FORECLOSURE DEFENSE

So, you have fallen behind on your mortgage payments for one reason or another.  And now, your mortgage holder has filed a lawsuit, or is threatening to file a lawsuit, seeking to foreclose on your home.  You feel helpless.  But, you are not.  You do have options.  You do have some decisions to make. 

First, the mortgage company, if they did everything right, holds a secured interest in the property.  By that, I mean, you owe a debt and that debt is secured by collateral, usually the property itself.  Your first decision is not an easy one, but it is one that must be made: Do you want to keep the home?  If the answer is NO, then your next choice is how you wish to handle the transfer of the property.  If the answer is YES, there are strategies that may be able to accomplish exactly that.

Let start with NO and work our way to YES.  If you wish to be out from under the obligation and give up the home, there are multiple ways to do so.  One way is to allow the foreclosure suit to proceed and negotiate with the mortgage companies' army of lawyers.  This would most likely end with the mortgage company taking possession of the home, selling it at an auction for a low price, and then pursuing a judgement against you for the difference, plus the amount of fees the company incurred.  Not usually the optimal result for you.  

Another way is to delay the foreclosure and sell the home privately.  This could have a variety of outcomes.  If the home sells for more than the amount of the secured debt, you could end up with money in your pocket.  If it doesn’t you still could see the mortgage company, try to secure a judgement against you.  Every situation is different.  The Fresh Start Lawfirm, LLC, works with local real estate professionals who can guide you through the sale process.   

Generally, the mortgage company is in the business of servicing mortgages, not in the business of owning and selling real estate.  They want the loan paid back, not possession of property.  There is a pretty good chance they are going to be cooperative if the plan will lead to satisfaction of the obligation in full.  To sell the home for less than you owe, referred to as a “short sale”, you will need to work with them to some degree and you would likely owe the difference.   

A third way to surrender the home is through Bankruptcy.  In Bankruptcy, the debtor, with Court approval, determines if they wish to surrender secured property and then is generally entitled to a discharge of the legal obligations, or a financial fresh start.  Often, this is the strategy that many people choose because the fresh start is appealing.

If your answer to the earlier question is YES, you want to keep the property, there are ways to do so.  Bankruptcy is an option and the modification of the mortgage terms through mediation is a possibility.  Negotiating with the mortgage company while the threat of bankruptcy looms can be effective strategy, especially if you are now in a position to catch up.   

Consultations are free if you want to discuss the details of your personal situation.