Foreclosure and Loan Modification Blog

Editor's note: This article was originally published March 2013, and has been updated in August 2015.

So you've recently had your loan modification denied and can't figure out why?

You’ve handled tax forms; you’ve filled out car applications, job applications, and credit card applications. And a loan modification is just another application. Are you thinking to yourself: How hard could it be? Unfortunately, a loan modification might be the hardest thing to get approved without the help of an attorney.

Ask yourself this question: Do you know your DTI “debt to income” ratios? Your Net Present Value (NPV) and how to structure it?

What about organizing and keeping track of all of your final loan modification papers to ensure that nothing is left out?

You’ve been served and you weren’t playing basketball. If you’re a couple months behind in your mortgage, you probably knew it was coming. You asked for more time to pay the back mortgage payments. Instead, your lender starts threatening you with the F-word. You have two options when facing foreclosure: let your lender win or hire a foreclosure defense attorney and fight.

The Judicial Foreclosure Process

Whether you live in New York, Illinois, Florida or New Jersey, foreclosures are judicial, which means the lender must file a lawsuit in state court. The court allows a lender to start the foreclosure process after you miss three payments. However, most lenders wait for you to become more than three months behind. How nice of your lender, right?

You are an attorney or you currently work or have worked for a bank and know their guidelines. You already know how many documents will you need to submit to your bank for a loan modification. **Free Amerihope Alliance Legal Services Document Checklist**

You know the general foreclosure laws and procedures in your state. For example in Florida, foreclosures are judicial, which means the lender must file a lawsuit in state court. The lender starts the foreclosure by filing a complaint with the court and having it served to the borrower, along with a summons. If you lose the case your house will be sold to satisfy the debt.

You don't need a foreclosure attorney to prove that the foreclosing party doesn't own your loan. In other words you know that your loan was bundled and securitized. Which means that in a process called securitization, your loan and other loans (includes both the promissory notes and the mortgages) with similar qualities are pooled, and then sold in the secondary market, often to a trust. Basically, securitization takes individual mortgage loans, bundles them into a package, and turns them into marketable securities (called “mortgage-backed securities”) that can be bought and sold. With that being said you believe you have a defense based on the fact that the foreclosing party can't prove that it owns your loan.

If you are struggling to pay your mortgage, it's encouraged that you speak with an experienced and knowledgeable foreclosure defense attorney who can properly inform you of the best solutions for your specific situation. Not to mention that on average, a defended foreclosure usually takes anywhere from one to two years or longer.

Each foreclosure case is different and has complicated nuances that can ultimately make or break the case. For example if you have been served with a foreclosure lawsuit in Florida and New York you have 20 days to file a proper legal response in court. In Illinois, you have 30 days to reply. In New Jersey, you have 35 days. In your reply you can:

• Accept the Claim -OR-
• Dispute the Claim – Perhaps your loan servicer didn't follow proper foreclosure procedures or the foreclosing party can’t prove it owns your loan. Maybe your loan servicer made a serious error with your account such as misapplying funds, failing to credit payments to the account, or charging unreasonable and non-allowable fees. Or you’re in the military and as an active military service-member you have some special protections against foreclosure and have certain rights under the Service-members Civil Relief Act (SCRA). -OR-
• Claim Affirmative Defenses – Which means that without denying responsibility, you may claim that the foreclosing bank had contributing negligence or perhaps there is an expiration of the Statute of Limitations.

Failure to file a legally satisfactory Answer could result in default being entered against you and not being able to fight the foreclosure.

THE EFFECTS OF FORECLOSURE:

Emotional Well-Being Distressed - According to Harris Interactive Poll of persons going through foreclosure 38% are Scared, 35% are Depressed, 9% are Angry, 8% are Embarrassed, and 9% None of these.

Increase of Violent and Petty Crime - According to Neighbor Works America, homes in foreclosure that become vacant provide sites for crime. Lin Cui of the University of Pittsburgh Department of Economics study showed that the rate of violent crime within 250 feet of the property is 15% higher than the rate in the area between 250 and 353 feet from the property.

What does the acceleration of Florida's five year statute of limitations mean? It means that the plaintiff within 5 years after the mortgage loan goes into default is the time that they can sue for foreclosure. But let's say that the court dismisses the action without prejudice. The plaintiff can then pick a more recent breach date (time that loan is in default) and restart the limitation clock. Only if the plaintiff does not file a new action within 5 years of the most recent breach will the Statute of Limitations prohibits the court from hearing the case. However, the 3rd District Court of Appeal in Florida has, since January 2015 a unique yet narrow interpretation stemming from the ruling in Deutsche Bank Trust Company Americas, v. Harry Beauvais, et al., No. 3D14-575 where it deems basically that a dismissal with prejudice merely resets the clock. Please note that there are 5 District Court of Appeals in Florida. Therefore, the jurisdiction your home is in is also a factor.

It is important to know that:

1. Acceleration is a term in a loan agreement that requires the borrower to pay off the loan immediately under certain conditions.
2. The five year Florida statute of limitations period begins when the lender files its first action.
3. Only valid mortgage notes can go into foreclosure.
4. Only a dismissal with prejudice stops the clock for purposes of the Statute of Limitations.

Although the number of Americans behind two or more months on their mortgage payments have fallen below  the 2 million mark for six consecutive months, an estimated 1.89 million borrowers had  serious delinquencies of  60-days+ in August 2014, according to HOPE. It does not matter why you fell behind on your mortgage payments. Unless you negotiate otherwise, you will fall into default on your mortgage loan, which triggers the foreclosure process.

But do you need a lawyer?

Massachusetts is a non judicial (technically, “nonjudicial under power of sale in deed of trust") foreclosure state... Uhm, what the heck is that you ask? Oh, just that lenders can take your home without going through court, or any sort of judicial proceeding. Okay and?! AND, say good bye to any extra time you thought you had in your home, because clearly there will be no pending judicial process delaying your foreclosure... I don't mean to a big ole' foreclosure ogre or anything but that's reality peeps, time to embrace the “it is what it is.”

Foreclosure by sale  

Otherwise know as, “foreclosure under a deed of trust.” which just so happens to let the lenders sell your precious property through a power of sale (unfair much? after all you two have been through, haha they got you! If you didn't already know, lenders have 0 remorse..). Now I'm sure you want an explanation of how this power of sale BS works. Here it goes.....

On July 5^th 2014, we celebrated the 6^th anniversary of Amerihope Alliance Legal Services. That meant celebrating six years of hard work from our team, six years of innovative practices and techniques, and six years of helping homeowner's dreams come true by annihilating the threat of foreclosure.

Although many say foreclosure is on a downward trend/ decline, there are still 794,000 homes nationwide in some state of foreclosure. States including Florida, New Jersey and New York are struggling with the highest foreclosure inventory in the nation. Furthermore, Florida has 116,000 completed foreclosures within the last 12 months. Here at Amerihope Alliance Legal Services we know these numbers are not just two-dimensional statistics, they reflect real people on the track to losing their homes.

There's some “good-ish” news for New Yorkers because early last week, NY Attorney General Eric T. Schneiderman announced the launch of a new New York State Mortgage Assistance Program (“NYS MAP”). This program will create loans of up to $40,000 (not more than) available to homeowners that are hanging on their last thread before foreclosure. The “good-ish” aspect stems from the ability to secure another loan to save your house, which is great don't get me wrong, however, you will be getting ANOTHER LOAN (uhm, even more debt). But then again, I guess incurring more debt is better than losing your house, am I right? Since massive debt has become a concept that's even more commercialized than McDonalds (don't you love them McMuffins?)    

Atty General Schneiderman says,