People across the country may soon find themselves in uncertain, to dire straits. Federal pandemic unemployment benefits ended on September 6, 2021 with many states electing not to extend these programs. That included the extra $300 weekly boost received by many, as well as the Pandemic Unemployment Assistance (PUA) for the non-traditional unemployed and Pandemic Emergency Unemployment Compensation (PEUC) which extended benefits past the end of any state benefits.
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That affects about seven million people nationwide, and 800 thousand in New York state alone. The United States Supreme Court also recently ruled that the federal eviction moratorium is unconstitutional. That puts many at risk for potentially losing their homes. Given those developments, legal help may be your best bet in finding out how to stop foreclosure and keep your home, if you face losing it with not being able to pay your mortgage. Fill out a form on our website to find out more on ways to stop foreclosure now.
Foreclosure is the process of a bank or other lending institution taking over a property where the owner is in default of a loan. This happens when, for whatever reason, an owner stops making payments on their mortgage. Foreclosures take two forms: judicial and non-judicial. In judicial foreclosures, the lender sues to evict the borrower, and the borrower defends themselves in court. Non-judicial foreclosures generally do not involve the courts and are generally faster than judicial foreclosures. Any evictions rely on language in the mortgage agreement between the lender and the borrower. New York state is a judicial foreclosure state, so we will focus more on that in this article.
There is a process or NYS foreclosure timeline that gives an idea of what to expect if you fall behind on paying your mortgage, are foreclosed on:
Grace periods are usually given in circumstances where, for unforeseen reasons, you cannot make a given month’s payment. Keep in mind that you could be looking at a late fee. Some lenders will also want to report the delinquency to the credit bureaus if you are behind over for 30 days..
Next you would be considered in default, if you miss several mortgage payments. At this time the lender will send you a notice of default. However by law, the lender must send you a notice of default at least 90 days before beginning the foreclosure process. The 90-day plays out the same time as a federally mandated 120-day pre-foreclosure period.
As New York is a judicial foreclosure state, the next step would be for the lender to file a foreclosure lawsuit. A default judgment would be issued if there is no response to the lawsuit. A trial or summary judgment could be ruled on by the judge if the borrower answers the lawsuit.
The pre-foreclosure period between the default notice and selling your home is the most crucial because this is a time in which you can seek to remedy your mortgage default.
When all is said and done and the foreclosure process has concluded without you resolving your delinquent mortgage, your property will be put up for sale to satisfy any outstanding debts. This is usually handled through a notice of sale by the lender and is typically published on your existing property and/or in your local newspaper. Once the property is sold, you will be given notice to vacate your former home.
As there are several steps to go through before any actual foreclosure, there are opportunities and ways to stop foreclosure immediately. Also, if you have any questions, such as only one spouse on a mortgage but both on title, don’t hesitate to talk with a foreclosure attorney.
One way of stopping a foreclosure is by filing for bankruptcy. Bankruptcy is a process by which you declare yourself financially insolvent and unable to meet your current financial obligation. Depending on your circumstances and the type of bankruptcy you file for, you either get essentially a clean slate or an opportunity to rearrange your debts into something more manageable. In either case, a bankruptcy halts the foreclosure of your home.
A lender can contest the stoppage of the foreclosure in bankruptcy court, but that can not happen for at least 30-60 days from the date of filing. The advantage here for the borrower, though, is that it buys time to find a resolution to the delinquent mortgage dilemma. There are two kinds of bankruptcy, Chapter 13 and Chapter 7, which we will go into more detail in the following sections.
In a Chapter 13 bankruptcy, you rearrange your debts and make arrangements to pay them off. Some of the advantages include possibly being allowed to keep your home because your past-due home loan can be figured into your bankruptcy filing plan. You may also be relieved of some or all of your unsecured debts (like credit cards), which frees up more money to put toward paying off the delinquent loan under your repayment plan.
In a Chapter 7 bankruptcy, your debts are eliminated completely, if you file and are approved for this type of bankruptcy filing. While this type of bankruptcy will not normally save your home, it can delay the foreclosure process, giving you time to amass money for other uses like renting an apartment or house or working with the lender to try to stay in your home. You may also not be held liable for any remaining balance after the foreclosure, more commonly known as a deficiency judgment.
A decision to file for bankruptcy is not something to choose lightly. Filing for bankruptcy carries several risks; the chiefest of which, it can affect your credit and ability to qualify for financing and buy things for years to come. That’s why it’s important to hire the right attorney in your corner to stop foreclosure now especially if you receive a foreclosure summons. Learn more about response to foreclosure summons and ways to stop foreclosure immediately by contacting one of our experienced attorneys for a free consultation.
In certain circumstances, you may qualify for a loan modification to make the loan more affordable. The Making Home Affordable Act has options to help homeowners stay out of foreclosure or examine ways to get out of your mortgage. You can work with the lender directly, but an option like this is best discussed with an attorney.
Dual tracking is where a lender will continue foreclosure proceedings while pursuing foreclosure-mitigation options with the borrower. Some states, like California, Colorado, Nevada, and Minnesota have outlawed this. Federally, the borrower may be protected if a loss-mitigation application is received more than five weeks before a foreclosure sale. In that case, the lender cannot proceed with the sale while the application is under consideration or if you catch up on your home loan during the course of considering the loss mitigation plan.
If there is pretty much no chance to save your home, there are other ways to avoid foreclosure. One of them is by selling your home.
Find a good real estate agent by asking friends and neighbors and other trusted people, especially one who has a good track record of quick home sales. The goal is to sell and close on that sale prior to any foreclosure proceedings concluding and getting enough from the sale to pay off the remainder of your past-due loan. But before you consider selling your home, first ask the lender as there are legal obligations to consider and potential consequences you could face if you sell without the lender’s permission.
Another option to avoid foreclosure is working with your lender on a short sale of your home. The lender must sign off on a short sale because they have to be willing to take less than the home is worth. And it only applies to homeowners who are upside down on their mortgage. Your lender could see this as an advantage though because a short sale could be the quickest way to dispense of the current foreclosure process and property.
Another option is a deed in lieu of foreclosure, where you sign the deed over to the lending institution. The advantage of this is it could have less of an impact on your overall credit rating than a full-on foreclosure. However, deeds in lieu of foreclosure are not granted as often because of the potential legal risks the lender takes on when taking over a deed to a house.
There are a couple of things you can do to stop foreclosure by reinstating the loan:
What is the difference between the two? We will take a look below.
Reinstatement of a loan: reinstatement of a loan is where you bring everything up to date and pay off any outstanding balances. First though, you have to find out the entire past due balance. This does not just include any balance on the mortgage itself, but other items like late fees, interest due, inspection fees, and other administrative costs and fees. Deadlines and requirements for loan reinstatements vary from state to state. In New York, you can reinstate your loan any time prior to a final foreclosure judgment.
Payoff is much simpler but much harder than reinstating a loan. Payoff is basically everything reinstating a loan is, plus the remainder of the entirety of the loan.
There are other ways to avoid foreclosure that haven’t been discussed above. They include:
Talk with your lender about reaching some sort of agreement, whether it is making new arrangements to pay off your loan. This is where the advice of a qualified real estate attorney will prove invaluable. A good attorney will know the ins and outs of what a lender may or may not accept and can negotiate on your behalf accordingly.
Under both federal and state rules, the homeowner has the right to ask for a 180-day forbearance, during which a homeowner will not have to make any payments, and there is an option for requesting an additional 180-day forbearance for continued hardships. Keep in mind, forbearance does not eliminate the mortgage owed.
The federal CARES act provided for forbearance for residents. In New York, homeowners can also find forbearance relief under Banking Law 9-x if the mortgages are held by state-regulated companies not backed by the federal government. It is best to consult an attorney for your best options for mortgage forbearance programs.
Another way of avoiding foreclosure is to allow another person to assume the responsibility of the home loan through leasing the house or assuming the financial obligations remaining. In the leasing option, arrangements are made for any lease/rent a new tenant pays to go toward paying off the delinquent loan. With the assumption option, a new person assumes the loan and any connected financial responsibilities, of which the original borrower may be released from said liability.
In states that utilize non-judicial means of foreclosure, you might be able to sue to stop the foreclosure of your home. It is a good idea to consult an attorney first because in judicial foreclosure states, most have already had their say in court. In instances where filing a lawsuit is an option, several things need to be proven, including being unable to prove ownership of the loan and violating state laws and required steps governing foreclosure processes. You also face the potential of losing and still owing the money from your past due loan on top of any legal fees incurred in pursuing the lawsuit.
If you are facing foreclosure on your home after falling on hard times, and you aren’t sure what to do, talking with an attorney is a good first step.
Our qualified real estate attorneys will examine your case and provide the guidance you need to either stop foreclosure and keep your home or stop foreclosure and minimize any financial impact so you can get a fresh start. You can start by filling out a form for a free consultation at one of our offices, online, or by phone.