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foreclosures

6 Ways to Stop Foreclosure

There are several ways that homeowners can help guard against foreclosure so that they can keep their homes and avoid the negative consequences of this action.

Reasons for Foreclosure

When a person acquires a mortgage on his or her property, the loan is secured with the mortgage. If the person gets behind on the payments or otherwise fails to meet his or her obligations under the mortgage contract, the lender can take steps to foreclose on the home.

Consequences of Foreclosure

In addition to losing the residence, the homeowner faces many additional consequences if the property is foreclosed upon. The homeowner can be charged for the expenses related to dispossession and other charges allowed by law. In many states, the lender can still pursue a deficiency judgment for any difference between the amount owed on the loan and the sale price. Additionally, the homeowner’s credit will likely be significantly impacted by this event.

There may be several options available to avoid foreclosure depending on the circumstances, including:

Foreclosure Settlement

Rather than selling the house at auction, the bank may be willing to work out some type of settlement that will allow the homeowner with the loan. In Florida, this usually happens before or during the lawsuit that is filed.  It is always a good idea for homeowners to act sooner than later if this is their goal.

Loan Modification

The lender may agree to modify the loan rather than foreclosing the property. A loan modification can make an existing loan more feasible by resulting in lower monthly payments, lower interest rates, more time to pay or unpaid payments added to the back end of the loan. In some loan modifications, the amount of the loan may be reduced. The lender may be more willing to work with a homeowner who has taken additional steps to try to meet the financial obligation, such as reducing other expenses or getting an additional job.

Deed in Lieu of Foreclosure

A deed in lieu of foreclosure results when the person whose name the home is in voluntarily signs the deed to the property back over to the lender. This can help the homeowner avoid the additional expenses related to foreclosure and the public nature of the proceedings. There are some disadvantages to this approach, so it is important that a person in this situation seek legal counsel.

Short Sale

One common way that a person can avoid foreclosure is by having a short sale of the property. Many lenders during the real estate crisis used short sales as an exit plan so that they would get more proceeds from the sale of the house than they would have received through a public auction. Once the homeowner receives a Notice of Default or otherwise suspects that he or she may have trouble meeting the obligation, he or she may consider a short sale. A short sale occurs when the homeowner sells the property for less than the current value of the property. The lender may agree to this arrangement rather than having to proceed with a foreclosure. However, the lender may still be able to seek a deficiency judgment for the unpaid portion of the loan. Some states do not permit this while others do. Individuals who are considering a short sale should be careful to negotiate an acceptance by the lender of the purchase amount and to accept it as payment in full. Even with this scenario, there may be tax implications to a short sale, so it is important

Bankruptcy

Filing bankruptcy can sometimes help avoid bankruptcy. When a person files bankruptcy, an automatic stay is issued which prevents further collection efforts. Therefore, a bankruptcy works to effectively freeze a foreclosure. However, the homeowner may still wind up losing the home in the bankruptcy proceedings if he or she cannot show that the debt can be repaid. So bankruptcy often works as a mere delay of the foreclosure. However, during bankruptcy, the debtor and the creditors may be able to work out an arrangement that will allow the debtor to repay some of the loan. The secured debt has priority over unsecured debts. Bankruptcy has many ramifications of which the debtor should be aware and seek counsel.

Hiring a Foreclosure Defense Attorney

Individuals who believe that they may be in fear of a foreclosure may wish to contact a lawyer. A real estate lawyer can help explain the process of foreclosure and evaluate the individual’s circumstances to determine whether there are any alternatives to foreclosure. He or she can explain the pros and cons of these potential alternatives.

Source: HG.org

3 Foreclosure Myths That Can Cost You Your Home

by Stefan McHardy, Esq.

For anyone faced with the prospect of losing their home to foreclosure, the pressure alone is enough to drive you up a wall.  Now throw in the reality of it all; the high-powered bank suing you in court (if you live in a judicial foreclosure state, that is), their high-priced lawyers, and the convoluted mess of a system we've come to know as the loan modification process.

Now I can very easily start out by claiming mistake number one is not hiring an attorney to represent your legal rights, etc., etc., etc.  But, besides being far too cliché for anyone's liking, the simple fact is this: it’s your home and however you choose to defend it is up to you.  There aren't many countries in the world that give you the rights to defend yourself and your property as this one.  But for the record, you should at least consult with a foreclosure defense attorney.

With that said, if you're going to get all Matthew McConaughey/Lincoln Lawyer about it, then at the very least give yourself a fighting chance and proceed in an informed way.  Lets bust a few myths.

Myth: If I'm Doing a Loan Modification They Can't Sell My House at Foreclosure Auction.

Yes they can.  Unless you have a court order, signed by a Judge, ordering that foreclosure sale canceled, the foreclosure sale will not be stopped simply because your modification package is under review.  The loan servicer that is reviewing your application is under no legal obligation to ask the court to cancel the foreclosure sale.  It's up to you, to notify the court by filing a motion and setting a hearing.  Once you get in front of the judge for that hearing, then you can bring it to his or her attention that the loan modification application is still pending review and that you would like the foreclosure sale canceled.

Now, I know many of you who have been through this are saying that you've had the bank's lawyers cancel the sale for you.  Well, congrats to you.  You have the friendliest opposing counsel the bank's money can buy.  But, if your legal strategy is to depend on the kindness of the lawyer who is being paid to take your house, then my friends, you have a tougher road ahead of you than you think.

Myth: If I'm Doing a Short Sale They Can't Sell My House at Foreclosure Auction.

Again, not true.  And if your realtor tells you this, then shame on you for taking legal advice from a realtor.  Unless your realtor just happens to also be a seasoned, skilled, and [quite charming] attorney. In that case, this savvy realtor-lawyer would never tell you such a thing.

Short Sales, much like loan modifications, need to be negotiated with and approved by the lender.  In fact, if you've ever seen the paperwork you have to fill out for a short sale approval, it is virtually identical to the loan modification paperwork.  And just like the above myth with the loan modification application, it's not a guarantee or a requirement on the part of the bank to cancel any upcoming sale just because your application is pending approval or currently listed for [short] sale.  And more importantly, the clock is always ticking; meaning, if your home isn't selling, or isn't getting approved for short sale, even the most patient of judges will eventually tell you it's "too little, too late."

Myth: Filing Bankruptcy Will Stop The Foreclosure.

Well maybe you're a better Lincoln Lawyer than we all thought because you are distorting the word "stop" more than Bill Clinton distorted the word "relations".  Although bankruptcy can delay foreclosure, if done correctly, that alone will certainly not make the problem go away.  What you are actually doing here is having the foreclosure delayed in state court while a federal judge in the bankruptcy court weighs the merits of your bankruptcy claim. (So now you are taking on a federal court case as well, Lincoln Lawyer.  Time to increase your retainer fee!).  If the federal court determines that you do not qualify for bankruptcy, or if your case is dismissed for any other reason, then the state court will reset your foreclosure sale date.

I'm not saying it's impossible to get out of trouble if you go about a bankruptcy correctly, but quite honestly, federal bankruptcy court is not a playground for the inexperienced.

-Stefan McHardy, Esq.

Florida Foreclosures Decline by 41,000 in One Year

Florida Foreclosures still rank at the top of the national heap when it comes to completed foreclosures.

Lenders closed on 66,071 Florida Foreclosures during the 12-month period ended in April, accounting for 14 percent of all seized properties in the U.S., data provider CoreLogic said.

That was nearly 20,000 more Florida foreclosures than second-place Michigan, but it was also 41,435 fewer than the previous year's foreclosures in Florida.

Florida Foreclosures tied for fourth in the total percentage of distressed properties, with 2.0 percent of the state's homes in some stage of the foreclosure process.

Florida foreclosure inventory is down from 2.9 percent over the year, but it remains nearly double the U.S. average of 1.1 percent.

Nationwide, 461,615 foreclosures were completed nationwide in past year.

When it comes to Florida foreclosures, 4.6 percent of all home mortgages are considered seriously delinquent – at least 90 days past due – which was the third highest rate in the nation. But that declined from 6.5 percent over the year.

Those homeowners are considered most at risk to fall into foreclosure.

The U.S. rate was 3.0 percent, the lowest level since October 2007.

"The recovery in home prices and improved labor market have contributed to the drop in seriously delinquent rates," said Frank Nothaft, chief economist for CoreLogic. "Over the 12 months through April, the CoreLogic Home Price Index for the U.S. rose 6.2 percent and the labor market gained 2.6 million jobs. We also found that the seriously delinquent rate fell by about three-quarters of a percentage point."

New Jersey led the nation with a foreclosure rate of 3.7 percent, followed by New York at 3.2 percent and Hawaii at 2.2 percent.

Copyright © 2016 Sarasota Herald-Tribune, Fla., John Hielscher. Distributed by Tribune Content Agency, LLC source

 

OCWEN Ordered to Stop Foreclosures for Failure to Comply With National Mortgage Settlement

After posting a massive loss for the first quarter of 2016, the nonbank has run afoul of the terms of the National Mortgage Settlement and is now forbidden from taking foreclosure actions on more than 17,000 loans.

According to Joseph Smith, the monitor of the National Mortgage Settlement, Ocwen is not yet back in compliance with one of the performance metrics of the National Mortgage Settlement that it failed in the second half of 2014.

According to Smith, Ocwen has not fully remedied the issues that led to the compliance failure.

Smith’s office stated that Ocwen “was delayed” in implementing its Corrective Action Plan for the failure of Metric 31 because of “difficulties in resolving the technical issues that led to the original fail.”  And because of those issues, Ocwen must place 17,496 loans that "could have been affected" by this issue on foreclosure hold. 

“While Ocwen has made progress toward correcting a number of past fails, it has not resolved its issues that led to its failure of Metric 31,” Smith said.  “Therefore, I will not allow Ocwen to move forward with foreclosures on any borrowers who could have been affected by this failure until each of these borrowers has correct information and a chance to appeal,” Smith continued.

According to Smith’s office, the hold will not be lifted until every borrower who could have been affected gets correct information and a chance to appeal.

Smith’s office stated it recently received and approved Ocwen’s Corrective Action Plan for Metric 31, and that Ocwen has implemented the plan.

Smith said that if his office determines that Ocwen’s CAP has indeed been implemented, testing of the issue will resume in the second quarter of 2016.

“Despite its progress, Ocwen continues to have work to do,” Smith said. “I will continue my efforts to review Ocwen’s compliance with the NMS and resolve any outstanding issues. I will report to the Court and the public on these efforts in the coming months.”

But it’s not all bad news for Ocwen in the eyes of Smith and the NMS.

Smith’s office stated that Ocwen has provided 23,000 borrowers with more than $2 billion in consumer relief, which fulfills its consumer relief obligation under the NMS.

“As a result of my review of the (Ocwen’s internal review group’s) work papers for Ocwen’s claimed consumer relief credit through Sept. 30, 2015, I have credited Ocwen with $1,246,442,217 toward its consumer relief obligation,” Smith said. “In total, I have credited Ocwen with $2,127,661,401 in consumer relief credit and have determined that Ocwen has exceeded its consumer relief obligations.”

Smith also stated that Ocwen did not fail any of the compliance metrics tested during the first half of 2015 and continues to work on corrective action plans designed to fix past fails.

In a statement, Ocwen said the company is pleased with the progress it has made.

“Ocwen is pleased that the Monitor’s second compliance report determined that we have passed all tested metrics in the first and second quarters of 2015,” the company said.

“These results confirm that we have implemented the appropriate actions to be compliant with our obligations under the National Mortgage Settlement,” the company continued.

‘Ocwen has made significant investments in our risk and compliance management infrastructure to ensure that we are fully compliant with all rules and regulations related to our business,” the company said. “We will continue to work closely with the Monitor and look forward to the next report.”

In fact, Smith’s office stated that Ocwen completed its Global Corrective Action Plan, which is a plan to correct a variety of letter-dating issues previously uncovered.

Smith also said that the Corrective Action Plans for Metrics 7, 8, 19 and 23 also are complete.

According to Smith's office:

  • Metric 7 evaluates the timeliness, accuracy and completeness of pre-foreclosure initiation notification letters sent to borrowers
  • Metric 8 tests whether the servicer complied with servicing standards regarding the propriety of default-related fees (e.g., property preservation fees, valuation fees and attorneys’ fees) collected from borrowers
  • Metric 19 tests whether the servicer complied with servicing standards regarding timeliness for responding to borrowers about missing or incomplete information
  • Metric 23 tests the servicer’s compliance with the requirement to notify borrowers of any missing documents within 30 days of a borrower’s request for a short sale

“The Monitor’s latest Consumer Relief Report is another positive step for Ocwen, and confirms our commitment to providing real solutions to struggling homeowners,” the company said.

“Our work with distressed borrowers will not end just because we have exceeded our NMS obligations,” the company continued.

“Families across the country are still being impacted by the financial crisis,” the company concluded. “Ocwen will continue to work with our customers, especially those facing foreclosure, to find loan modification programs, including principal reduction programs, to help them better afford and remain in their homes.” 

Written by Ben Cane.  This article first appeared on housingwire.com.  Source