NEW YORK STATE FORECLOSURE - Know Your Options:
by Konst Law in Buffalo New York
Ph. (716) 601-1000
Email your Question: KonstLaw@gmail.com
If you are having trouble making your mortgage payments, there are a variety of mortgage programs available to help you keep your home. You may be eligible to permanently modify your mortgage to make your payments and terms more manageable. If you do not qualify for a permanent modification and have only missed a few payments, you may qualify for a temporary solution. However, depending on your circumstances, you may not be able to keep your home. In this case, a short sale or deed-in-lieu of foreclosure may be a better alternative than foreclosure.
Here are some of the options that may be made available to you:
Reinstatement: In reinstatement, you agree to pay the lender the entire past-due amount, plus any late fees and/or penalties, by a certain agreed-upon date. This option may be appropriate if paying your mortgage is temporary problem.
Forbearance: The lender may agree to temporarily agree to reduce or suspend monthly payments for a period of time - such as six months. At the end of the forbearance period, regular payments will resume and the missed payments will be added on.
Chapter 13 Bankruptcy: Filing for bankruptcy will temporarily halt the foreclosure process and may force the mortgage lender to accept a more borrower-friendly repayment plan. But a bankruptcy should only be considered as an absolute last resort. A bankruptcy will remain on your credit report for ten years.
Repayment Plan: The lender may agree to a repayment plan. Under a repayment plan, the lender will divide the late payment(s) up and add them on to future monthly payments.
Loan Modification: The lender may agree to adjust the terms of the loan to make it affordable. They may lengthen the term of your loan, lower the interest rate or fold the past due amount into the loan and re-amortize the new balance (i.e. recalculate your payment schedule) so that you can pay the additional debt back over time. A modification may result in one or more of the following:
Reducing or fixing the interest rate temporarily or permanently
Extending the term of the loan
Deferring or capitalizing past due amounts
Deferring principal causing a balloon payment to be due at maturity or some other date
Conditionally or unconditionally forgiving a portion of the debt
Options if you cannot keep your home, alternatives to foreclosure:
Short Sale: In a short sale the lender agrees to let you sell the house for less than the outstanding loan amount. The lender then takes the proceeds from the sale and forgives the remaining debt. This is commonly used when a homeowner is experiencing a hardship and has been unsuccessful in selling the home at market value or an amount that covers what is owed. Servicers may suspend foreclosure action for a reasonable period of time to allow the homeowner to review and close an approved transaction. Although, the lender will not usually pursue the homeowner for any deficiency judgment, the lender cannot be prevented from doing so. Any junior liens (other claims to the property besides the lender) must agree to the sale.
Deed-in-lieu of Foreclosure:
With a deed- in- lieu of foreclosure, you surrender the home to the bank and they sell it. You may qualify if:
You are in default and don’t qualify for any of the other options;
Your attempts at selling the house before foreclosure were unsuccessful
The federal Making Home Affordable program has loan modification options to help borrowers obtain more affordable loans. For more information about these programs, visit www.MakingHomeAffordable.gov.
Home Affordable Modification Program (HAMP) is a loan modification program that is part of a federal stabilization plan called Making Home Affordable. You may qualify for a HAMP modification if your home is your primary residence, the amount you owe on your first mortgage is equal to or less than $729,750, you got your mortgage before January 1, 2009 and you are paying more than 31% of your current gross income on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues). Unemployed borrowers may also be entitled to have their mortgage payments temporarily reduced for 3 to 6 months while they look for a new job.
Home Affordable Foreclosure Alternatives (HAFA) Program is designed to reach those borrowers – both those who are in default and those who are at imminent risk of default – who are eligible for but unsuccessful under the Home Affordable Modification Program (HAMP). HAFA streamlines and standardizes industry practices for pre-foreclosure sales and deed-in-lieu to provide eligible borrowers with an alternative to foreclosure. You may be eligible for HAFA if you live in the home or have lived there within the last 12 months, you have a documented financial hardship, you have not purchased a new house within the last 12 months, your first mortgage is less than $729,750, and you obtained your mortgage on or before January 1, 2009.
Home Affordable Unemployment Program (UP): If you are unemployed and depending on your situation, MHA's Home Affordable Unemployment Program (UP) may reduce your mortgage payments to 31 percent of your income or suspend them altogether for 12 months or more.
Refinancing: Although refinancing options are not as widely available as they once were, you should still check to see whether your lender or another lender will refinance your mortgage. The federal Making Home Affordable program has two refinancing options to help borrowers get into more affordable loans. For more information about these programs, visit www.MakingHomeAffordable.gov.
Home Affordable Refinancing Program (HARP) is a refinance program designed to help homeowners with loans guaranteed or owned by Freddie Mac or Fannie Mae. You may be eligible for refinancing under HARP if you own a 1-4 family dwelling, your first mortgage does not exceed 125% of the current market value of your home and you haven’t been more than 30-days late on your mortgage payment in the last 12 months.
FHA Refinance Option is for homeowners who do not currently have an FHA mortgage and who owe more on their mortgage than their homes are worth. Homeowners must be current on their mortgage and occupy their home as their primary residence.
Service members Civil Relief Act: If you are in the military, you may be able to delay foreclosure or get a reduced interest rate under the Service members Civil Relief Act. Similar relief is available for victims of natural disasters.
FHA Disaster Relief: If your home or your ability to make your mortgage payments have been harmed by an event that the President has declared a natural disaster, you may qualify for relief to help you keep your home.
Partial Claim: If you have an FHA/HUD loan, you may be eligible for a partial claim. This is a one time payment to bring your mortgage current. You don’t have to repay until the original mortgage is paid off or you sell your home. See some frequently asked questions about HUD’s partial claim option at www.hud.gov.
NYS FACING FORCLOSURE:
Know Your Rights
Judicial Foreclosure. New York is a judicial foreclosure state. This means that your lender must go to court to recover your home.
Pre-foreclosure notice. As of January 14, 2010, the lender or loan servicer must give all homeowners notice at least 90 days before commencing foreclosure. This 90-day window gives you the opportunity to try to work with your lender. The notice must tell you how much you must pay to bring your loan current. It must also give you the names and telephone numbers of at least five government-approved housing counselors or other housing counseling agencies designated by the Division of Housing and Community Renewal (DHCR) serving the region where you reside.
Mandatory settlement conference. As of January 14, 2010, the court must schedule a settlement conference within 60 days after the lender files proof of service of the complaint in all foreclosure actions involving a home loan. The settlement conference is an opportunity for you to reach a resolution with the lender. You should bring proof of income such as your two most recent pay stubs and most recent tax return to the conference. The house can be sold at auction if you fail to: appear at a settlement conference, answer the foreclosure action or reach a settlement with the lender.
The Home Equity Theft Protection Act (HETPA) covers the sale of certain homes in foreclosure or default where a buyer is purchasing the home as an investment. This includes buyers who promise to bring your mortgage current and allow you to buy the home back from them. If you are planning to sell a home that is in foreclosure or default, be aware of your rights under this law, and know what to expect from a legitimate buyer. If your sale is protected by this law, and your buyer fails to fulfill any of these requirements you may be able to void or legally cancel the contract and the sale and you may be able to sue the buyer for recovery of damages.
Distressed Property Consultants. New York State prohibits “distressed property consultants" (individuals, corporations or other entities that promise to stop or delay a foreclosure or tax sale) from charging any upfront fees before completing their services and fully executing the written contract that sets out the services to be provided and the cost of those services.
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KONST LAW PHONE: (716) 601-1000
KONST LAW EMAIL: KonstLaw@gmail.com