When a lender forecloses on a home, the process typically tends to happen very quickly. It is for this reason that anyone facing foreclosure should speak to a foreclosure defense lawyer right away. However, there are times when the process is delayed, either by the bank or the borrower. In most cases, these delays are good news for the borrower, but there are times when it can hurt them even more financially. Below are the main reasons that a foreclosure would be delayed and how they could help, or hurt, a borrower’s case.
Lenders are not always ready to proceed with foreclosure, even when they have already started the process. If they lost the note, or any other important paperwork associated with the home’s ownership, they cannot proceed with foreclosing on the home. This is due to the fact that lenders must prove that they hold the mortgage papers and when they do not, they cannot foreclose on the home.
This is typically good news for the borrower, but that is not always the case. For example, Michelle Bomba purchased a home in Jacksonville’s Grove Park community in 2005. She lost her business five years later in 2010 and was unable to make mortgage payments. The bank started the foreclosure process.
Unfortunately, that process is still ongoing a decade later, presumably because the lender has lost the paperwork. Bomba left the home in 2013, but she continues to make mortgage payments on the property. She was willing to bring the mortgage up to date that same year, but every time she inquires as to what she owes, she is given a different amount. Selling the home to another person may be the only way she can get out from the situation, and she currently has a potential buyer for the property.
Loss mitigation is a term that mortgage lenders use when they attempt to come to an agreement with a borrower in order to avoid foreclosure. Federal law states that there is a small window of time in which borrowers can apply for loss mitigation. This window starts upon the commencement of the foreclosure process and ends 37 days prior to a foreclosure sale.
Under the law, when a borrower applies for loss mitigation, there are certain rules the servicer must follow. Loan services cannot petition the court for a foreclosure judgment unless they have told the borrower they are not eligible for loss mitigation, the borrower rejects all loss mitigation offers, or the borrower does not comply with the loss mitigation agreement. For example, if the borrower failed to make payments during the trial modification, the lender could proceed with foreclosure.
Although loss mitigation can delay a foreclosure, this process happens quite quickly. Loan services are required to review a loss mitigation application within 30 days, and if they meet conditions, such as determining the borrower does not qualify, they can proceed with foreclosure. The servicer is also under no obligation to review more than one loss mitigation application from a borrower. However, if the borrower brings their loan current after submitting their application and then submits another loss mitigation application, the lender must consider this second application.
In some cases, it may be possible to petition the court to stop or delay a foreclosure based on the fact that the borrower is facing hardship. Of course, anyone facing foreclosure is already experiencing financial hardship. However, borrowers will have to prove more than this when asking the court to delay foreclosure based on hardship.
To delay foreclosure for this reason, the borrower must prove that they are experiencing significant hardship that is making it difficult to make payments on their mortgage. For example, if a person has become seriously ill and is unable to work for a period of time, the courts may consider this a valid type of hardship. For a judge to grant a delay due to hardship, the situation must be temporary and the borrower must show that once the hardship has passed, they will be able to continue making mortgage payments and bring the loan up to date.
Significant Equity in the Home
Many people facing foreclosure do not have a lot of equity in their homes. This is not the case for all borrowers, though. When there is enough equity in the home, selling the home may allow the borrower to repay the lender in full and bring their mortgage entirely up to date. When this is the case, a judge may determine that the fairest solution is to allow the borrower to sell the home, which can prevent their credit from taking the hit that often comes with foreclosure.
Filing for Bankruptcy
Filing for bankruptcy is a very common way to stop foreclosure, or stop it from happening altogether. A Chapter 7 bankruptcy will delay a foreclosure for a short period of time. In fact, once a borrower files for Chapter 7 bankruptcy, lenders are prohibited from continuing with the foreclosure process. It is often not recommended to file for Chapter 7 bankruptcy when the sole purpose is to delay a foreclosure. Borrowers that suffer from a lot of other debt though, can find great relief from a Chapter 7 bankruptcy.
While a Chapter 7 bankruptcy can delay a foreclosure from proceeding for a short period of time, a Chapter 13 bankruptcy can prevent it from happening altogether. During a Chapter 13 bankruptcy, a borrower’s debt is restructured in a manner that makes it easier for them to repay it. Due to the fact that the borrower is repaying all or most of their debt, they can keep their home and avoid foreclosure altogether, unless they get behind on their debt again.
Our Florida Foreclosure Defense Lawyers Can Help Delay the Process
The best way to delay or avoid the foreclosure process is to speak to a Fort Lauderdale foreclosure defense attorney. At Loan Lawyers, we will advise on the best methods to prevent or delay the foreclosure process, ensure your rights are protected when dealing with lenders, and help you get your financial life back on track. Call us today at (954) 523-HELP (4357) or contact us online to schedule your free consultation.
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.