You've been served with foreclosure documents and now you're wondering: What's my next move to fight this action? Once you are served with foreclosure papers there are two options. You can be reinstated or you can request a loan modification.
Reinstatement
If you think you may have away to come up with the money you owe on the home you can request a quote from the bank that tells you exactly how much you need to pay in order to be reinstated as the homeowner. It's important to remember that once you are reinstated this does not mean you have paid off your home. You still have to keep making your monthly payments. The reinstatement will also have a due date, and it's good to pay off the delinquent amount well before the reinstatement due date. If you make only a partial payment towards the reinstatement, the lender will reject the payment. See a sample loan reinstatement form here.
Loan Modification
A loan modification changes the terms of your current loan to give you a lowered interest rate or a lengthened loan term to lower your monthly mortgage payment. Loan modification programs offer many options for borrowers depending on personal circumstances and each lender has their own eligibility criteria. These criteria can address the amount the borrower owes, the property being used for collateral, and specific features of the collateral property. In order to be granted a loan modification it is very important to document the exact circumstances under which you fell into foreclosure. If you are granted a loan modification you must carefully review the terms under which the mod has been granted. These terms can be different than your original mortgage terms because the lender will write the modification repayment plan in their own favor.
Beware: Dual Tracking
Dual tracking is when a mortgage servicer forecloses on a person's home while at the same time reviewing the person's loan modification application. If servicers advance a foreclosure while telling the homeowner that they are working on a loan modification this gives the servicer the opportunity to get whatever deal is best for them, regardless of what is better for the homeowner. This would leave homeowners shocked to lose their homes when they thought they were going to be approved for a loan modification. For this reason, dual tracking is now illegal and loan servicers are now prohibited from taking steps towards a foreclosure once the homeowner is trying to secure a loan modification or another alternative to foreclosure.
The servicer can begin foreclosure once the homeowner has been informed that no loss mitigation is available, if the homeowner rejects the loss mitigation offered to them, or if the owner accepts the loss mitigation strategy but then fails to comply with the terms. Just because applying for a loan modification freezes the foreclosure, this does not mean that you can apply for several loan modifications just to buy you more time. The law also prohibits homeowners from filing duplicative requests. In your fight against the foreclosure of your home, dual tracking can be a defense in your lawsuit. That is why it is so important to hire an attorney to handle your foreclosure case, because an attorney will understand exactly how to defend your home against foreclosure and obtain the best outcome possible.
