By: Lance T. Denha, Esq.
Whether your home is in foreclosure or worried about foreclosure in the near future, below are ten techniques and legal strategies homeowners should contemplate during this stressful time period.
Technique number 1- The first and probably one of the more well known ways of delaying a foreclosure is chapter 7 bankruptcy. Any kind of bankruptcy will immediately stop your foreclosure where ever it is. A chapter 7 bankruptcy will actually dissolve all debt and absolve you of the responsibility to pay your debt. It will temporarily delay foreclosure with the US bankruptcy court. Usually it will buy up to 45 to 75 days, sometimes more sometimes less depending on your financial institutions foreclosure system and your local bankruptcy court judge as well.
Technique number 2- The second way of delaying is through a chapter 13 bankruptcy. This type of bankruptcy reorganizes your debt and creates a payment plan. The most recent law changes mean that more people will be forced to file this type of bankruptcy. If you were to simply file this bankruptcy but never make the payments it will still buy you as much as 45 to 75 days and sometimes even more. If you make payments according to the plan and properly include mortgage debt in the bankruptcy you should be able to permanently stop foreclosure.
Technique number 3- Take full advantage of the most recent Michigan law established in 2009, which essentially permits the homeowner to acquire more time to work with his/her lender in order to find an alternative way to avoid foreclosure. You as a homeowner need to request a meeting within 14 days of the notice of legal action mailed to you by lender’s counsel. This could easily buy you an additional 90 days or more. If you don’t request a meeting, your case continues to be foreclosed by advertisement and after 4 weeks of published notice by your lender, a foreclosure sale will take place if you do not take advantage of this new Michigan legislation.
Technique number 4 & 5- Another way to delay or even stop your foreclosure is through payment plans like forbearances and loan modifications. Banks will delay or stop foreclosure when you initiate a loan workout and plan to start making payments. Loan modifications will usually completely stop the foreclosure. It typically will actually stop the foreclosure and move the back payments to the end of the loan. A forbearance plan is easier to get but only pauses the foreclosure until you’re completely caught up which means there will be less of a delay.
Technique number 6- If you’re planning on selling your house and you have an offer, technique number seven would be to tell the bank that you have an offer, otherwise known as a short sale. You or your professional consultant will explain that they need to delay the foreclosure process because you have an offer for them that’s going to pay them off. If your legal team is diligent in notifying your lenders, typically banks will halt sheriff sales and delay the foreclosure process numerous times for purposes of analyzing and potentially accepting the offer.
Technique number 7- Defending the foreclosure- You should have an attorney no matter what technique you are using so that you can have quality advice that keeps you out trouble and puts you in a better position. However a skilled and knowledgeable foreclosure defense attorney can rip to pieces most of the foreclosure complaints put together by lender attorneys because most of those complaints are put together in foreclosure factories with standard templates. They only work because no one challenges them so they are accepted by default. Usually at some point in time due process is not followed by lenders or their attorneys. In some instances an attorney may be able to delay foreclosure cases for years without even using bankruptcy. This technique may very well force the lender to start the foreclosure proceedings all over again. Interestingly enough as a result of a successful foreclosure defense, the lender may suddenly reassess the situation and possibly work with a distressed homeowner to work out a modification or short sale.
Technique number 8- An astute Attorney, given certain circumstances, may also choose to challenge the right of a plaintiff to sue based on jurisdiction. The attorney may argue as a defense for the homeowner that since the foreclosing lender was based out of state that particular lender should be suing in federal court.
Technique number 9- After thorough review of a homeowner’s loan documents, attorneys may also be able to challenge the right of a plaintiff to sue based on the fact that they could not prove that the plaintiff/lender actually owned the mortgage. This could stall the case indefinitely or at least until they can trace back from all the servicer transfers and the sale of the mortgage from one investor to the other in order to find the original signed document that says that you, the borrower, actually owe the money. In some cases that document does not exist. There have been federal judges that have totally eliminated the mortgage balances because they couldn’t prove that the defendant actually owed that amount of money!
Technique number 10- Finally, there are thousands of state and federal rules that a lender must abide by as they lend money. There are so many that it’s nearly impossible to faithfully fulfill all the necessary requirements. It may be a wise idea to have an attorney audit your loan documents and possibly bring law suits against lenders. Your debt could be erased in its entirety but most likely your attorney could at least delay a judicial or even a non judicial foreclosure and very often lower the balance of the loan to a significant amount that your lender will be motivated to be more aggressive about offering you a reasonable short sale settlement or even better option to keep your house.