The foreclosure process and how to avoid foreclosure is tough to understand and master, even for a lawyer.
For instance, court procedures vary from state to state, and even from court to court. Also, non-judicial foreclosure procedures are often entirely different in different states.
If you wish to fight foreclosure or avoid foreclosure in the first place, you’ll need to understand how to file documents with the court, rules of evidence, and more.
An experienced and competent foreclosure lawyer will assist you in following the rules and advise you of your various options.
For instance, a lawyer can assist you to avoid foreclosure altogether by working out a “loss mitigation” option (like a loan modification), representing you throughout the foreclosure action, or helping you to save your home in a Chapter 13 bankruptcy.
A lawyer will work together with your loaner to avoid foreclosure.
If given enough time, a lawyer could be ready to work out a deal with the bank to avoid foreclosure.
Here are examples of ways in which a lawyer will facilitate that and avoid you going to court.
Help you modify your loan
A loan modification is an agreement between the borrower and the loaner that changes the original terms of the loan. Your lawyer will assist you in the loan modification method.
“(Note that some states, like California, do not permit a lawyer to just accept payment until after the lawyer has absolutely performed each and every service associated with a modification that he or she was contracted to perform or represented that he or she would perform.
Cal. Civ. Code § 2944.7.)”
A modification may lower the rate of interest or extend the amortization term.
However, your foreclosure lawyer should also review the conditions of any modification that the investor offers you.
He or she is going to examine the documents to make sure there are no illegal charges – like improper fees or advances – added to the full balance. This ensures the modification is in your best interest.
Your lawyer will inform you about loss mitigation options. Certain types of loans, such as Fair Housing Administration (FHA) loans, have special loss mitigation options. These allow you to bring your balance into good standing. For instance, you may qualify for a “partial claim,” which could be a particular sort of loan that may bring your payments up to date.
However, not all lenders can allow you to realize every possible option.
On the other hand, your lawyer will advise you about the available options.
Ensure that the loaner follows the rules
Lenders aren’t always helpful when it comes to processing loan modification applications. This is despite federal (and generally state) law mandating strict requirements for lenders.
A lawyer will ensure that the loaner follows all of the relevant laws and processes your application promptly.
Under federal law, if you submit a complete loss mitigation application more than 37 days before a foreclosure sale, the servicer should consider the application and provide you time to reply to a proposed option before it can ask the court for a foreclosure judgment or order of sale, or conduct a foreclosure sale.
Your lawyer will help you to recognize if the loaner violates any relevant laws. They may assist you to enforce your rights and potentially avoid foreclosure.
Similarly, your lawyer represents you during foreclosure mediation.
Some states offer foreclosure mediation. Here, the homeowner and the loaner come together to try to work out an alternative to foreclosure.
Your lawyer will represent you in the negotiation method to confirm that the bank treats you fairly.
Defenses a lawyer will raise in court to avoid foreclosure
A lawyer may be able to raise certain defenses or illustrate errors that the bank made during the process.
Potential arguments can include:
- the loaner or mortgage servicer (on behalf of the lender) broke the loan contract by, for example, failing to accept your payment (read regarding common servicer errors)
- the foreclosing party can’t prove that it owns the mortgage debt
- you’re an active military member entitled to protection against foreclosure under the federal Service members Civil Relief Act
- the loaner failed to follow correct foreclosure procedures under state law
If your attorney raises a legitimate defense to avoid foreclosure and if the court agrees with the argument, the loaner may consider a settlement or the court may dismiss the foreclosure.
Help You File for Chapter 13 Bankruptcy
Filing for Chapter 13 bankruptcy may be a potential solution if your investor won’t modify your loan, or if your pockets aren’t deep enough to fund a costly legal battle.
If you qualify, you’ll keep your house and your arrears current over a period of three to five years. (For additional info, see Secured Claims in Chapter 13 Bankruptcy: Am I able to Catch up on My House or car Payment?)
How to avoid foreclosure – questions for your lawyer
- Do I have any defense against foreclosure?
- How long can the foreclosure process take in my case?
- Are you able to help me to work out an alternative to foreclosure with my lender?
If you need any further information regarding foreclosure, please do contact a learned lawyer.