Just as the housing market in Florida was starting to recover from the 2008 recession, the pandemic hit, leaving many people furloughed and laid off from their jobs. Sadly, this means that thousands of people are unable to pay their mortgages and, even though certain lenders are offering different options, such options just will not be enough for all homeowners.
With so many people being unable to make their mortgage payments and potentially facing foreclosure, it is important that all homeowners understand the myths behind the process.
1. The Main Reason for Foreclosure Is Financial Irresponsibility
It is easy to think that if someone cannot pay their mortgage, it is because they made some poor financial decisions. This could not be further from the truth. As the pandemic has shown, sometimes extenuating circumstances arise that are out of the homeowner’s control.
Truthfully, homeowners have already shown that they are financially responsible by being approved for a mortgage in the first place. As such, if the home ends up in foreclosure, it is unlikely that financial irresponsibility is the reason.
2. The Foreclosure Process Starts After One Missed Payment
No homeowner ever wants to miss a mortgage payment, as it can make it much more challenging to bring the loan up to date. Some homeowners, though, think that their lender will start the foreclosure process after they miss just one payment, and that is not true. In most cases, lenders will wait until a homeowner has missed three monthly payments on their mortgage before they start the foreclosure process.
3. Lenders Want to Foreclose
Lenders will send notices and try to contact the homeowner repeatedly before starting the foreclosure process. Due to this, many people think that lenders are eager to foreclose. That is untrue. The foreclosure process is a long and costly one for lenders, and they would much rather keep homeowners in the property and continue to receive regular mortgage payments from them.
Lenders are usually quite willing to work with homeowners to ensure that payments happens and will only use foreclosure as a last resort.
4. Nothing Can Stop Foreclosure Once Homeowners Miss Mortgage Payments
Again, lenders do not want to foreclose and they usually want to work with homeowners to come up with a solution. Homeowners, though, have options even if the lender does start the foreclosure process.
There are many defenses available in foreclosure cases, including if the lender foreclosing does not hold the title or the note. A foreclosure defense lawyer can advise on the options homeowners have, and represent them throughout the process.
5. Homeowners Should Draw from Retirement Savings to Make Mortgage Payments
When homeowners realize that they will miss a mortgage payment, they often take drastic steps, such as drawing from their retirement savings.
Although it is important to cut back spending and look for ways to earn more income, drawing from retirement savings is not the best option. Prior to this point, homeowners should seek the help they desperately need, and that will still ensure their future is protected.
6. Buyers of Homes in Foreclosure Take Advantage of the Homeowner
It is true that there are some unscrupulous buyers and investors out there that will try to take advantage of the situation, and the homeowner. However, this is not always the case.
In fact, buyers can actually help homeowners who are facing foreclosure. Buyers will often approach a homeowner and agree to buy the home before the foreclosure process starts. This arrangement is beneficial for the homeowner because it will prevent the foreclosure from showing up on their credit report. It also benefits the buyer because they can often buy the home for lower than market value.
7. Homeowners Can Walk Away Once the Bank Forecloses
Although homeowners will have to leave the home if the bank is successful in foreclosing on the property, it does not necessarily mean that they are free and clear. If money is still owed on the mortgage after the home is sold, the bank can seek a deficiency judgment in court.
If a judge decides in the lender’s favor, they will issue an order requiring the homeowner to pay the deficient amount. A foreclosure defense lawyer can help a homeowner avoid this by properly drafting any agreement the homeowner enters into with the lender.
8. A Bankruptcy Will Stop a Foreclosure
There is some truth behind this myth. After a person files for bankruptcy, a judge will issue an automatic stay. This stops the foreclosure process and prohibits creditors and lenders from contacting you. However, it is also important to know that lenders can ask the judge to lift the stay so they can continue with the foreclosure process. Some judges will allow this, while others will not.
Homeowners who file a Chapter 7 bankruptcy may stall the foreclosure process, but they will likely still lose their home. A Chapter 13 bankruptcy can help homeowners keep their home because a bankruptcy trustee will create a repayment plan that allows individuals to make delinquent mortgage payments over a certain period of time.
9. Homeowners Must Leave Their Home After Receiving a Foreclosure Notice
Receiving a foreclosure notice is definitely scary, particularly when homeowners think that they must immediately leave their home. Fortunately, this is not true. Once a lender starts the foreclosure process, homeowners usually have at least one month before they have to leave their home. Others have even longer than that, particularly if they have a valid defense to the foreclosure lawsuit.
10. Homeowners Do Not Need a Florida Foreclosure Defense Lawyer
The foreclosure process is a legal one and, as such, homeowners should always speak to a Fort Lauderdale foreclosure defense lawyer who can help. At Loan Lawyers, our attorneys can advise on the foreclosure process, and the defenses that are available that can help keep you in your home. If you are in fear of foreclosure, call us today at (954) 523-4357 or contact us online to schedule a free consultation and to learn more about how our experience can help you.
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Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.