Foreclosure FAQ


Should I open and respond to all mail from my lender or lender’s attorney?

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action and important dates. Your failure to open the mail will not be an excuse in foreclosure court, and ignoring these notices will only make the situation worse. Before responding, contact us immediately for a free consultation. Your lender will have an attorney working for them, so should you.


I have just been served with a summons and foreclosure complaint. What do I do?

YOU MUST RESPOND IN WRITING AND/OR SERVE AND FILE AN ANSWER AND AFFIRMATIVE DEFENSES WITHIN 20 DAYS OF BEING SERVED WITH THE COMPLAINT. Any delay may make the situation you are in worse, and if a borrower or homeowner fails to do anything at all, the situation may become the worst case scenario possible. Contact us immediately for a free consultation. Florida’s mortgage foreclosure process will absolutely have serious, long lasting ramifications that you may have to deal with in the future, so it absolutely in your best interest to participate now while it is occurring. Your decision to participate now may preserve, protect and safeguard valuable legal rights affecting your future income, credit worthiness and income tax consequences. Contact us immediately for a free consultation.


If I do nothing, what will happen?

A default and default judgment will be entered, and the clerk of the court will auction your property, usually within 25 to 30 days from entry of a final judgment.


Should I use a foreclosure prevention company?

You don’t need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender may provide for free. Watch out for foreclosure recovery scams! If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home. Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney or a trusted real estate professional.


Will the foreclosure process affect my credit score?

It is hard to say exactly how many points your credit score will drop due to a foreclosure. There are numerous factors that affect your credit score. It does appear though, that loss mitigation options that do not result in the completion of the foreclosure are better for your credit score depending on which credit bureau you are looking at. However, Fair Isaac Corp. (FICO) has been quoted as saying that loss mitigation options have the exact same negative effect on a person’s credit score. This is so because Fair Isaac Corp. has done very little analysis distinguishing loss mitigation options vs. foreclosures, and as a result of ignorance they treat loss mitigation options and foreclosure all the same. However, Transunion, Equifax and Experian have a little more detailed credit scoring system, so they may account for loss mitigation options. However, a benefit of short sales and other loss mitigation options is that borrowers will generally face a shorter waiting period before they can obtain another mortgage. Many lenders primarily make loans that they can sell to big mortgage players Fannie Mae and Freddie Mac. Fannie Mae generally will not buy loans made to borrowers involved in a short sale in the past two years. That’s shorter than the four-year wait time if you have a deed in lieu of foreclosure on your record, and the five-year wait time if you have a foreclosure on record. Typically, any late mortgage payments are viewed as a negative mark. Generally, negative marks will remain on a credit report for 7 years. Foreclosures also remain on credit scores for 7 years. The impact on credit scores diminishes over time though. Loss mitigation efforts and foreclosure are definitely better than a bankruptcy, as the filing of a bankruptcy is viewed by the credit reporting industry as an attack against all trade lines across the board, whereas a mortgage foreclosure is only an attack against a single trade line, your mortgage lender.


What if I file bankruptcy?

A bankruptcy will stop the foreclosure. A chapter 13 bankruptcy may allow you to make up the arrearages and reinstate your mortgage, over a period of time, usually 5 years. It means you make a regular payment and part payment each month until you get caught up. In a chapter 7, you will have to pay back the arrearages much quicker than 5 years, the foreclosure will continue. The general rule is bankruptcy negatively affects your credit score for 10 years, but sometimes the creditors on a chapter 13 will voluntarily remove it after 7 years to encourage people to file a 13 rather than a 7.


Are their income tax consequences as a result of a foreclosure?

It usually depends on whether or not your home or property has equity and what type of loan it is. If there is no equity, it is likely that the property or home will be sold for less than the mortgage amount owed. The Internal Revenue Service will consider debt forgiveness by the lender as income, and the borrower may also have income in the form of capital gains from the sell or transfer as well. However, there are several ways to offset this gain or income such as off setting income and capital gains with losses, being insolvent at the time of the transfer and bankruptcy. CONSULT WITH AN ACCOUNTANT. These rules are complicated and you are advised to make a thorough examination of your personal financial situation with an experienced tax professional.


After the property is auctioned by the court clerk, do I have to get out?

Yes. The sheriff’s office will physically evict you and remove you and your personal effects from the property, usually in as little as 10-15 days.


What can an experienced and knowledgeable lawyer do?

File an answer containing affirmative defenses, if any.
In the answer, is a denial of the lender’s complaint all I need to do? Usually not. You must state all affirmative defenses, otherwise they may be waived or may be may not be sufficient to stop the foreclosure process.


What are affirmative defenses?

They are special defenses which must be specifically alleged, such as truth-in-lending violations, usury, fraud and other specific types of improper conduct by the lender, which may defeat or partially defeat the lender’s claims.


Why are affirmative defenses different than just an answer with denials?

The lender has a sufficiently more difficult burden to obtain a “fast” or summary judgment of foreclosure when affirmative defenses are filed.


Can an attorney just delay the case without justification?

No. An attorney cannot cause delay solely for that purpose. But, in the full exercise of your legal rights, delay may result as a by-product of a proper defense, often caused by the plaintiff not properly and promptly responding to your attorney’s rightful demands.


If I get a lawyer, does he automatically get more time to file an answer?

No, the 20 days continues to run. If a default is taken against you, it will pose, at a minimum, difficulties in getting the default set aside and allowing your attorney to use the defensive arsenal otherwise available on your behalf.


If my property is sold by the court clerk, what price will it bring?

Usually much lower than fair market value. Most of the time it is sold for the total amount of the mortgage, or less.


Will I get any of the sales proceeds?

Only if there is a surplus (if the property is sold for more that what is owed in total to the plaintiff and all other mortgages and liens on the property).


If the property is sold for less than the total owed, can the lender collect the difference?

Yes, but only if the Lender also obtains a deficiency judgment.


Can I sell the property and get my money out?

Yes, you can sell or refinance so long as the lender is paid prior to the foreclosure sale date.


I have lots of other questions, can I call the judge or the court for advice?

No. Judges, judicial assistants (judge’s assistant), court clerks and sheriff’s department employees cannot practice law or give you legal advice. They can only point out the existence of certain procedures, but cannot tell you how to follow them or how effective they will be.


Do I have the right to reinstate? (bring the mortgage current)

Not always, unless your mortgage or mortgage note specifically gives you this right. However, many mortgage lenders often voluntarily consent to reinstatement.


What are some of the general types of real estate ownership?

There are several types of real estate property ownership. Joint Tenancy is when two individuals have equal share in a property. Sole Ownership is when one person owns a property. Tenants in Common are when more than two people own the same property. In addition, Community Property is only active in select states. This type of ownership involves the a married joint occupant situation.


What is the meaning of possessing real property?

When an individual owns real property, that person has the right to do as they please with that land. Some general functions are using land for personal use, renting to individuals, place the land for sale, using the property as collateral for a loan.


What exactly does a quitclaim deed mean?

Creating a quitclaim deed transfers property ownership to a willful participant or investor for a price below market value and is to mortgage provider approval.


What is involved in recording a property title?

When an individual is a new property owner, it is you right of that owner to have an official recorded document called the property deed. The deed transferred to a person in exchange for sale price of a property.


What are the required taxes that a property ownership has to pay?

All property owners are required to pay their county property tax. County entity is the main contact for all issues dealing with property tax revenues. Property taxes can be combined into a person’s mortgage payments, or paid on the property sale anniversary date.


What is the government law on eminent domain?

The government has the right to use private land for the well being of the public, one example is expanding a highway over an individual’s property. The only right the property owner has is to receive the fair market value your property.


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