It can be difficult to deal with foreclosure and the possible loss of your home. Many people are unable to face the seriousness of their situation and avoid dealing with the problem until it is almost too late. Once the bank schedules a sale date on a home, the foreclosure process is nearly over and the problem cannot be put off any longer. However, the situation is not hopeless if you act immediately.
If your home is scheduled for sale, your options depend on whether you want to minimize the damage to your credit from a foreclosure or save your house entirely.
A foreclosure can make a serious dent in your credit score, and the effects of a forced sale can last for years. If you are facing a foreclosure sale and want to minimize the damage, you may try offering the bank a deed-in-lieu of foreclosure or setting up a short sale.
A deed-in-lieu of foreclosure that the homeowner turns over all of his or her interest in the house to the bank. By offering a deed-in-lieu, the homeowner avoids the foreclosure process and may receive better terms from the bank than he or she would in a foreclosure sale. The bank may agree to accept a deed-in-lieu early in the foreclosure process in order to avoid legal fees and the costs of putting the home up for auction. However, the closer it gets to the sale date, the less likely the bank will be to accept this type of offer.
Short sales allow a homeowner to sell the house for less than full mortgage value. For example, if a house has a $300,000 mortgage but the fair market value is only $200,000, the mortgage lender may agree to accept a short sale rather than face a larger loss in a foreclosure sale.
Setting up a short sale is often a complicated process that takes a significant amount of time, and many lenders will not agree to a short sale if the house is already near the end of the foreclosure process. However, if the bank agrees to a short sale, the homeowner may receive money for moving expenses and the lender may agree to forgive any outstanding deficiency between the mortgage value and the sale price on the house.
Saving the Home
If you fell behind on your mortgage payments but are now able to resume regular payments, you may be able to save your home.
First, the homeowner can exercise his or her right of redemption. This means that before the sale has occurred (or within 10 days after the sale) the homeowner can offer to pay off the amount of the outstanding debt and reclaim the home. There is a very short window for redemption in Florida, and this option will not be available for long after the sale date.
Second, the bank may allow you to pursue a mortgage modification. Banks are in the business of making money, and they often lose money in a foreclosure sale. In many instances, a bank or mortgage lender will agree to modify the mortgage and allow the homeowner to avoid foreclosure by catching up on payments over time. It is important to note that applying for a loan modification will NOT stop a sale date—the foreclosure process will continue unless the bank agrees to postpone the sale or until a permanent loan modification is in place.
If these options fail, homeowners can file for bankruptcy which will immediately stop any foreclosure proceedings or sale. While filing for bankruptcy requires the collection of a significant amount of documents and financial information, homeowners are allowed to file an emergency bankruptcy case known as a skeleton petition which contains only the minimum amounts of information the court requires. Homeowners will also have to pay a filing fee for the petition and will have 14 days to submit the rest of the required information.
In order to file an emergency bankruptcy petition, homeowners must have the legal ability to file for bankruptcy, meaning that they haven’t received a bankruptcy discharge for a Chapter 7 case within 8 years or a Chapter 13 case within two years. Additionally, the homeowner must have plans to follow through with the bankruptcy case—filing multiple petitions simply to stop a sale date can be considered fraud.
Help for Homeowners
If your house is in foreclosure or if you have a pending sale date, you need to speak with an attorney immediately. At Loan Lawyers, our attorneys can discuss your options and help you determine the best way to save your house from foreclosure.
To schedule an appointment at either of our three South Florida offices, contact us today by calling 844-344-4813.