What Happens When Your House Goes Into Foreclosure?

The foreclosure process is pretty straightforward, and it helps if you know what to expect when this happens. This is a VERY common question at our firm.

Question: What happens when your home goes into foreclosure?

My Answer:  If your house has been foreclosed upon then you no longer own the house.  If that is the case, then the new owner, a bank or private owner, will soon be in touch with you to discuss your vacating the property.  If you do not voluntarily vacate then an action to evict you from the house may be brought against you.  To get you to cooperate, the bank may offer you money to voluntarily hand over the property in good condition.  This is sometimes referred to as a" cash for keys" program.

Pre-Foreclosure

If the house has not yet been foreclosed upon, but you have received notice that the bank or other lien holder intends to foreclose on the home, then you have several options.  

These include, among others: 

• Coming current on your mortgage and seeking to have the bank reinstate the mortgage; 

• Walking away from the home and letting the bank foreclose; 

• Giving the bank a deed in lieu of foreclosure; 

• Selling the house and paying off the mortgage or getting short sale approval from the bank in the funds obtained from the sale are not sufficient to cover the mortgage; 

• Filing for bankruptcy to get a stay that will temporarily stop the foreclosure which may buy you time to latter re-assume the mortgage.  

You may also qualify for a loan modification program. But, you need to be careful because while you are trying to work out a loan modification, often the foreclosure process continues to proceed. Before you can complete the loan modification, you may find that the bank has already acted to foreclose on your home. 

Unfortunately, this has happened to many homeowners.  Some of these homeowners may then have an action for wrongful foreclosure depending on the precise circumstances, but it is better to be proactive and not wait until you house is actually foreclosed upon. 

If you are facing foreclosure, you should seek the assistance of an attorney to discuss which options may be right for you in your particular circumstance.

Disclaimer: The above is intended as general information and your specific situation may be different so it is always important to speak with a lawyer about your specific situation.

For further information, visit our website at:

MarkWeinsteinLaw.com

Bank Gets the House Back - Am I Free and Clear?

In the age of Foreclosure, people often want to know if they are "free and clear" if they let the bank take back a house through the foreclosure process. This is additionally complicated for heirs and executors of estates that have real estate involved. Here is a recent question I received.

Question: If we don't accept the offer (from a buyer) and let the bank have the house, (which has a) $73,000 mortgage, will I be free and clear?
Question Detail: I am having an auction of my father's estate. If we don't accept the offer and let the bank have the house, (which has a) $73,000 mortgage, will I be free and clear? I am the executrix. Will it affect my credit?

My Answer: 

If a bank forecloses on a property and obtains less than what is owed for the property at a foreclosure sale, then the bank may pursue an action against the mortgagor for the balance owed under the mortgage agreement.  If the mortgagor is deceased, then the bank can pursue action against the estate.  Whether the bank will actually decide to pursue the amount remaining unpaid, if any, depends on the amount left unpaid and the policy of the bank. 

As long as you and the estate are kept separate, any action against the estate should not affect you individually. However, the bank might try to name you individually in a suit. Even if it does not do so, it is possible that there might be a mistake made by a credit reporting company that confuses you as executrix with you individually.  This should not happen, but it might, so while your credit should not be affected by an action against the estate, there is a chance it might affect your credit.  

Disclaimer: The above is intended as general information and your specific situation may be different so it is always important to speak with a lawyer about your specific situation.

For further information, visit our website at:

MarkWeinsteinLaw.com

Will a Short Sale Lender Sue for Defficiency?

Short Sales can be a solution for Home Owners with distressed homes and difficult financial circumstances. However, Home Owners should know the whole story before pursuing this route.

We are a law firm that handles Short Sales, so we get a lot of calls from people who want to know the answer to this question:

Question: How can I be sure my lender will not sue me for the deficiency of a short sale after they have accepted a lesser amount?

My Answer: 
Usually when a short sale lender approves a short sale they will send the seller/borrower a Short Sale Approval Letter specifically stating that the short sale lender agrees to not sue the seller/borrower for the deficiency.  (The deficiency is the difference between what is owed on the property and the amount that the short sale lender will net from the short sale).  

You as the seller/borrower should attempt to obtain a Short Sale Approval Letter from your short sale lender(s) that specifically waivers the bank's right to pursue the deficiency as part of the negotiation with your lender(s) in connection with your agreement to sell the property.  

You can use your agreement to sell the property, and the fact that you have found a buyer to purchase the property, as leverage in connection with obtaining a waiver of the deficiency.  This is because the short sale saves the bank time and money.  

The short sale means that the bank will obtain funds for the property and will not have to go through the process of foreclosing on the property and then marketing and selling the property.  

You may need legal assistance to effectively negotiate with the bank to obtain a specific waiver of the deficiency in the Short Sale Approval Letter.  Sometimes, if the deficiency is very large, the bank may only agree to a partial waiver of the deficiency and demand a Promissory Note for the portion of the deficiency they will not agree to waive.  

Again, you may need legal assistance in connection with your efforts to work the best deal with the bank and to stop the bank from foreclosing on your home before you can get the short sale completed. 

Disclaimer: The above is intended as general information and your specific situation may be different so it is always important to speak with a lawyer about your specific situation.

For further information, visit our website at:

MarkWeinsteinLaw.com

Renter Obligations when Mortgage is NOT Being Paid

A common question I get from folks who have called my office recently is whether a renter must continue to pay rent if the landlord is not paying his/her mortgage.

Actual Question: "Am I obligated to pay rent if the homeowner isn't paying the mortgage? The mortgage has not been paid since December. The management company is aware and still requires the [rent] to be paid."

My Answer:

Yes, you are still obliged to pay rent. If you do not, then you can be evicted. If you have a bona fide written lease then even if the property is foreclosed upon your lease will still be valid against the bank or the new owner until the end of the existing lease term unless the property is purchased by an owner occupant. In that case the new owner occupant can terminate your lease so long as the new owner occupant gives you 90 days notice.

Disclaimer: The above is intended as general information and your specific situation may be different so it is always important to speak with a lawyer about your specific situation.

For further information, visit our website at:

MarkWeinsteinLaw.com

Landlords Proper Notice to Tenant

Landlords and Tenants eventually part ways, but how this is done should be written in the lease agreement.

Actual Question from a Landlord: I gave my tenant a three-day notice 60 days ago, but they still won't leave or pay what can I do?
Question Detail: I need to get them out asap.

My Answer:  If you have a written lease agreement, then you need to look carefully at the notice required for termination.  You need to provide a valid notice under the lease and usually a "three-day notice" - even given 60 days ago - will not be valid.  Once the tenant has been given a valid notice of termination, if they hold over, then you can file a dispossessory action against them to obtain legal possession of the leased premises.

Disclaimer: The above is intended as general information and your specific situation may be different so it is always important to speak with a lawyer about your specific situation.

For further information, visit our website at:

MarkWeinsteinLaw.com