mortgage

Foreclosure Overview

Posted on by McIntyre Thanasides

In Florida, the process of a foreclosure is controlled by the Florida Statutes. Foreclosure is a legal process a mortgage holder uses to obtain both legal title and possession of the property. When the lender (Mortgagee) loans money to the borrower (Mortgagor) there are many documents which are executed. The two main documents are the Promissory Note and the Mortgage. The Promissory Note contains a promise to pay at a certain rate and under specified terms. The mortgage instrument is a document which allows the lender to seek foreclosure if certain defaults occur. In Florida, this process is done through the Courts.

Different mortgage companies handle delinquencies differently but once you default on your mortgage the lender will retain a law firm and file a foreclosure action. A Complaint is filed with the Court which spells out all the preliminary information and the nature of your default. That Complaint will be served on you by a process server. Once you receive the Complaint and Summons you will have twenty days in which to file your legal response. If you do not file any response, a default will be entered by the Clerk. This Default is a certification from the Clerk to the Judge that you have not filed a response and in essence, you admit the default which is contained in the Complaint.

Despite the Foreclosure Complaint, you have many opportunities to save your home. Among the choices are restructuring or ‘Loan Modification’, a negotiated reinstatement or a Chapter 13 Bankruptcy. Loan Modifications are possible under a wide variety of circumstances. Some of these include the lender reducing the amount of the principal balance owed and thus a reduction in the payments. A Negotiated reinstatement is a process where you make an arrangement to pay the delinquency and attendant court costs and continue on with your mortgage payments as if no default had occurred. Chapter 13 is a bankruptcy process where you can do one of several things to save the home from foreclosure. A loan Modification can be negotiated as part of your Chapter 13, this may include a reduction of the principal balance and a corresponding reduction in payments.

All of your options are complex and critical and given the complexity and importance of saving your home, you would be well advised to seek and obtain legal counsel for any of these foreclosure alternatives. Just because you are delinquent and you have received ‘legal papers’ seeking to foreclose on your home, it is not too late to save your home. The most important part of this process is not to sit on your rights and remedies. If your mortgage is in arrears, you would be well advised to seek experienced legal counsel and explore what solution is best for your situation.

Mortgage Foreclosure Deficiencies

Posted on by McIntyre Thanasides

When you buy a home with mortgage funds, you sign two primary documents, the Promissory Note and the Mortgage Instrument. The Note is the promise to pay the financed amount under certain terms. The Mortgage is a document that allows the lender, under certain events of default (non-payment, waste, non-payment of property taxes, etc) to seek foreclosure to recover both possession and legal title to the property. When the lender actually does complete a foreclosure, the property is sold on the courthouse steps by the Clerk of the Court to the highest bidder. More often than not, the buyer is the mortgage lender. Often times the sales price is far less than the balance owed. The Lender is permitted by Contract (The Mortgage) and by Statute to ask the Court for a Deficiency Judgment against the borrowers for the amount between the fair market value at the time of the sale and the balance owed. The fair market value is the value which a willing buyer would pay a willing seller in an arm’s length transaction.

The lender currently has a five year statute of limitations to ask the Court for a Deficiency. This five year period may be reduced in the future as part of a Bill pending in Florida but it is currently five years. The deficiency is dischargeable in a bankruptcy and can often be negotiated away as part of a negotiated foreclosure result.

Some consumers chose to fight the application for the deficiency on the basis of disputing the lender’s valuation of the property at the time of the sale. That type of litigation is expensive and largely unnecessary with the variety of ways to resolve a mortgage default and foreclosure. Disputes over determining the value of property are complicated because real estate valuation is hardly a science but falls in the realm of experts and expert opinions.

If you have a mortgage delinquency or a pending foreclosure you need to consult with experienced counsel who can explore and help you navigate through the many remedies available to avoid an adverse result in a foreclosure where the lender seeks a deficiency. As complicated as it sounds, all of these types of problems are manageable with good advice and legal counsel so you understand your rights and remedies as they develop and make the best, most prudent decisions possible.