Foreclosure Defense - FAQs

 

In an effort to help you obtain as much information needed as possible, our attorneys have compiled a list of questions that are most commonly asked about foreclosure defense in Florida. Feel free to browse through them and navigate to other pages of our site where more information is available:

I am behind on my mortgage payments, what do I do?

Don't ignore the problem; it will only make your situation worse. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house. Foreclosure may not be the only option.  Your lender may be able to work with you and offer some alternatives to foreclosure. You should seek advice from a foreclosure defense attorney right away to discuss other options before the available alternatives are not possible due to a change in circumstances. Contact us immediately for a consultation. Back to Foreclosure FAQs

Should I open and respond to all mail from my lender or lender’s attorney?

Yes. The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action and important dates. Your failure to open the mail will not be an excuse in foreclosure court, and ignoring these notices will only make the situation worse. Before responding, contact us immediately! Your lender will have an attorney working for them, so you should have an attorney working for you. Back to Foreclosure FAQs

I have just been served with a summons and foreclosure complaint. What do I do?

Contact us immediately for a consultation. Florida's mortgage foreclosure process will have serious, long lasting ramifications that you have to deal with in the future. It is in your best interest to participate fully at every stage of the proceeding. Your decision to participate now may preserve, protect and safeguard valuable legal rights affecting your future income, credit worthiness and income tax consequences. Back to Foreclosure FAQs

Should I use a foreclosure prevention company?

No. You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender may provide for free. Watch out for foreclosure recovery scams! If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home. Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney or a trusted real estate professional. Back to Foreclosure FAQs

Will the foreclosure process affect my credit score?

Yes, your credit score will suffer if you experience a foreclosure proceeding. The level of impact will vary. Loss mitigation options that do not result in the completion of the foreclosure sale should help to lessen the impact on your credit score but exact numbers are difficult to predict. Back to Foreclosure FAQs

Will I be able to purchase a home in the future?

Generally, one that reestablishes credit will be able to buy again in the future. It is important to reestablish credit in smaller increments and stay current on whatever indebtedness is undertaken. Short sales and other loss mitigation options will speed up the time needed to qualify for a mortgage after experiencing a foreclosure. Many lenders primarily make loans that they can sell to big mortgage players Fannie Mae and Freddie Mac. Fannie Mae generally will not buy loans made to borrowers involved in a short sale in the past two years. That's shorter than the four-year wait time if you have a deed in lieu of foreclosure on your record, and the five-year wait time if you have a foreclosure on record. Typically, any late mortgage payments are viewed as a negative mark. Generally, negative marks will remain on a credit report for 7 years. Foreclosures also remain on credit scores for 7 years. The impact on credit scores diminishes over time though. Loss mitigation efforts and foreclosure are definitely better than a bankruptcy, as the filing of a bankruptcy is viewed by the credit reporting industry as an attack against all trade lines across the board, whereas a mortgage foreclosure is only an attack against a single trade line, your mortgage lender. Back to Foreclosure FAQs

What if I file bankruptcy?

Filing for bankruptcy will stop foreclosure. A chapter 13 bankruptcy may allow you to make up the arrearages and reinstate your mortgage, over a period of time, usually 5 years. It means you make a regular payment and part payment each month until you get caught up. In a chapter 7 bankruptcy, you will need to bring arrearages current at or very quickly after filing or the lender will be able to continue with the foreclosure. The general rule is bankruptcy negatively affects your past credit score for 10 years, but sometimes the creditors on a chapter 13 will voluntarily remove it after 7 years to encourage people to file a 13 rather than a 7. It is possible to rebuild a strong, new credit score after you have filed for bankruptcy. Back to Foreclosure FAQs

Are their income tax consequences as a result of a foreclosure?

It usually depends on whether or not your home or property has equity and what type of loan it is. If there is no equity, it is likely that the property or home will be sold for less than the mortgage amount owed. The Mortgage Debt Relief Act of 2007, allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced with mortgage restructuring as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. Consult with an accountant. These rules are complicated and you are advised to make a thorough examination of your personal financial situation with an experienced tax professional. Back to Foreclosure FAQs

What can an experienced and knowledgeable lawyer do?

File an answer containing affirmative defenses, if any. You must state all affirmative defenses, otherwise they may be waived or may be may not be sufficient to stop the foreclosure process. Back to Foreclosure FAQs

What are affirmative defenses?

They are special defenses, which must be specifically alleged, such as truth-in-lending violations, usury, fraud and other specific types of improper conduct by the lender, which may defeat or partially defeat the lender’s claims. Back to Foreclosure FAQs

If my property is sold by the court clerk, what price will it bring?

Usually much lower than fair market value, most of the time it is sold for the total amount of the mortgage, or less. Back to Foreclosure FAQs

Will I get any of the sales proceeds?

Only if there is a surplus (if the property is sold for more than what is owed in total to the plaintiff and all other mortgages and liens on the property). In today’s economy, there are very few properties that will result in surplus sales. Back to Foreclosure FAQs

If the property is sold for less than the total owed, can the lender collect the difference?

Yes, but the Lender must seek a deficiency judgment for the difference. Back to Foreclosure FAQs

Can I sell the property and get my money out?

Yes, you can sell or refinance so long as the lender is paid prior to the foreclosure sale date. Back to Foreclosure FAQs

Do I have the right to reinstate? (bring the mortgage current)

Most mortgage lenders will voluntarily consent to reinstatement regardless of terms. But, reinstatement is not automatic. It is important to have your mortgage and note reviewed by an attorney. Back to Foreclosure FAQs