Foreclosure: Do you need a foreclosure attorney?

What is a foreclosure?

A foreclosure allows a lender to repossess a home when a borrower has failed to pay their mortgage payments, pay their property taxes, or homeowners association fees. In order to foreclose, the bank must file a lawsuit and serve the borrower with the lawsuit. If a borrower’s property is foreclosed due to lack of payment, the lender will be able to seize the property to sell it to potentially recuperate any losses from the borrower’s default on the mortgage. If there is still money owed to the lender after a foreclosure sale they can pursue the debt, called a deficiency, from the borrower.

What is the foreclosure moratorium?

8.2 million homeowners were behind on mortgage payments as of April 2021, according to a Census Bureau survey. In response to this ongoing issue, the federal government extended the foreclosure moratorium provided for by the CARES Act. This allows homeowners with federally insured mortgages to request up to 180 days of forbearance, which may be extended another 180 days.

A borrower who requests a forbearance on their mortgage is asking the lender to temporarily lower the monthly mortgage payment or pause it altogether. When the forbearance ends, however, the borrower is still responsible to repay the debt of mortgage payments that the borrower reduced or missed.

What happens when the foreclosure moratorium ends?

Borrowers wonder what options are available when they received a forbearance once the forbearance ends. If you, a borrower cannot qualify for any of the options, then you may seek a foreclosure attorney near you. Borrowers who qualified for mortgage forbearance through the CARES Act, have a few options once the moratorium and your forbearance end.

Full Repayment

A full repayment allows the borrower to make a one-time lump sum payment in the amount owed for the missed or reduced payments. This payment is taken upon the expiration of the forbearance period and would bring the mortgage to date with the one-time payment.

Monthly Repayment Plan

Another repayment option is to spread the missed or reduced payments to the upcoming months. This, in essence, would require the borrower to repay the missed payments in addition to their regular mortgage payment. This option allows the borrower to repay the missed payments over three, six, nine, or 12 months. A monthly repayment plan is a good option for borrowers who will be able to make larger payments on their mortgage over a specified number of months in the upcoming year.

Loan Extension

If the borrower is unable to make a one-time payment or multiple larger mortgage payments, the borrower may consider a loan extension. A loan extension allows the borrower to extend the term of the loan for the months during which the borrower received forbearance. This would tack on the number of months missed to the payment period of the mortgage. Therefore, the payment period is extended, and the payments associated with the missing months would be paid off according to the new payment period.

Payment Deferral

This option is like the loan extension in that it adds the payments to the end of the payment period. Rather than extending the mortgage term to include the missing months, payment deferral allows the missed payments to be paid either at the end of the life of the mortgage or when the house is sold or refinanced.

Loan Modification

The final option available is loan modification. This allows for the payment amount of the terms of the mortgage, such as monthly payment amount or interest rate, to be modified in an effort to help borrowers at risk of mortgage default. To qualify for loan modification, a borrower may be required to show a permanent hardship or change of circumstances that has made the terms of the mortgage impossible to pay. The borrower will also be required to submit documentation such as paystubs, tax returns and a detailed list of expenses.

How can we help?

If you do not qualify for any of the above options and are still facing a foreclosure, you may need a real estate foreclosure attorney and we are here to help. Our team will guide you through the process and defend you in the foreclosure so that you may have peace of mind. Please keep in mind that if you have been served with a foreclosure lawsuit you must file a formal response with the court even if you are trying to modify the loan or are seeking other workout options with the bank. It is not a defense to a foreclosure to state that you have been communicating with the bank. Unless you file a formal response with the court, the judge will not know that you are interested in defending the case and keeping your home or commercial property.

With our extensive experience, we will protect your rights through the process, which can often be confusing.

Please contact our office to discuss your foreclosure claim with our mortgage foreclosure lawyer and get the relief that you need.