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Facing Foreclosure? You May Have Options


Facing Foreclosure? You May Have Options

If yours is one of the nation’s estimated 14 million troubled mortgages, it can seem as though you are running out of options. But help may be on the way:

“Homeowners unable to meet their current mortgage payments may have a new remedy. Many lenders are showing a new willingness to reduce the principal owed on the property by lowering or ‘writing-down’ the amount. The reduction brings the mortgage loan in line with current property values and borrower incomes. As foreclosures rise so, it seems, does lenders’ flexibility in offering this option: Principal write-down was used in 30 percent of private loan modifications in 2011, as opposed to only 2 percent in 2009.” (New Options for Homeowners Facing Foreclosure by

For your reference, here’s a roundup of recent legal updates on options for forestalling foreclosure:

Mortgage Modification – Do You Qualify? (Harold Shepley & Associates, LLC)

“With a mortgage refinance, you are looking for an entirely new loan. With modification, you are simply changing the terms of the existing loan to bring the mortgage current and make the payments more affordable. Besides lowered payments, mortgage modification may also give you a reduced interest rate, reduced late fees, and reduced penalties. All of this can help save your home and your peace of mind.” Read more»

What to Do to Avoid Foreclosure (Tampa Bay Bankruptcy Center, P.A.)

“Once you fall behind in your mortgage payments, you can just about predict that foreclosure would be around the corner if you do not do anything about it. Once foreclosure proceedings have begun, it is difficult to deal with so the best thing to do is avoid it. But the question is, how?” Read more»

More Mortgage Refinance Help for Homeowners Through Enhanced HARP 2.0 (Pew Law Center)

“A problem that many homeowners with Adjustable Rate Mortgages (ARMs) have been suffering with is the need to refinance their homes to get out from under the high-interest ARM they started with. Refinancing the loan can result in meaningful savings, as current interest rates are at historic lows.” Read more»

How Bankruptcy Protects You From Your Lender During Foreclosure (Fonfrias Law Group LLC.)

“When your lawyer files your bankruptcy papers in federal court, the bankruptcy court judge issues an automatic stay… This court order stops the foreclosure lawsuit – stops the lender from seizing your home – stops the lender from selling your home – stops the lender from evicting you from your home. In addition, the court order stops every one of your creditors from trying to collect money from you, including all state court lawsuits by creditors.” Read more»

Bankruptcy and Foreclosure (Tampa Bay Bankruptcy Center, P.A.)

“One of the most dreaded things anyone can face is the foreclosure of their home. This is because foreclosure threatens our basic need for security. But if debts are mounting and you fall behind in your mortgage payments, it is only a matter of time before your bank takes foreclosure action. Is there anything you can do about it? Yes. You can file for bankruptcy protection.” Read more»

Related Commentary and Analysis

Court Sets Aside Foreclosure Sale Where Assignee Of Mortgage Failed To Record Its Interest Prior To Sale (Warner Norcross & Judd – Appellate Practice Group)

“On January 12, 2012, the Michigan Court of Appeals issued its opinion in Kim v. JP Morgan Chase Bank. In Kim, the defendant was the assignee of the mortgage, and it failed to record its ownership of the mortgage before foreclosing by advertisement… [T]he Court held that the foreclosure sale was invalid because the defendant had not complied with [Michigan law] requirements.” Read more»

Inertia Is Not An Option: Massachusetts Court Rules Lender May Be Liable For Dragging Heels On HAMP Loan Modification (Richard Vetstein)

“Under HAMP, there are strict deadlines by which lenders must respond to a borrower’s application, and foreclosure activity must stop during the consideration period. [In Parker], the judge lamented that federal regulators had failed to pass enforcement mechanisms to protect borrowers from lenders such as BofA dragging their heels on loan modifications.” Read more»

What You Need to Know about the New Mortgage Loan Servicing Standards (Marjorie E. Gross)

“When the home mortgage bubble burst in mid-2007, the initial focus was on mortgage loan originators and underwriting standards. But attention shifted to mortgage loan servicers as a result of skyrocketing foreclosures and the robo-signing crisis, as well as complaints that servicers were not modifying enough mortgages under the Treasury Department’s Home Affordable Mortgage Program… Because of the increased focus, there have been a number of major regulatory actions involving servicers.” Read more»

Eaton v. Fannie Mae: A Must Watch Foreclosure Case (Richard Vetstein)

“The Massachusetts Supreme Judicial Court has just issued an unusual order in the very important Eaton v. Federal National Mortgage Association case… [T]he Court is considering the controversial question of whether a foreclosing lender must possess both the promissory note and the mortgage in order to foreclose. If the SJC rules against lenders, it could render the vast majority of securitized mortgage foreclosures defective, thereby creating mass chaos in the Massachusetts land recording and title community.” Read more»

New Obstacles on the Course: State Foreclosure Laws Continue to Complicate Mortgage Loan Servicing (K&L Gates LLP)

“Recent reports reflect that an average foreclosure takes over 986 days in New York; New Jersey, Florida, and Maryland also lead the pack of states with lengthy foreclosure timelines. However, legislators have recognized that a lengthened foreclosure timeline will not solve our crisis; in fact it may actually create new problems! Servicing practices have come under increased scrutiny… States have heightened their focus on these practices, and as a result have enacted more than 90 servicing-related measures during the past three years.” Read more»

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