Loss Mitigation is the process used by mortgage lenders to work with homeowners who are delinquent on their home loans. Through the loss mitigation process, a lender may modify the terms of a home loan, allowing the homeowner to sell the property for less than is owed, or transfer the deed back to the lender. Loss mitigation can be complicated. There are a lot of rules when it comes to homeowner rights, home loans, and foreclosure defense. In many of these situations, a real estate attorney can help you understand what is a real solution rather than a temporary fix. Take a look below at five foreclosure myths that a real estate attorney can help you demystify.
MYTH #1. IF YOU HAVE A MODIFICATION APPLICATION PENDING FORECLOSURE WILL NOT OCCUR
TRUTH: If you are facing a potential foreclosure while you have a loan modification application pending, your lender may still foreclose on you. It is still entirely possible for a foreclosure suit from the lender to be moving forward on a parallel track with your loan modification. Your loan modification application must be completed and submitted at least 45 days prior to a foreclosure sale. Many people submit the loan modification application timely, however — to their defeat – they then realize their application was incomplete. This is a very common mistake in the process of applying for a modification and the foreclosure often proceeds without the assistance of an attorney. A real estate attorney can help you with the process of modifying your loan to make it more manageable. This is a wise step to take to avoid foreclosure in the future. Be sure to contact a real estate attorney at least 60 days before a foreclosure sale date. It’ll save you a lot of money in the long run.
MYTH #2. IF YOU HAVE MADE A RECENT PAYMENT ON YOUR MORTGAGE THE LENDER CANNOT FORECLOSE.
TRUTH: Sometimes life changes and your finances change with it. Perhaps you fell behind on your mortgage and now you have the finances to pay some of it down. Unless you pay the entire outstanding balance your lender claims you owe, even a lump sum payment will be considered insufficient to save your home. In this case, you’ll be required to “reinstate” the mortgage loan (usually costing thousands of dollars). Otherwise, your lender is entitled to move forward with the foreclosure and simply credit your account with the recent payment you made. A real estate attorney can help you navigate the loss mitigation process to avoid foreclosure in the future.
MYTH #3. IF YOU ARE IN FORECLOSURE, YOU ARE NOT ELIGIBLE FOR REFINANCE FROM ANY BANK TO GET OUT OF FORECLOSURE.
TRUTH: If you have sufficient equity in your house, approximately 60% to 70%, many specialty lenders may refinance your house for paying off the first loan and adverting foreclosure.
MYTH #4. FILING BANKRUPTCY WILL STOP THE FORECLOSURE AND SAVE YOUR HOUSE FOR GOOD.
TRUTH: Filing for bankruptcy would stop the home foreclosure only temporarily. Your lender will meet you in bankruptcy court and ask the court for relief to move forward with the foreclosure, despite your bankruptcy case. This occurs often and many lenders are successful in foreclosing on a house through the bankruptcy court. Also, the bankruptcy court will force you to expose your entire financial circumstance for your lender see. If you are facing foreclosure, sooner or later you will have to carry out some preventive measures in order to keep your house for a longer term. It is best to navigate these deep waters with a real estate attorney by your side.
MYTH #5. IF YOU HAVE RECEIVED A FORECLOSURE NOTICE, YOU HAVE TO MOVE OUT OF YOUR HOUSE IMMEDIATELY.
Truth: Texas follows a foreclosure process that is separate from the eviction process. What this means is even if you are unable to avoid foreclosure, you still don’t have to move out of your house. After the foreclosure process you will need to attend an eviction hearing. At some point, you will be asked to move out of your house. However, you should try to stay as long as possible so that you can fight back. You could be in for some luck if you take timely action and don’t waste available chances to stop your house from reaching the foreclosure stage. This part is tricky! It is best to hire a real estate attorney to explain your rights to you and fight for you in court.
These are only a few of the things that real estate attorneys can help with. Their jobs are complex and they handle a large variety of situations. If you find yourself in a situation where you feel you need real estate guidance of any kind, it’s worth reaching out to an attorney to find out what they might be able to do for you.