Home foreclosures have become part of everyday life for millions of Americans. Foreclosure rates have steadily increased over the past two decades. Homeowners in New York and surrounding areas have been hit especially hard. A common misconception is that homeowners facing foreclosure are lazy or irresponsible. That could not be further from the truth. In fact, the top reasons for foreclosure include:
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Many times, individuals simply need an additional few months or weeks to come up to date on their mortgage. This is why there are a number of federal and New York state protections for defaulting borrowers. In addition to those protections, defaulting borrowers should look to all options available to delay a foreclosure if full payment is in reach. Below are the most common and effective means to delay a foreclosure preceding. If you need to delay the foreclosure process, or if you are simply looking for foreclosure help, our professional and knowledgeable foreclosure attorneys can help guide and direct you through the process.
Not all foreclosures are created equal. It is important to understand the mechanism by which your lender is foreclosing on your home. Generally, the terms of your mortgage will determine whether the foreclosure will be a judicial or non-judicial foreclosure. While the end result is the same, the means to get there varies.
New York is a judicial foreclosure only state for residential properties. A judicial foreclosure is a foreclosure through the courts and through the use of a judge. This can be considered a “basic” foreclosure because every state allows for judicial foreclosures. Homeowners generally prefer judicial closures because there are more foreclosure delay tactics available by utilizing the courts.
When a judicial foreclosure takes place, the lender will file a complaint against the borrower alleging that the mortgage has not been paid. The homeowner will then have to respond to that complaint formally through the court. The court will then give the parties time to discuss the issue and settle the matter if possible. If no settlement is reached, the court will schedule and hold a hearing.
A hearing is not a trial, but the mechanics are similar. The lender will provide evidence that the borrower has defaulted on the mortgage and the borrower will provide evidence to the contrary. Either side may call witnesses and offer documents, such as payment receipts and the mortgage contract. Once the hearing is completed, the judge will determine whether the borrower has defaulted and whether a foreclosure sale may take place.
Non-Judicial foreclosures are a streamlined mechanism by which a lender can foreclosure on a home. They are not permitted in the state of New York for residential properties. Non-judicial foreclosures have become more popular in recent decades because they are faster and cheaper than judicial foreclosures. In order for a lender to initiate a judicial foreclosure, the mortgage document itself must contain a “Power Of Sale” clause. This clause says, in brief, that in the event of default, the lender may circumvent the judicial foreclosure process and sell the home directly.
The process for a non-judicial foreclosure will vary according to state law. There are fewer ways to delay foreclosure in a non-judicial foreclosure because the process is designed to be streamlined. Generally, the lender will post a foreclosure notice on the home and send the borrower notice of default. The lender will then publish that the home will be offered in a foreclosure sale in a local newspaper for a legally required number of weeks. If the borrower fails to remedy the default during this time, the home will be offered for sale. This process can take place within months, depending on the state.
When the bank notice comes, it seems that everyone you talk to will have delaying foreclosure tips to offer. Some can be helpful, and others not. The truth is that there are a number of legal and effective ways to delay the foreclosure process. Delaying foreclosure should not be viewed as a bad thing. In fact, it is an effective strategy for those who wish to stay in their homes and for those who need a little extra time to find someplace new. Below are some of the most effective strategies to delay a foreclosure sale.
Lenders are generally large, national corporations. This means that they have hundreds of thousands of financial records to manage. In their haste, lenders often initiate the foreclosure process prior to having all of the proper documents in order. In both judicial and non-judicial foreclosures, the lender must be ready to provide all necessary loan documents, including the mortgage and promissory note, for the foreclosure to take place. By requesting these documents, you may buy yourself some extra time if the lender did not properly prepare prior to initiating the foreclosure. In extremely rare cases, it may be that that lender has completely lost the documents. If your lender is refusing to provide the necessary documents, contact a foreclosure defense attorney immediately.
There are a number of federal laws that protect homeowners in default. One of those is loss mitigation. Homeowners have the right to apply to their lender for loss mitigation at least 37 days prior to the scheduled foreclosure date. If the lender approves your application for loss mitigation, you and the lender will enter into an agreement that will temporarily halt the foreclosure as long as you satisfy the terms. In New York state, the lender must suspend foreclosure while reviewing the application for loss mitigation..
Due to the Coronavirus Pandemic, New York state and federal laws have been enacted providing for significant mortgage forbearance periods. Forbearance allows you to lower or pause your regular mortgage payments for a specified timeframe, meaning that those amounts can be paid off later. Importantly, your lender cannot foreclose on your home during the forbearance period.
The truth is, lenders do not want to foreclose on homes. It is costly, and they often lose money after all is said and done. If your mortgage payment is just beyond reach, your lender may be willing to modify your loan agreement to make it more affordable. For the most favorable changes, this should be done as early as possible, before the lender puts significant time and money into the foreclosure.
A short sale is an agreement between the borrower and lender to sell the home on the market. The home will typically be sold for less than the outstanding mortgage balance, with the borrower paying the difference to the lender. This is preferable to a foreclosure because the borrower can:
With the help of an attorney, filing for bankruptcy will temporarily halt the foreclosure process during the bankruptcy proceedings. Bankruptcy should be utilized if you are in financial stress in other areas in addition to your home. That is to say that bankruptcy generally should not be used only to stop a foreclosure proceeding. Filing for bankruptcy has serious legal and practical repercussions.
If filing for bankruptcy is applicable to your situation, there are generally two types of bankruptcy that you can file. These are Chapter 7 and Chapter 13 bankruptcy. Generally, you and your attorney will discuss which option is best for you.
A Chapter 7 bankruptcy issues an automatic stay of all collection activities. An automatic stay means that creditors, such as the foreclosing bank, are temporarily halted from collecting on the debts. Chapter 7 prevents all collections long enough for the debtor to sell their assets and pay off the creditors. The assets sold off will generally include the home being foreclosed on, which means that you will most likely not be able to stay in the home after the bankruptcy proceedings are finished. Any debts owed in excess of the assets sold will generally be discharged, including the balance of the mortgage after the sale. While Chapter 7 will generally not allow you to keep your home, it can temporarily prevent the foreclosure long enough for you to find alternative housing.
Many people wonder how long will a Chapter 13 bankruptcy delay foreclosure. If all goes well, Chapter 13 will delay foreclosure indefinitely and allow you to retain ownership of your home. This is because Chapter 13 bankruptcy provides more protections to individuals who want to remain in their homes, despite impending foreclosure. Once you file for Chapter 13, an automatic stay is also entered and the lender will be unable to foreclosure on your home, whether or not the foreclosure proceedings have already started.
Rather than a sale of your assets, Chapter 13 attempts to let you keep as much of your property as possible. This is done by the court facilitating an agreement between you and your debtors. Once an agreement is reached, you will make regular payments to a bankruptcy trustee, who will disburse those funds amongst your creditors, including your home loan lender. These payment plans can last for up to five years, meaning that you have that long to catch up on the amount you fell behind on your mortgage. Once the payment plan is completed you will be up to date on your mortgage and all amounts previously-owed are discharged.
You must still pay your monthly mortgage payment during the bankruptcy period. However, during the bankruptcy proceedings, you and your lender will have an opportunity to renegotiate the terms of your mortgage or refinancing. Generally, the court will be happy to see you and the lender work together to make your loan payments more affordable. If you complete the bankruptcy payments during the term of the agreement and continue to pay the amended loan amounts, you will be able to keep your home.
There are significant downsides to filing bankruptcy. A prior bankruptcy will stay on your credit report for seven years, and during that time many lenders will be hesitant to lend to you again. This means that a mortgage in the near future may be unavailable or unaffordable. That being said, the seven years after bankruptcy are often best utilized getting your finances in order and ensuring that you can avoid bankruptcy again in the future.
Bankruptcy protections vary from individual and their particular circumstances. It is not a decision that should be made quickly. If you would like to know how long bankruptcy will delay foreclosure in your situation, you should contact an attorney specializing in foreclosures and bankruptcy law.
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Foreclose is complicated. Generally, it is a once-in-a-lifetime event. This means that most people will need help navigating the process. If you are wondering how to postpone your foreclosure, an experienced and knowledgeable foreclosure attorney will help you navigate the complex laws and regulations and fight for your rights along the way.
At the Law Office of Yuriy Moshes, we are experts in helping our clients fight foreclosures and mortgage defaults. We have assisted clients in Manhattan, Brooklyn, Queens, the Bronx, and Staten Island delay their foreclosures and resolve mortgage complications on their own terms. Contact the Law Office of Yuriy Moshes to discuss your foreclosure prevention options today.