Foreclosure defense

The biggest mistake you can make when your lender threatens you with foreclosure or serves you with papers is to do nothing.

If you face foreclosure, we can help you by defending the action brought by your lender and by discussing the possible countersuits that may be pursued under the federal Truth in Lending Act (TILA), the federal Real Estate Settlement Procedures Act (RESPA), and under the federal and Florida Fair Debt Collection Practices laws. TILA and RESPA both contain provisions regarding the documentation of your mortgage loans and violations of these laws on the part of your lender may entitle you to damages, whether or not you are currently in foreclosure.

We can review your loan documents from your original closing and any subsequent refinances carefully, and we also review the calculations on your mortgage accounts to determine if the payments you made were properly applied.

If the lender or servicer has misapplied your payments or cannot prove the chain of ownership of your note and mortgage, we can raise challenges to their foreclosure action.

Being proactive with help from qualified legal counsel can lead to a settlement with your lender or just allow you to stay in your home longer without making mortgage payments while you determine your best options.

Short sale

A short sale is the process by which a homeowner sells his or her home for less money than is owed on the mortgage or mortgages. The term short sale refers to the short payoff that the lender agrees to accept for release of its lien on the property and for a full settlement of debt. The homeowner seller does not receive any funds from closing and closing costs such as real estate commissions, document stamps, transfer taxes, and title insurance premiums are netted from the purchase price. The lender must approve the purchase price as well as the net figure it is to receive upon closing.

The homeowner must submit the short sale offer as well as documentation of the homeowner’s hardship to the mortgage lender or bank. The homeowner must also submit financial information to begin the process to approve the short sale. Once the homeowner has provided the entire short sale package, the lender determines whether it will actually take a loss or write-off on the mortgage because the value of the home has fallen below the mortgage balance and because the homeowner is in a poor financial condition that will not allow him or her to continue to pay on time. If the bank approves the short payoff of the mortgage, the home can be sold for a lower price, the mortgage lien is released, and the foreclosure process stops.

Most short sales are done on properties in with mortgages that are in default. This means the homeowner is at least three payments behind and the foreclosure suit may have been filed by one of the mortgage lenders. Recently, more mortgages that are simply behind or in default are considered short sale candidates without actually being in foreclosure. Also, the homeowner typically has negative equity or no equity in the home. In other words, the total balance owed on the mortgages is equal or greater than the price at which the house can be sold.

Homeowner benefits of a short sale

A short sale relieves the stress of foreclosure. A short sale also gives homeowners a mitigation tool by eliminating a large mortgage payment and giving them the financial opportunity to move on with their lives.

A common saying is that banks are in the business of lending money and do not want to own real estate. This is slightly misleading but is essentially true. When a bank takes a property back via foreclosure, it is a long and expensive process and often results in holding the property in its inventory as a non-performing asset. Banks have a limit to the amount of non-performing assets they want to hold.

Will a short sale save my credit?

Yes and no. A short sale is often only available once the homeowner has defaulted on a mortgage payment. This default is reported to credit bureaus, which damages your credit. However, your situation will get much worse if you allow the foreclosure to continue and do not pursue a short sale of the property. If you can complete the short sale before the foreclosure takes place, then you can prevent further damage to your credit. Note that while a short sale is pending, the lien holders are not prohibited in any way from continuing to pursue foreclosure on the property or judgments against you, and many will because of the potential that the short sale could fall through.