WORRY AMONG PEOPLE STRUGGLING TO SAVE THEIR HOMES OFTEN COMES FROM not knowing what to expect or if there is any way to stop a foreclosure. Take for instance the case of “Mr. Smith.” Mr. Smith is a fictitious name.
The Situation of Mr. Smith
After losing his job, Mr. Smith stopped paying his mortgage, and unable to find a new job, he could not pick up his mortgage payments again. Over the next two years, “Mr. Smith” approached his lender multiple times asking for a loan modification. Unfortunately, the paperwork he submitted to the bank was lost several times. The bank he started with had sold its mortgages to other lenders and the new lenders had staff changes as well. Although Mr. Smith tried three times for a modification, he was unsuccessful. In the meantime, his unpaid mortgage balance increased every month and he had no idea how to resolve the situation.
Mr. Smith, a Florida resident, eventually was served a foreclosure summons.
Mr. Smith consulted an attorney to discuss his options. The attorney asked if Mr. Smith wanted to try to hold onto his house. If he did, he would have to consider filing for bankruptcy under Chapter 13, where mortgage modification mediation programs have been extremely successful. One reason is that the multi-year repayment timeline of a Chapter 13 bankruptcy would allow Mr. Smith to catch up the unpaid balance.
About Modification Mediation
A modification mediation may be requested by the debtor or attorney. The mortgage company usually will cooperate. All documents required by the mortgage company must be submitted through an online portal so there is no confusion about which documents have been provided. (This is a major problem outside of mediation). A mediation date is set. and more often than not, an agreement is reached.
Chapter 7 Bankruptcy Option
Mr. Smith also could choose to file a Chapter 7, which stops the foreclosure process immediately with an “automatic stay” of creditor action. During the period of the automatic stay, Mr. Smith would be able to remain in his house long enough to prepare to move, find a new job, and/or try to work out a new payment plan with the lender.
Mr. Smith also could decide to hire a foreclosure attorney to fight the lender’s repossession, and/or drag out the process as long as possible while “Mr. Smith” figures out whether to file bankruptcy or contact someone with the financial means to help him out.
All of the above options are feasible and will work if the situation fits the decision. The best bet when falling behind on your mortgage and facing foreclosure is to contact an attorney. S/he can explore your concerns, find out your priorities, and let you know how your desired outcomes can be achieved.
As always, this article is an illustration and not intended to provide legal advice for an individual case. If you are trying to protect your home from foreclosure, contact a qualified attorney about your specific case.