Defending your home from foreclosure Chapter 13 Defending your home from foreclosure

4 Types of Foreclosures Type #1 -where your city or town tries to seize the home for unpaid property taxes. Type #2 - where someone without a mortgage on your home obtains a court judgment to try to seize your home. Type #3 - where you do not pay your condominium fees and the condominium association puts a lien on your condominium and then attempts to foreclose for those unpaid fees. Type #4-where the lender holding your mortgage on your home seizes your home. (most common)

Your rights in the mortgage foreclosure process: Get preliminary notices Notice of Default- Almost always you will get a notice from the lender or servicer that says you have fallen behind on your payments. Notice of Acceleration- In most states, before lenders can foreclose on your home, they must take a legal step called “acceleration.” Acceleration means that you are far enough behind on your mortgage -- the law allows the lender to treat the whole loan balance as due right away. This will either be due immediately or after the period for “curing” the default has passed.

The right to reinstate and the right to redeem Many states allow you a second chance. In these states you can avoid foreclosure by “reinstating” the mortgage after acceleration. Usually, this means getting caught up on the arrears (missed payments together with foreclosure fees and costs). You can usually stop a foreclosure if you are able to pay all past-due mortgage payments plus certain costs.

Your Rights: How long does foreclosure take? The length of time you have before your property is sold varies a great deal from state to state. A foreclosure can take as little as three months from the time you default to as long as a full year or more. 3-12 months or more.

Your Rights: How does a lender get permission? Some states require the lender to file suit in a court to get permission to foreclose on your home if you cannot work out an agreement with them. Other states have “non-judicial foreclosures.” In these states, lenders can foreclose without a court action and without official permission to go forward.

Your rights in the mortgage foreclosure process The foreclosure sale - The lenders are required to send you a notice of the date and time intended for sale of your property. The sale date is the most important deadline in the foreclosure process because the sale will cut off all of your rights as owner. After the foreclosure sale and the mortgage deficiency or surplus - If the sale does not bring in enough to pay off the lender, in many states you remain responsible for the balance, and the lender can seek a “deficiency.” A deficiency is the remainder due on the loan plus costs, minus the amount the lender was paid from the sale proceeds.

Getting legal advice to stop a foreclosure Foreclosure is a harsh legal process and you should immediately try to obtain legal help. Possible sources of low-cost legal help are the neighborhood legal services office and the bar association panel of pro bono attorneys. Contact a local nonprofit housing organization to find out where a more legitimate source of help for foreclosure prevention counseling. Visit HUD website at www.hud.gov to find a HUD- approved housing counseling agency near you.

Delaying the foreclosure process Foreclosure can move very quickly. One advantage of exercising your legal rights is that you can slow down the process. If you succeed in delaying the foreclosure, you should do everything possible during that time to put money aside toward your mortgage to avoid falling further behind. You cannot properly delay foreclosure just because you need more time. The actions you take must be based on some underlying legal claim or defense that is raised in good faith.

Delaying the foreclosure process Procedural defense may delay the process – examples of these defenses include failure to give the proper notice, failure to give you a fair chance to correct the default, failure to properly advertise the sale, failure to introduce the original documents in the foreclosure proceedings, failure to sue all the proper parties, failure to bring the foreclosure proceeding in the name of the real mortgage owner or discouraging bid at the foreclosure sale. The lender’s acceptance of partial payments may be grounds to delay a foreclosure - If the lender accepts a payment after the foreclosure process, you can argue that you are no longer in default.

Delaying the foreclosure process Asking the court for more time – In two situations the court may delay the foreclosure process: if there is a serious hardship and if there is a substantial amount of equity in the home, which protects the lender against losses on its claims. A chapter 7 bankruptcy may create a temporary delay – If you file a chapter 7 bankruptcy case, you will delay a foreclosure because the automatic stay in the bankruptcy case will temporarily prevent the foreclosure process from continuing. However, because a mortgage loan survives chapter 7 bankruptcy, this will not resolve the problem, only delay it a short while.

Delaying the foreclosure process Filing a chapter 13 bankruptcy may stop a foreclosure permanently if you make retired payments. In chapter 13 bankruptcy, you can cure a default or pay off a mortgage in installment payments over time rather than by having to come up with a lump sum. The filing of your petition in bankruptcy automatically stops most creditor actions against you and your property, including foreclosure, foreclosure sales, and the filing of liens against your property.

If you decide to go to court The automatic stay – With an automatic stay, you can cure delinquent payments and reinstate your mortgage. In Chapter 13 bankruptcy filing a “debt adjustment,” you can “cure” the delinquent payments gradually over a period of years so long as you also keep up on future payments as they come due.

If you decide to go to court Raising disputes in bankruptcy –You do not lose your right to dispute how much you owe, or dispute fraud or unfairness when you walk into bankruptcy court. Sale of a home in a Chapter 13 bankruptcy- You can use the bankruptcy process to sell the home on your own in an orderly fashion, thereby keeping your equity and avoiding the problems of a foreclosure sale.

Your options after the foreclosure sale All is not necessarily lost after the foreclosure sale. You may be able to buy the home back from the purchaser, particularly if the buyer was your mortgage lender. If the house does not sell at the auction, government lenders, occasionally, will be willing to refinance your loan and let you stay in the home.

Your options after the foreclosure sale Redemption and setting aside the sale –In some states, for a very limited number of days after the foreclosure, they will allow you to redeem the home back from the lender. Your rights as a tenant in your own house – If all else fails, you will be a tenant at will in your own home, now owned by someone else. Before they can evict you, in most states, the new owner must follow a temporary federal law that protects certain tenants from eviction.

Foreclosure for unpaid taxes and court judgments Foreclosure based on a tax lien –Once a lien has been imposed, the government may move quickly to sell your house. You probably won’t be summoned to court prior to the sale. (Type #1) Foreclosure based on a judgment lien – A creditor must get a court judgment against you before they seize your home. After that, they can ask the court to sell your home and use the proceeds to satisfy the amount of the judgment lien. (Type #2) Delete?

Foreclosure for unpaid condominium fees If you are having trouble paying the mortgage on your condominium, you are probably also behind on your condo fees. It is important for you to understand the consequences of your overdue condo fees. (Type #3) The condominium association will have collection remedies for failure to pay your condominium fees and may pursue them aggressively. State laws vary in terms of how associations may go about collecting the debt.