Foreclosure and Loan Modification Blog

The unofficial definition of a deficiency judgment, sometimes called a mortgage deficiency judgment, could be something like: “…When your former mortgage lender won’t let you go.” Unfortunately, the real answer is a little more complicated.

If the unthinkable happens and you lose your home to foreclosure sale, there could be two outcomes. The first outcome is that the lender receives the amount of money you owe on the mortgage. In a perfect world, your house is worth $100,000 and it sells at foreclosure auction for at least $100,000, then your mortgage lender is just a bad memory (maybe).

If you were to believe everything you've ever heard, stepping on a crack would result in your mother's broken back, and you'd be more golden than King Midas based on all the pots you would have collected at the end of rainbows. However, these myths are just like many of the foreclosure myths, simply untrue. Recognizing some of the crazier myths has always been easy, but many of the foreclosure myths seemingly have merit. In the quest for the truth, some of the most common foreclosure myths are put to the test. In true myth buster fashion, the following information features foreclosure myths tested, tried, and ultimately debunked.

MYTH #1

My credit will be damaged forever.

Although a foreclosure will have a negative effect on your credit score, you can recover. Today's borrowers can be approved for FHA loans in as little as one year after a foreclosure. However, you can't have any other derogatory marks on your credit report at the time.

By John Voket, RISMedia Columnist

In a previous segment, I touched on several options for mortgage holders who are underwater. Then I ran across some particularly timely information courtesy of Anna Kerr of Refinanceitt.com, an online refinance loan company in Schaumburg, SC.

Kerr says if you are lacking behind in the mortgage and are not able to qualify for loan modification or some other kind of payment, you should opt for mortgage modification.

Home loan modification permits the consumer to interact with the lender and avail the desired loan terms and conditions. According to Kerr, you can state your preferences, which will enable you to pay the loan with ease and comfort.

She says chances are the lender will either decrease the mortgage modification rate, which will in turn decrease your payment per month, or give an extension in the loan term and be assured that the dues are included in the main balance of the loan.

Kerr says you begin by calling up the lender or the present mortgage service provider who has been given rights by your lender. Before contacting your lender, however, keep in mind three important things.

Here's something that probably didn't make your local news: David J. Stern, the so-called "Foreclosure King" will more than likely lose his law license and will have to pay a $50,000 fine to the Florida Bar. This follows an extensive investigation and civil suit from the Florida Bar Association. While the fact is that this is the only court decision against Stern himself thus far (his companies, however, have been sued several times, and one of his companies is in the process of suing Stern for $60,000,000) surely pleased Stern, the big banks, and their cronies, it's a slap in the face to every homeowner in the nation, not to mention the homeowners in the Sunshine State who were torched by his firms' actions. 

Who is David J. Stern?

If you're not familiar with David J. Stern and the impact he's had on the state of Florida, imagine if most of the court cases in one state (the nation's 4th most-populated state, at that) were controlled by a single law firm. Now imagine if this law firm was run in the most greedy and apathetic, but least efficient manner possible. Imagine that this law firm found several ways to make a mockery of everything the legal system stands for- from missing court appearances, to forging important documents, to blatantly disregarding the most basic laws that applied to its cases. Then imagine if these improprieties didn't only cost years worth of time and resources for the legal system and the taxpayers that finance it, but they also cost thousands and thousands of families their homes and livelihoods.

Disclaimer: These results should not be taken as a guarantee, as each case is unique. We have helped over 5,000 homeowners, here is one of their stories.

This New Jersey homeowner was picking up the pieces after a divorce and could no longer afford his home. Worse, he missed out on a previous loan modification offer from Bank of America due to confusion about the documents he received. By the time he retained us in June 2013, he was already 39 months behind on his monthly mortgage payment of $2,701.43, and was in grave danger of foreclosure. Who's to say why Bank of America hadn't filed the foreclosure lawsuit yet, but after 3 years of missing mortgage payments, it is inevitable.

Immediately after the homeowner signed his retainer agreement, we began working with him to gather documents that are necessary to create a new loan modification package. This diligent homeowner was so organized that we were able to submit his loan modification package to Bank of America by the start of the following month, July 2013. After 3 months of staying on top of Bank of America's notoriously flaky loan modification department, we obtained a permanent loan modification offer from Bank of America. His payment would be lowered by over $450 monthly to $2,244.48 and his interest rate would be dropped from 5.50% to 4.75%. Best of all, the loan modification took about 3 months to complete, even with Bank of America's terrible record of helping troubled homeowners, and the threat of foreclosure on his home had been completely avoided.

If an industry insider was asked to compare the way big banks have handled the foreclosure crisis to the movies, he would not think of the highly coordinated drama of a war epic, nor would he mention the selfless heroism shown in superhero movies. Instead, he would probably compare the banks' ways to the silent ineptitude of the Marx Brothers or Charlie Chaplin; or even the destructive buffoonery of the Three Stooges.

Your Mortgage Lender Loves Slapstick Comedy

Unfortunately, the way the banks have dealt with people's homes- and by extension, their very livelihoods- is no laughing matter. Hundreds of thousands of people have lost-and are still losing- their homes because they don't know how to fight against the banks, even when the banks themselves don't have a proper handle on the foreclosure cases they've been filing.

By John Voket, RISMedia Consumer Confidant

With the uptick in mortgage and loan fraud in recent years, we tapped the Federal Trade Commission and continue our look at the agency's list of red flags to help you stay safe from scam artists and fraudulent mortgage or loan purveyors.

Disclaimer: These results should not be taken as a guarantee, as each case is unique. We have helped over 5,000 homeowners, here is one of their stories.

A retiree retained our law firm in mid-2012, he was over 2 years past due on his $900.00 mortgage payment to Selene Finance, and had already undergone several lifetimes' worth of trouble with various mortgage lenders. Our lawyers were able to save his home and he is enjoying his retirement in peace.

This homeowner had experienced a laundry list of problems with his subprime mortgage; his mortgage had been transferred between several different banks and servicers since 2006. One of the mortgage companies attempted to foreclose in 2009, but it was delayed because they didn't have the original mortgage paperwork. The homeowner had been served foreclosure just before he retained us.

If you are going through the foreclosure process, or if you are in danger of foreclosure, this can be a very daunting time. The whole process can be confusing and a bit intimidating. It is times like these that you need someone on your side who will really fight for you. The current housing crisis has spawned a number of “foreclosure specialists” who will offer a free foreclosure consultation but little else. 

They have great sales pitches and promise to keep you in your home, but once you sign on the dotted line and hand over your hard-earned money, not much else happens. Most of these companies seem more adept at marketing their services than keeping people in their homes. 

Chances are, there are real vampires in your neighborhood right now, and no silver bullet can stop them.

Vampire foreclosures are a real phenomenon that is sweeping the nation. The term was coined by housing statistics provider RealtyTrac to describe homes that are being lived in by the original homeowners, but have been seized by a bank. According to RealtyTrac, 250,000, or nearly half of all bank-owned homes fall within this category, and this number won't be falling anytime soon, although these homes will eventually have to hit the market.

Zombies and Vampires Are Everywhere 

If you're familiar with housing lingo, you may be wondering if these vampire foreclosures are the same thing as "zombie" foreclosures. They aren't. Zombie foreclosures are foreclosures in which the homeowner abandons the home after a foreclosure sale date has been set, only to find out that the house never was sold or the title was never transferred over. This means that fees such as homeowners association fees, maintenance fees, and property taxes are still piling up on the property, which eventually wrecks the original homeowners' credit. There are tons of zombie foreclosures too: all in all, vampire and zombie foreclosures make up about 67 percent of all foreclosures.