In Florida, there seems to be no light at the end of the foreclosure tunnel. For some, fighting the foreclosure is not worth it or leaving the property is the better option. However, for those who want to keep their home and are determined to work hard to save it; the following are some tips which will hopefully minimize frustration and wheel-spinning.
1. Find Out Who Owns Your Loan
The owner or investor on your loan almost always hires a loan servicer to manage the loan, just as a landlord may hire a property management company to tend to the day-to-day issues relating to the property and its tenants. This is the company from whom you may have been receiving warnings about late payments or demand letter, in which the borrower is basically directed to bring the loan current or face a foreclosure action.
However, the servicer may not be the owner of your loan. Sometimes they may be one and the same; for example, Bank of America and Chase may service their own loans. In any case, the investor is the person or entity you want to speak with about finding a solution, as the buck stops with them, other than the government. You may find out whether your mortgage is a federally-backed loan and whether Fannie Mae or Freddie Mac is the investor on your loan by visiting http://www.fanniemae.com/loanlookup/ or https://ww3.freddiemac.com/corporate/.
In their Save the Dream Tour, the Neighborhood Assistance Corporation of America (NACA) offers homeowners financial counseling and face-to-face meetings with loan servicers. Representatives from Fannie Mae and Freddie Mac may also be present at the tour stops. NACA staff advise homeowners that even if their servicer has not attended the event, that the borrowers may still meet with these federal corporations to discuss a loan solution.
You may also call your servicer and inquire as to who the investor is, or if a foreclosure action has already been filed, the “Plaintiff" in the action may be the investor. It is possible to spend years spinning your wheels with a servicer to get a loan modification and never get anywhere. Cut to the chase and contact the investor. Hopefully the investor will be cooperative and work with you.
Even if the investor is not cooperative, you should still be entitled to meet with them. The servicer may always be able to stonewall a settlement, claiming that they do not have “authority" to take action. They will then tell you that they must present information to the servicer and get back to you, yet never follow through.
Mediations have been ordered by the Florida Supreme Court in virtually all new residential foreclosure actions. The servicer will want to dictate which representative will appear for the mediation. Although the courts have generally ordered that a lender representative at mediation must have authority to approve any solution, often the representative may not have true authority, or may not have all information with them necessary to finalize a settlement.
Therefore you should request that the investor be present in person for the mediation, even if you have to take the matter up with a court. If a foreclosure action has not yet been filed, there are still ways to approach a judge about the issue. If a lawsuit has already commenced, a specific motion for mediation should be presented to the court. In both circumstances you should seek representation by counsel.
2. Think Twice About Entering Trial Loan Modifications
In recent news, stories have been emerging about the scarcity of permanent loan modifications. What is more common is that a servicer will place a borrower on a “trial modification," “trial forbearance" or similar temporary plan. The arrangement requires the borrower to make several payments, often much larger than her or his original payment. The borrower is enticed to do this by the bank’s representation that the borrower may be approved for a permanent loan modification at the end of the trial period. However, this plan often turns out to be a ploy on the bank’s part to wring more money out of a desperate homeowner without any intention to end the foreclosure or reinstate the borrower’s loan.
Therefore, if the bank had been rejecting your payments but offers you a trial modification, think twice. It is tempting to think that by making these payments, you will be out of danger of losing your home. However this is sadly not the case for many people. Consult with an attorney and have a formal agreement prepared to state, among other things that if you do resume payments with the bank, they will stop the foreclosure.
3. Consult With A Reliable Attorney Right Away
There have been so many scams and swindles arising from the foreclosure crisis that it is hard to know where to turn. Also abundant in the news are stories of outfits who take homeowners’ money, sometimes guaranteeing them a loan solution or that the organization will work with the bank, and yet do nothing. These have been multi-million dollar industries, but the Florida Attorney General has sharply responded. This has reduced the fraud but it is always necessary to be careful. No matter where you are in your hardship process, you should consult a reliable and reputable attorney to determine the right strategy. The pre-foreclosure strategy will be entirely different from that if you have just been served with a complaint, which strategy will be completely different from the strategy if a summary judgment hearing is scheduled tomorrow, and so on.
In my opinion, there is absolutely no reason to deny a loan solution to a willing homeowner who can support monthly payments and will work as long and hard as necessary to save their home. Yet it is still happening left and right. A recent story in the New York Times describes how there are some real estate companies which are employed full-time by Fannie Mae and Freddie Mac, reselling foreclosed properties. These properties are often sold for less than 60 percent of what the homeowner owed.
While this is a winning situation for the real estate companies and for the new buyers, it is not for the people who lose their homes and most likely cannot purchase another property because of their credit. Foreclosure has cut across all loan products from subprime, more recently to prime. Foreclosure should not be used to punish people who fell upon hard times; as we have seen, it can happen to all of us.