The South Florida real estate market is a complete mess. People who have purchased or refinanced homes between 2004 and 2008 have seen their investment sink like a rock. The drop in home values has put families in a cash crunch, forcing them to make some hard decisions.
Te foreclosure rate in South Florida is one of the highest in the entire nation. According to research firm Corel Logic an amazing 27.3% of the mortgages in Dade County were at least 90 days behind or in foreclosure. So YOU ARE NOT ALONE. With many debts mounting and incomes dropping, many families have decided that it is better to pay FPL, educational costs and general expenses than pay their mortgage. These borrowers have made the choice under the assumption that the mortgage company will take longer to foreclose on their home than FPL will to turn off their lights. Still others, recognizing the dramatic drop in the home values, have strategically stopped paying their mortgage in an attempt to seek a modification of their current loan.
Unfortunately, for those that have either by strategy or necessity stopped paying their mortgages but who want to keep their homes, many banks have been taking the incredibly odd strategy of refusing to negotiate with home owners at all! This leads us to the five steps that everyone should consider when trying to save their homes
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Initial Loan Modification
Aggressively pursue a loan modification. Speak with your lender; be prepared with financial documents and a clear explanation about what caused you to fall behind and what the near future holds for you and your family.
The banks can chose to accept the modification which often will lower the interest rate of your loan, roll your escrow payments into the future monthly payments, and absorb the missed payments that led up to this discussion. Unfortunately, the banks are not acting rationally and are choosing to deny initial loan modifications and instead are moving toward a foreclosure.
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Initial Foreclosure Defense
Once served with foreclosure papers from the civil court, don’t panic, but contact an attorney immediately. There are different strategies you and your attorney may pursue. Regardless of which one you follow, a response of some sort must be filed with the court, usually within twenty days. Don’t miss this deadline, as it will dramatically affect your chances of saving your house! Foreclosure defense is an essential part of your efforts to keep your home. While you may have many options toward saving your home, once your mortgage company has received the foreclosure judgment they will be holding all the cards and are less likely to negotiate. You will likely lose your home. Don’t let the foreclosure go through the courts with out forcing the bank to jump through every legal hoop before successfully foreclosing.
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Chapter 7 Bankruptcy
Most people who are having trouble paying their mortgage are also having trouble with other debts. Bankruptcy is great equalizer in this battle with the banks. Many times people are declined a loan modification because they have too many other outstanding debts which bankruptcy takes care of in a big way. Bankruptcy can also help “convince” the banks that the situation is serious and prompts them to negotiate a favorable loan modification.
My office, the Bankruptcy Law Clinic, has helped thousands of families over the years. We have been able to get favorable responses from mortgage companies and helped families stay in their homes. In many cases, once a chapter 7 bankruptcy was completed, the banks give my clients an incredible loan modification saving their family home.
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Chapter 13 Bankruptcy
This type of bankruptcy can eliminate second and third mortgages, home lines of credit, credit card debts and medical bills, while preserving almost all of your assets. Imagine not paying a second monthly mortgage payment and wiping out all your credit card debt as well? The Chapter 13 bankruptcy can be very complicated, but if your situation allows it, a qualified, experienced attorney can use it to help you on the path to financial success. A chapter 13 bankruptcy isn’t for everyone, but when it works it is a beautiful thing. I recently had a very happy client who we were able to not only modified a first mortgage on his primary home, but we were able to eliminate his second mortgage, wiped out credit card debt and even diminished a $100,000.00 mortgage on an investment property. As an attorney who works solely to protect his client’s interests against the banks, it was particularly satisfying. The client was so grateful; they even sent the office free pizza! Yum! Learn more about how a Chapter 13 bankruptcy can save your home by clicking here.
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Secondary Attempts at Loan Modification
I always tell my clients, don’t ever give up on a loan modification. At any point in the foreclosure process, a bank can choose to modify your mortgage. I have helped clients successfully modify their loans years into the foreclosure process, saving their home from ending up being sold in foreclosure on the courthouse steps. Amazing!! Never give up if you want to save your house.
Please understand this is a simple overview of five ways to save your house as you are falling behind on your mortgage. In order to get a thorough overview you must speak with a professional. |