10 THINGS YOU SHOULD KNOW ABOUT FORECLOSURE DEFENSE

1. How long will a foreclosurecase last before the lender takes my property and how much notice will I receive?

It can take only 3-4 months for an uncontested foreclosure to be finalized once a borrower is served papers until the court sale. If you choose to not put up any type of defense, it can become very easy for your lender to take your property. However, in my experience, when the borrower fights back and defends a foreclosure action, the case will almost certainly last beyond a year in court. The duration of any case depends on the facts and legal issues involved, as well as other factors. Rest assured, nothing happens suddenly in a foreclosure action, unless you do not defend yourself against it! There will NOT be a sudden knock on the door by the Sheriff to kick you outwithout plenty of advance notice, especially if the borrower has an attorney defending the case.

2. Can my lender change the locks on my property during the foreclosure action?

NO!!!! A lender does not have the right to take possession of a property until the end of the foreclosure process when the lender acquires legal title. Only if the lender has confirmed that the property has been abandoned and is concerned about protecting their collateral, will the lender possibly will change thel ocks. It is illegal for lenders to lock people out of their homes when they’re still living there and would give rise for a cause of legal action against the lender.

3. Should I continue paying property taxes, insurance and HOA dues when my property is in foreclosure?

This depends on your goals and objectives with respect to the property. If you areplanning to just walk away from the property, there is less incentive to pay these bills. If you are seeking a loan modification to keep the property, there is more reason to pay. In Florida, a property owner cannot lose title becauseof a tax delinquency until 2 years have passed following the failure to pay. Lenders will usually buy a new insurance policy if that lapses and is not renewed; the lender will add this cost (which is usually a much more expensive policy) to the final judgment amount, but it is in your own interest as a homeowner to make sure that the policy is replaced. It is also always a good idea to stay current with your association dues for multiple reasons, including the fact that an HOA can foreclose just like a lender for failure to pay dues and it’s good to avoid another legal battle, one that may end quicker than the initial one with the lender!

4. If I own a rental property that is currently subject to a foreclosure action , will I be able to continue renting it?

Yes!!! In Florida, the owner of a rental property may continue renting it even if it is subject to a foreclosure case. Tenants are legally required to pay the rent during that time. In fact, the borrower/owner only loses the right to collect rent upon the conclusion of the case if title is transferred. However, we suggest that you should be completely honest with your tenant and fully disclose the legal status of that property, plus explain what is being done to defend the case against the foreclosure action.

Beware: Your lender CAN file a “Petition for Assignment of Rent" if it doesn’t like the fact that you, the borrower, is collecting rent and not paying on the mortgage. This petition asks the court for an order requiring your tenant to pay the lender directly. Good news is that lenders rarely, if ever, pursue this relief. Yet, it is another important reason why you should have a lawyer represent you during the foreclosure, to completely safeguard your interests.

5. Can my lender garnish my wages?

Most foreclosure properties are “upside down” (worth less than the mortgage debt owed).This means it’s virtually certain that unless a loan modification agreement is reached, your lender will suffer a loss at the conclusion of the foreclosure. Whether your lender receives money through a short sale or takes title to the property, your lender will not be compensated for the full value of the debt the borrower owes. When this happens, your lender may pursue a “deficiency judgment” against you, the borrower. This means that your lender can try to take certain assets belonging to you, as borrower, though there are many exceptions known as exempt assets that are off-limits. The most common exempt assets are your homestead property (only if the foreclosed property was a second home or investment property) and retirement accounts, such as 401K and IRA. Florida is a debtor-friendly state and wage garnishment can be challenging to any creditor. For example, if the debtor qualifies as “head of family” by earning more than fifty percent (50%) of the household income,garnishment is prohibited. A borrower concerned about a deficiency action should consult an attorney for asset-protection advice.

6. What is a "Deed in Lieu of Foreclosure"?

This is a settlement agreement with a lender where the property owner/borrower signs a deedt ransferring title to the lender in exchange for not filing the foreclosure or dismissing a case that’s already been filed. The "deed in lieu" may be a good settlement option for many borrowers willing to walk away. However,in this instance, it’s important to try to negotiate certain conditions in return for giving the property away and allowing the lender to avoid the foreclosure process, such as a deficiency waiver. This is a promise by the lender not to pursue the assets of the borrower in satisfaction of the deficiency between the value of the property they’re taking and the debt still owed. Unless the lender affirmatively waives such a right, you will still owe the remaining amount demanded in the foreclosure action!

7. Can a second mortgage or home equity line lender also foreclose on my property?

Any lender with a mortgage or equity line in second position may foreclose, butthey rarely do so because they cannot “jump over” the first mortgage lender. Asecond mortgage foreclosure may result in title to the property going to thatlender, but subject to the first mortgage in front of that lender. For thisreason, it’s more common for a second lien holder to file a simple collectionaction against the borrower, as if it were unsecured debt, like a credit card.In this scenario, the lender would go after any of your assets that it canfind. Note: In a short sale, all lienholders, including second mortgage lenders and Home Owners Associations, mustapprove of the payoff trickling to them for the deal to close.

8. What happens if the lender can’t produce the original promissory note?

This issue has received much media attention, but usually the story is incomplete.It is so common for lenders to lose original notes that there exists a remedy under Florida law which permits a foreclosing lender to rely on a copy insteadof the original. However, this is not automatically granted by the court, and the lender IS required to lay the proper foundation to enforce a lost note.That means, at a minimum, the lender must produce a copy, then convince the court that the foreclosure should be permitted to move ahead without the original. Unless the borrower is represented by an experienced and knowledgeable attorney, the court may very likely accept whatever the lender’s attorney argues, in respect to enforcing that lost note.

9. Should I file Bankruptcy if my property is subject of a foreclosure action?

It’s a common misconception that filing bankruptcy is necessary, or even a right thing to do when one is in foreclosure. Bankruptcy is not right for everyone and it won’t make a foreclosure go away, although it can delay the process somewhat.There are circumstances when a Chapter 7 liquidation or Chapter 13 reorganization may be a sound strategy, especially when the borrower has a great deal of debt apart from the mortgage, but it should not be used as a mere tool to stall a foreclosure. Anyone contemplating a bankruptcy should immediately seek the consult of an attorney experienced in handling such matters.

10. Can I afford to pay a foreclosure attorney or even need one? Yet again, this depends on your goals and objectives with respect to the property. If you are planning to just walk away from the property, then you may still want to negotiate a deficiency waiver,which an attorney can do on your behalf. If you want to stay in the home as long as possible and, hopefully, modify the loan terms, an attorney can again be very useful. When evaluating this situation, you must primarily decide if youc an afford NOT to have a skilled and experienced lawyer defending your foreclosure action.