Foreclosure and Loan Modification Blog

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,

Should have saved this segment for Halloween because deficiencies induce blood-curdling, spine-tingling misery... Too much?!?

DEFICIENCY JUDGMENT?

First of all, a deficiency after foreclosure is exactly what it sounds like, it's when one owes a mortgage lender money after the foreclosure sale of their home because the house sold for less than the mortgage balance (did you think all the debt went kaput after foreclosure, yeah right!).   

For example:

Say the total debt owed is $220,000, but the home only sells for $160,000 at the foreclosure sale. The remainder to be owed back to the lender is $60,000, hence a deficiency.

Yes people, that's $60,000 you STILL have to pay back to the lender, you can't just say ala- kazaam and voila, gone! (If only... I can only imagine being able to do that every month with my credit card statement... anyways that's beside the point...)

Ok, so where were we?... Yes, the flipping horror of a deficiency after foreclosure, hanging above your head like a black cloud, every single day... I mean, in all fairness, it could be worse...? (wishful thinking?)

The nitty gritty is, even if you feel like you can ignore this black cloud, it comes back to haunt you. In some states, “The lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount (in our example, $60,000) from the borrower by doing such things as garnishing the borrowers’ wages or levying the borrowers’ bank account.”

THAT'S NOT ALL:

“What is the difference between a taxidermist and a tax collector? the taxidermist takes only your skin."  

      - Mark Twain

That's right people, today we're going to be talking about taxes (I know you'd much rather stab your leg with a fork, but listen closely, this might change your life).

Let's see how many types of taxes we can come up with real quick..... Sales tax, income tax, social security tax, payroll tax, breathing tax, walking tax, existing tax, occupying space on this earth tax.. Am I missing any? … Oh yeah, almost forgot about PROPERTY TAX. The one tax you thought you could maybe, sorta get away with... Really though? Did you think you could get past uncle Sam that easy... naïve much?

Anyways, as a homeowner, there is one tiny little responsibility that is impossible to avoid, (I mean, other than your mortgage, HOA fees, pool cleaning service, landscaping, whatever else comes with a home... well ok that's more than one thing but bear with me here) and it is property taxes, yet another tax to add to the arsenal of never ending governmental blood sucking.. Alright, alright, so I'm a bit cynical, but hey, I pay taxes just like you.

Like I said, you HAVE TO pay your property taxes (only if you're a homeowner of course, renting doesn't count), whether you want to or not (non-debatable), uncle Sam's got an iron grip on this one. So what happens if by slight oversight (or you willingly outright don't feel like paying them) forget to pay them?..

There's a growing pollution problem in Massachusetts, but for a change, it has nothing to do with the Charles. Many Bay State lenders are saddled with toxic titles in the wake of the “apocalyptic” ruling in U.S. Bank v. Ibanez. That case, decided by the Massachusetts Supreme Judicial Court in 2011, dealt a serious blow to banks involved in the slice-and-dice securitization of residential mortgages which contributed to the 2008 market meltdown. Now some new legislation may fix all that at the expense of former homeowners.

Connecticut may soon become part of another revolution, at least as far as foreclosure law is concerned! Under recently signed legislation, a new foreclosure option could allow homeowners to recoup more of the money they’ve invested in their homes.  

Strict Foreclosure and Foreclosure by Sale

Connecticut’s judicial foreclosure process has traditionally allowed for either strict foreclosure or foreclosure by sale. Under strict foreclosure, courts allow lenders to foreclose on underwater mortgages and receive title to property automatically. A foreclosure by sale is only slightly better; setting the property up for public auction with the hope that the borrower recovers whatever is left over after the debt is paid. Hint: typically not very much.

Not satisfied by such meager offerings, both homeowners and real estate professionals have been calling for something a bit less antiquated. Foreclosure by sale, they argue, shuts them out of the process, leaving borrowers to watch as their home is sold off to the highest bidder, often for far less than it may be worth. Foreclosure by market sale, as the new measure is known, aims to change all that.

I know you've heard the term short-sale before, I mean, after 2008, who hasn't? Yet many of you who have heard the term, don't know what it means or how it works. Basically, a short-sale “is when a bank agrees to accept less than the total amount owed on a mortgage to avoid having to foreclose on the property. This is not a new practice; banks have been doing short sales for years. Only recently, due to the current state of the housing market and economy, has this process become a part of the public consciousness.”

Voila, that is all you need to know about short-sales... End of article here...

Just kidding...

The description above sounds like a no brainer (you already knew that!). However, understanding the elements needed to obtain a short-sale isn't quite like takin' a walk in the park . Although short-sales these days are a common practice, many homeowners are given information that is kinda sorta not true (misunderstandings, myths, fallacies, whatever you want to call it) about short-sales. Now, don't freak out because I've come up with a plan to clear some of those common misconceptions for you, so look below and feast your eyes on what you thought you already knew....But was really just wrong.

I'm going to call this segment... the modern day short-sale fallacies.

Since when have they really been on board with anything not created by them anyhow..?

So what's this law I'm talking about you ask?

The 2012 Massachusetts foreclosure law was predominately designed to help distressed homeowners. It works like this : The law allows nonprofit organizations to buy homes that are foreclosed, after buying the foreclosed properties, the nonprofits sell back the homes to the homeowners that originally lost the homes to foreclosure. Better yet, because the nonprofits tend to buy the homes from the lenders at their current market values, they can sell the home with a restructured loan (one the buyer can very much afford) and give it back with a modified loan agreement. The ultimate goal is for homeowners to keep their homes at affordable rates.     

How selfless of Massachusetts to want to implement such a life changing concept. You can bring out the tissues... now!

However, like Murphy's Law goes, anything that can go wrong will!

And what can go wrong with this?

If you're not quite sure what eminent domain is, or if you just forgot, then let me refresh your memory. Eminent domain is “The compulsory purchase (as in, required by law, obligatory, mandatory, or in other words AGAINST YOUR WILL) to take private property (in this case your home) for public use by a state or national government. However, it can be legislatively delegated by the state to municipalities, government subdivisions, or even private persons or corporations when they are authorized to exercise functions of public character.... I don't know about you, but being forced out of my home by the government doesn't seem like a great idea to me, and now New Jersey homeowners are on boat with (a watered down version of eminent domain) to (possibly) save them from losing their homes? Are you seeing an awkward paradox here...? (WHAT THE HECK NEW JERSEY?!).

Ok, ok, let's stop the dramatic antics, even though eminent domain (in its natural definition) sounds sadistic and sinister, Newark, New Jersey's government is planning to use it for homeowners' benefit. Apparently, there is a new process in the works that would “allow the township to seize underwater mortgages and restructure them on behalf of homeowners to make payments more affordable.” Hmm, sounds intriguing, what else?

You can take that with a grain of salt...

ILLINOIS IS MAKING IT HARDER TO FORECLOSE? IS THERE A CATCH OR...?

According to the high and mighty and all so reasonable Supreme Court of Illinois, the new foreclosure rules, effective as of March 1, 2013, basically take a load off from the soon (or not soon) to be foreclosed homeowner.

Some of the new legal mambo jumbo (aka rules) include;