The story of a pending foreclosure in Miami Gardens emerged recently that shone a light on not only foreclosures in Florida, but also the unexpected fees that often come along with it. The Miami Gardens home was passed down from a mother to her daughter, who later died without a will or estate plan in place. The family tended to the home from time to time, but did not have the legal authority to pay the mortgage or stop a foreclosure from happening.
The bank took over the home with just over $8,000 owed on the mortgage. One year later, the homeowner’s sister obtained the legal authority to take control of the home. She paid off the mortgage and the fees that had accrued over the year. It ultimately cost over $40,000 to save the home from foreclosure. The family, like so many others in South Florida, was shocked to learn what it would cost them to keep the home.
Fortunately, while the story had a happy ending even with the additional cost, the fees lenders charge people to keep their homes only add to the financial difficulties of homeowners. For many, they are too much and they lose the home anyway. However, there are ways you can challenge fees and ensure this does not happen to you.
Late Fee Assessments
If you default on your mortgage, the servicer will likely apply a late fee to your account. Servicers, though, do not always charge these fees correctly and that can add hundreds of dollars to the amount a person owes. The most common mistakes made with late fee assessments are as follows:
- Late fees are assessed during a grace period
- Servicers do not post payments to the borrower’s account promptly
- The amount of the late fee assessment is incorrect
In other instances, a servicer may ‘pyramid’ late fees illegally. In these cases, a servicer will charge the borrower a late fee even though a full payment was made. However, if a borrower did not include a payment for a late charge they did not previously pay, the servicer deducts the prior late fee to the current full payment. This leaves a certain portion of the current amount owed overdue, and more late fee assessments are applied to the account.
Servicers are also not allowed to apply late charges to post-accelerated cases. If a loan is accelerated, it means you must pay the entire loan’s balance, and not just the amounts that are already overdue. This is often the beginning of the foreclosure process in South Florida, but borrowers cannot accrue late fees during this time. Unfortunately, they still often face these fees.
Fees Related to Default in South Florida
If you do not make mortgage payments on time, a servicer may also apply default-related fees to your account. These fees often include:
- Fees for property inspection: Servicers are usually allowed to take certain steps to protect the rights of the lender, which includes inspecting the property to determine if it is occupied, as well as the physical condition of the premises. Once the mortgage loan falls into default, an inspection is often automatically ordered and the cost of the inspection is added to the mortgage loan.
- Fees for preserving the property: To protect the lender’s rights, servicers are also often allowed to conduct maintenance on the property to preserve it. This may include replacing locks, repairing or replacing windows, restoring utilities, or landscaping the property. Most courts in South Florida have rules that these fees are collectible from the borrower, but that they must also be reasonable.
- Fees associated with foreclosure: Lenders do not generally want to foreclose on a property because it costs them a lot of money to do so. Still, lenders can also pass those fees onto the borrower in the event that they are trying to foreclosure. These fees can include advertisements at auction, the cost of the sheriff’s duties in serving the papers, filing fees, and any certified mailings they sent in regards to the foreclosure. In some cases, borrowers may even have to pay the lender’s attorney’s fees.
While the amount of fees incurred during the foreclosure may make it seem impossible for any borrower to pay off entirely, it is not. There are times when it is found borrowers are not responsible for these fees.
Challenging Fees During Foreclosure in South Florida
When late fees or default-related fees are charged improperly, it is possible to defend against them and show you are not responsible for them. Some of these defenses can bring a full stop to the foreclosure, while others will reduce the amount you owe on the total debt. A few proven defenses are:
- Violation of state law
- Breach of contract
- Deceptive and unfair practices
- Negligent servicing
- Breach of good faith
- Breach of fiduciary duty
In addition to challenging foreclosure fees, you can also prevent them from incurring altogether.
Preventing Fees in Foreclosure in South Florida
A number of things could have helped prevent the foreclosure process from starting in the most recent story, and they can also help thousands of other borrowers in South Florida. To prevent fees from incurring during foreclosure, you should:
- Have a will and power of attorney in place so someone else can make decisions for you in the event that you become incapacitated.
- Remain in contact with your lender, particularly if you are having trouble paying your mortgage.
- Visit the home regularly if it is not a current residence and ensure the home is properly maintained.
The above actions will prevent servicers from making simple improvements, such as mowing the lawn, and charging large fees for it.
Our South Florida Foreclosure Defense Lawyer Can Advise on Your Case
While it is possible to defend against foreclosure and the additional fees it causes, you should not do it alone. At Loan Lawyers, our foreclosure defense attorneys in South Florida can advise on your case and prepare the necessary defense to help you keep your home or avoid excessive fees. Call us today at 954-807-1361 or contact us online to schedule a free consultation.