Foreclosure and Loan Modification Blog

Disclaimer: These results should not be taken as a guarantee, as each case is unique. We have helped over 7,000 homeowners. Here is one of their stories.

A recent client of our law firm, who I'll call Ms. Garcia to protect her privacy, nearly lost her home in Hudson County, New Jersey after she fell behind on mortgage payments to SLS following the death of her husband.

In June of 2015, Ms. Garcia was served a with a foreclosure summons and complaint, which meant that she was being sued and was the defendant in a civil lawsuit. This is the way it works in states with a judicial foreclosure process. The plaintiff (the party suing) was HSBC.

By June of 2016, an order of summary judgment had been entered, which meant that the lender could request a Writ of Execution, and a sale date to auction off her home at anytime.

Disclaimer: These results should not be taken as a guarantee, as each case is unique. We have helped over 7,000 homeowners, here is one of their stories.

Being really, really, really far behind on your mortgage doesn't necessarily mean that you can't get a loan modification and keep your home. A recent client of our firm is a good example of this. To protect his privacy, I'll call him Mr. Shroff.

Mr. Shroff lives in a nice home, currently valued at about $1 million, in Hilsborough County, FL with his wife and son. He is self-employed. A downturn in his business caused him to fall behind on his mortgage during the recession in 2009.

Eventually Mr. Shroff's financial problems cleared up and he was able to make payments again, but by then, his mortgage servicer, Ditech, wouldn't let him make payments. They wanted him to pay all of the missed payments plus fees, which ended up being an astounding $191,140.06. He didn't have that much cash, so he stayed in default.

If you miss mortgage payments, or pay less than what is required, then you're in default on your mortgage loan. Your lender will at some point send you a notice of default letter notifying you that by not paying your mortgage, you're in violation of the terms of the promissory note that you signed and are at risk of losing your home to foreclosure.

If you don't work things out by reinstating your loan (paying the entire amount you're behind), agreeing to a repayment plan, or getting a loan modification, then the foreclosure process will continue.

Further along in the foreclosure process there's another type of default that can happen called a judicial default or clerk's default. A judicial default is a “binding judgment in favor of either party based on some failure to take action by the other party.”

Normally people fall into foreclosure because they don't have enough money to pay their mortgage. But sometimes it's a mistake from the mortgage servicer, not any fault of the borrower, that puts someone into foreclosure. That's the case for a recent client of our firm, who I'll call Ms. Craig to protect her privacy.

Ms. Craig is a school teacher who has owned a home near Chicago, Illinois since 2002. For nearly a decade and a half things went pretty smoothly with her home and finances.

Then in 2016, Ms. Craig filed for Chapter 7 bankruptcy to deal with some debt that was not related to her mortgage. Her home was not included in the bankruptcy and she continued to make her mortgage payments during bankruptcy.

Mortgage Servicer Changed

Also in 2016, the servicing rights to Ms. Craig's mortgage were transferred from Loan Care to Freedom Mortgage. It's a servicer's right to sell the servicing rights to another company if they wish, and the borrower has no say in it.

Servicing is supposed to continue as normal during and after the transfer, but that's not what happened in Ms. Craig's case.

If you're facing foreclosure, and only have a few thousand dollars to your name, is gambling that money by trading stocks or investing in cryptocurrencies like Bitcoin your ticket to big earnings and saving your home? No. There are smarter ways to invest and avoid foreclosure.

Dream Pushers

There is a huge industry that sells the dream that anyone can make a bunch of money speculating in stocks and securities. They make it seem like all the cool people are doing it, and they're getting rich. Don't you want to be cool and rich?

Discount brokerages like Scottrade, TD Ameritrade, Etrade, and Robinhood, as well companies providing information, like CNBC and countless newsletters and websites, all market the idea that it's possible for an average Joe with no experience to earn more money trading stocks than with other investments. 

A final judgment of foreclosure is an order in certain states that a plaintiff/bank gets from the court, which allows them to sell a defendant's home for failure to pay the mortgage.

Final judgment of foreclosure is one of the last dominoes to fall before the foreclosure sale, and a big loss for a homeowner who wants to keep their home.

Final judgment can be in rem (against the house), in personam (against the homeowner), or both. If the lender believes there is a deficiency on the in rem judgment because the home won't sell for enough to cover all the money they're owed, they can seek an in personam judgment against the homeowner.

It's back to school time. Kids are getting on the bus, going to class, and doing homework after school, and hopefully you'll find some time to handle your own homework. 

If you've missed mortgage payments, there's no better time than now to try to repair your finances.

If you do your homework, you could ace foreclosure avoidance and keep your home. So sharpen your number two pencils, grab a fidget spinner if you must, and let's do some foreclosure avoidance homework.

Homework Assignment #1: Discover Your Options

In school and in the real world, success depends on good information. So your first homework assignment is to educate yourself on the options available to you. 

When you stop paying your mortgage, you have to find a solution to or else you will eventually lose your home to foreclosure. There are a number of loss mitigation options that could help you avoid that, including:

Select Portfolio Servicing (SPS) is now the biggest servicer of non-agency residential mortgage-backed securities (RMBS) in the country, with 410,286 loans worth $80.03 billion in their portfolio. Previous number one Ocwen falls to second place, and Nationstar follows in the third spot.

Non-agency, or “private label,” backed mortgage securities are created by private entities. They're not guaranteed by the government and often contain higher risk subprime loans from borrowers who couldn't meet agency standards.

So SPS services a huge portfolio of mortgages that have a relatively higher risk of default. Even if only a small percentage of those loans default, there are many thousands of homeowners seeking to work with SPS for an alternative to foreclosure.

If you're behind on your mortgage and desperate to avoid foreclosure, you may find yourself searching for any and all ways, no matter how obscure, that you could improve your situation.

Could there be a way to get a free house through the statute of limitations or a quiet title action, or would suing your lender benefit you in some way? We've covered all of those topics on this blog before.

How about a quitclaim deed? Could that you could make your mortgage problems go away?

In late 2015 a homeowner in Orange County, Florida came to our law firm seeking assistance avoiding foreclosure. To protect his privacy, I'll call him Mr. Hannah.

Mr. Hannah's home is in a great location in central Florida just a few miles from Walt Disney World. But being near the “most magical place on earth” didn't help him when, in 2010, he encountered a hardship and couldn't afford to make his mortgage payments to Wells Fargo. In 2011 he was served foreclosure papers.

By the time we were retained to represent him, Mr. Hannah's home was scheduled to be sold in a foreclosure auction. 

Our client told us that he wanted to pursue both a loan modification and a short sale at the same time. He figured that way if one didn't work out he would have the other option to fall back on. We've heard this from other clients in the past, but it doesn't work like that.