If owning a home is the American dream, then losing it to foreclosure is an absolute nightmare. But a foreclosure does not have to be inevitable just because you have missed some mortgage payments. There are options out there, if you know where to look.
Where a foreclosure is concerned, hiring an attorney early on helps you access more available options than what might be available later in the foreclosure process. A lawyer, for instance, can work out a way for you to live in the house by negotiating a deal with the lender or, if needed, fight the case in court with a valid defense.
Read on to learn when it is essential to hire an attorney and how the lawyer can assist you in the foreclosure process.
When is it Time to Get Help?
If you fall too far behind your mortgage, usually more than one “twenty days delinquent” per federal law, then the lender can begin the foreclosure process. A foreclosure allows the lender to take back your property and put your house on the market to repay the loan.
Before initiating a foreclosure officially, the lender must notify you by mail following the terms of the legal mortgage contract. The letter that the lender sends before foreclosure is called a “Breach Letter.” The Breach Letter notifies you about the lender’s intention of starting foreclosure proceedings if you fail to get current on loan. To prevent the bank from moving ahead with these proceedings, you’ll need to bring your loan current under a specified time, usually thirty days.
In that case, the best option can be to file for Chapter 13 bankruptcy if your lender is not willing to amend your loans or if you don’t have enough funds on hand to bring the mortgage current.
By the time you get a breach letter from your lender, you need to be making up your mind to consult an attorney. Especially if you have trouble catching up on your payments and don’t want to lose your house. Your lawyer will have a tight time limit to take the necessary steps needed to prepare a defense.
If you wait too long to hire a foreclosure attorney, chances are, you will lag behind the deadline. And worst-case scenario, it will become difficult, if not entirely impossible, to get back your house.
How Can A Foreclosure Attorney Help?
The foreclosure laws are complicated and challenging to master, even for a lawyer. Court procedures for foreclosure vary from state to state, sometimes even from court to court. Plus, there are both judicial and non-judicial foreclosure proceedings. And especially the non-judicial proceedings are dealt with differently in each state.
If you want to defend the foreclosure, you need a clear understanding of how to file a document in court, evidence rules, and much more. Therefore, you need a qualified and skilled foreclosure attorney who can counsel you about available options. For example, an attorney can help prevent the foreclosure entirely by working out a deal called “loss mitigation”, something like a loan modification. Moreover, a lawyer can also fight the foreclosure for you or help you save your home through chapter 13 bankruptcy.
An Attorney Can Deal with Your Lender to Avert Foreclosure
If there is enough time, a lawyer might be able to sign a deal with the bank to stop foreclosure. Here are some ways a foreclosure attorney can save your house without going to court.
Help You Modify Your Loan
A loan modification is a mutual agreement between the lender and the borrower that alters the loan's initial terms. A lawyer can help you work out a loan modification with your lender. A modification may result in a reduced interest rate or new repayment terms. Be careful in attempting a loan modification when you are in default of your mortgage. The Loan Modification process does legally stop a foreclosure proceeding against your home. I have had far too many phone calls from prospective clients who were in a foreclosure proceeding and attempting to get their loan modified, only to be told later they can no longer modify the loan because the house had been foreclosed on. Was the mortgage company trying to mislead them? Probably not, but you have two different departments at the mortgage company (the modification department and the foreclosure department) and they don’t necessarily communicate with one another.
Guide You About Loss Mitigation
Certain types of housing loans, such as Federal Housing Administration (FHA) loans, come with loss mitigation options. These options allow you to bring your balance back into good standing. For example, you might be able to qualify for what is called a “partial claim,” which will bring the payments current. But your lender possibly won’t inform you about these alternatives. However, a lawyer can guide you better about your options.
Some states allow borrowers the option of foreclosure mediation, where lenders and homeowners sit down together to come up with an alternative to foreclosure. During this process, an attorney can help you negotiate and make sure that the bank treats you justly.
Defenses an Attorney Can Raise in Court
A lawyer might be able to make your defense stronger by pointing specific errors the bank made in the foreclosure process. Potential arguments an attorney can raise may include:
- The mortgage service or lender broke the loan contract, like not accepting your payments.
- The party that filed foreclosure can’t prove that it owns the mortgage.
- You are an active army member and should be legally protected against foreclosure under Servicemembers Civil Relief Act.
- The lender or mortgage servicer did not follow the proper foreclosure process.
If your attorney presents a legitimate and strong defense and the court agrees with your arguments, the lender might move towards settlement, or the court might set-aside the foreclosure proceedings.
Foreclosure in Michigan
If you acquire a loan to buy real estate in Michigan, you will sign two primary documents: a mortgage and a promissory note. The promissory note contains the repayments terms and a note promising that you will pay back the amount borrowed, plus interest, in a specified time. The mortgage, on the other hand, includes the sale clause. If you fail to make the mortgage payments, the sale provision clause will allow the lender to sell your home, either judicially or non-judicially, to repay the loans.
The official foreclosure begins with the lender publishing a notice of sale in the local newspaper for 4 consecutive weeks. Within fifteen days after the first notice is issued, a copy of the same notice will be posted on the concerned property. (Mich. Comp. Laws § 600.3208).
(Michigan laws does not require the lender to issue an advanced notice to the homeowner).
If you face foreclosure, it is always best to hire an attorney or contact the legal aid office to explore your options and learn about your rights. Contact Acclaim Legal Services today.