Avoiding Foreclosure and Foreclosure Defense
Ways to avoid losing your home
If you have fallen behind on your mortgage payments by more than a couple of months, your lender has probably been threatening or has already started the foreclosure process. The prospect of losing your home to foreclosure can be devastating to you and your family. Because it takes many months for a foreclosure to progress from the initial notice to the final sheriff’s sale of your property, you may be lulled into taking no action.
There are several alternatives to foreclosures, but each requires action by the homeowner who is urged to act without further delay.
The Making Home Affordable® Program (MHA)® is a free federal program that assists homeowners who have difficulty making their monthly mortgage payments. For homeowners that desire to remain in their homes, MHA provides programs to lower your monthly payments by make a loan modification. If your home is worth less than your mortgage loan’s outstanding balance, you may even qualify to reduce the principal owed on your loan.
If you haven’t yet fallen behind on your mortgage payments, but struggle to make each payment, refinancing your loan can be an attractive alternative. By refinancing you can take advantage of today’s historically low interest rates and/or extend the term of your mortgage loan. Either or both will significantly lower your monthly payments when may be all the debt relief you need to avoid foreclosure. If you do not qualify for a traditional refinance, you may be able to qualify for the federal Home Affordable Refinance Program (HARP).
A short sale occurs when a mortgage lender approves the sale of a home for a purchase price that is less than the outstanding mortgage balance plus costs of sale. The mortgage lender is motivated to approve short sales for a number of reasons, including the fact that a short sale can be more cost effective for the lender than a foreclosure proceeding
Benefits of a short sale to homeowners and lenders include:
- Significantly less negative effect on the homeowners’ credit report than a foreclosure.
- A lender does not have to maintain the property or find a buyer as it would if it foreclosed on the mortgage.
- If qualified under the Home Affordable Foreclosure Alternatives (HAFA) Program, homeowners may receive $3000 for relocation expenses.
- Part or all of the unpaid balance of the mortgage loan (the deficiency) may be forgiven so that the homeowner is no longer responsible for it
Under the Mortgage Debt Relief Act of 2007, taxpayers are not required to pay income tax on the amount of forgiven debt resulting from a short sale. However, the Act is scheduled to expire at the end of 2012, so if not extended by Congress, homeowners should act quickly to take advantage of this benefit.
Deed in lieu of foreclosure
Once the foreclosure process has begun, some lenders may allow you to transfer ownership of the property to the lender. In this case, your credit rating may improve for two reasons:
- By having no more mortgage payments, the reporting of late or missed payments stops
- You have avoided the negative impact that a foreclosure would have had on your credit report
If the home is worth less than the mortgage balance, some lenders try to hold the homeowner responsible for the difference, known as the deficiency balance. Our foreclosure lawyer can negotiate with your lender to accept a deed in lieu of foreclosure with deficiency forgiveness.
When you file for bankruptcy, a foreclosure in process is halted. While home mortgages are not generally dischargeable in bankruptcy, other debts are wiped away. Thus when you emerge from bankruptcy you may be able to bring your mortgage current and afford to make your monthly mortgage payments.
Let an experienced Lawyer help you avoid foreclosure
If you live in the New York City area, contact the Law Office of Gregory Messer online or at 718-717-2368 to schedule a free initial consultation. Our office is located across the street from the U.S. District Bankruptcy Court in Brooklyn and is close to the Borough Hall and Court Street subway stations. We serve residents throughout Brooklyn, Bronx, Manhattan, Staten Island and Long Island.
To ensure every client receives the personal attention he or she deserves, we are an appointment-only law firm with flexible hours adjustable to fit your needs.