claim to resolve your mortgage issues without being absolutely certain you know what these documents say. If you are uncertain about any document relating to your mortgage, visit with a mortgage foreclosure defense attorney and discuss your situation. Your lawyer will help you protect your rights.
Mortgages — and the laws that govern them — are extremely complex. The options available to you depend in large part on your individual circumstances. Sometimes a modification — even on less than favorable terms — is the best recourse when you are in default. In some circumstances, you may want to consider litigation as a way to resolve your mortgage default. Consulting with an experienced mortgage foreclosure defense lawyer is the best approach to identifying the viable options you have.
Your lawyer can explain all the details about these options, as well as protect your rights in court. In Kansas, a foreclosure case must be litigated like any other civil case filed in court. If you are sued in a foreclosure case, your foreclosure defense lawyer can take advantage of every rule of civil procedure that applies to lawsuits. Your lawyer can conduct discovery, file motions, or even go to trial for you. Alternatively, your attorney can negotiate with the lender on your behalf to get the most advantageous resolution.
To illustrate the different ways foreclosure may be avoided, here are some of the most common ways of addressing unpaid mortgages. In some cases, the resolution may involve using two or more of these tools together.
Forbearance is a temporary reduction or suspension of mortgage payments. This option gives you time to overcome the issues that caused your inability to make payments, but does not necessarily resolve any delinquency. Forbearance is one of the tools used as part of the federal response to Covid-19 homeowner issues. However, because the delinquency is not resolved, you may end up owning a balance after forbearance is over. To resolve your post-forbearance balance, you will have to pay a lump sum or structure a payment plan to repay missed amounts until you get caught up. It is important to know your rights and options after forbearance.
A mortgage or loan modification is a change in your mortgage loan that enables you to make up missed payments through any number of mechanisms. A typical mortgage modification will extend the payment terms, lower the interest rate, and add any unpaid amounts due back into the principal balance of your loan. There are obvious pros and cons to a mortgage modification that you must consider before exploring this option. For example, while a mortgage modification may lower your monthly mortgage payments, it may also increase the principal balance of your loan. As a result, you may pay more interest on your loan.
Sometimes lenders will agree to set up a repayment play through which you can make up your unpaid amounts over a longer term. This is a less common resolution, but is something that some lenders and mortgage servicers offer.
A partial claim is a tool used for FHA-insured loans in which the borrower receives a second loan (typically interest free) that enables them to become current on the primary mortgage. If you have a conventional loan, your lender may utilize an advance claim, which is similar. However, these workarounds are difficult to qualify for, and thus rarely are a viable option. Your foreclosure defense lawyer can help you determine if you are eligible for this option.
Occasionally, but not often, a lender will agree and waive a payment to get you current on your loan. The term that applies to this action is debt forgiveness. Typically, any debt forgiveness comes after you have established a positive payment history on a loan modification. However, any debt forgiveness is usually at the discretion of your lender, so make sure you review any fine print related to any forgiveness claims.
If you have sufficient equity in your home, the lender may agree to refinancing that increases the balance of your loan to cover back payments and re-amortize the loan over the payback period. Or, depending on the delinquency, you may be surprised to find out that you can refinance the loan with a third party.
In some cases, you may be able to deed your home to the lender to satisfy your mortgage obligation. You should only take this action directly with your lender or servicing company. Do not ever deed your property to any other company or individual. A deed in lieu of foreclosure may have tax implications that a foreclosure defense lawyer can help you consider.
Selling your home on your own may be a way to resolve mortgage problems. If your home is worth less than the amount you owe on the loan, the sale might be a short sale (selling the property for less than it’s worth), which requires approval of the lender.
If working with your lender does not yield a satisfactory solution to avoid a foreclosure action, or you don’t know how to even begin finding a solution, a mortgage foreclosure defense lawyer may be able to help.
After a lender or servicer files a foreclosure action, your only option is to defend against and stop the foreclosure, which is a judicial process in Kansas. In a foreclosure action, the lender files suit against you as the borrower, seeking judgment for the amount owed plus the right to foreclose the mortgage on your home. A foreclosure action eventually results in a judgment against you, and later the sale of your home by the lender to pay the judgment. But you can defend against the action, just like any other lawsuit. You can file motions, take depositions, or even go to trial.
Defending against a foreclosure action requires representation by an experienced mortgage foreclosure defense lawyer. Sloan Law Firm attorney Tai Vokins has more than a decade of experience fighting big banks in court. The rules that apply to the court process are complicated, and so are the laws and procedures that apply to the foreclosure action.
If you are sued, do not ignore the lawsuit. If you do not defend against the action, judgment will be entered against you, and you may lose your home. You also may face a monetary judgment if your home doesn’t sell for enough to cover your debt. You should not take those risks if your lender files a foreclosure action. Instead, talk with a lawyer with experience to stop foreclosure.
For additional information about foreclosure court actions, please read our blog article, What Does a Foreclosure Defense Attorney Do For You?
From our Sloan Law Firm offices in Topeka and Lawrence, we assist clients throughout Kansas with mortgage avoidance and defense to stop foreclosure. We invite you to contact us by calling (785) 357-6311 or using our online contact form.