How Can I Prevent Foreclosure?

There’s no one size fits all solution to stop a foreclosure nor is there a silver bullet. While there might be temporary “cheat moves,” they’re not sustainable. Let’s instead explore several legitimate alternatives that can allow someone keep their home.

Deed in Lieu of Foreclosure

By opting for a deed in lieu of foreclosure, borrowers can avoid the time and expense of defending a foreclosure action, thereby minimizing the risk of deficiency judgments or even preventing them altogether. This can also help prevent a lawsuit from appearing on their credit record. However, it’s important to note that the borrower relinquishes title to the property.

In determining whether to uphold deeds in lieu of foreclosure, courts consider various factors. These include the relative bargaining power of the parties, any events of default, the equity in the mortgaged property, and whether there’s genuine consideration for the deed in lieu.

Forbearance Agreement

Liquidation and forbearance agreements are attempts to reach a mutually beneficial solution between the borrower and lender. They fall somewhere between a deed in lieu of foreclosure, where the borrower relinquishes all rights, and reinstatement, where the borrower pays off all outstanding debts. Florida courts generally favor settlement or forbearance agreements.

Advantages of liquidation and forbearance agreements include reducing litigation costs and time by avoiding lengthy disputes and positioning the bank for a swift resolution.  Liquidation and short sales are two options for debtors facing financial difficulties.  Liquidation involves selling assets to pay off debts. It can be a drastic measure, but it may provide relief for debtors who are unable to make their payments. 

Short Sales

Short sales, on the other hand, involve selling real property to pay off a portion of the debt. Under Florida Statute 201.02(11)(a)-(11)(d), a short sale occurs when the grantor’s interest in the property is encumbered by a mortgage or mortgages that secure a debt in an aggregate amount greater than the purchase price paid by the grantee. In exchange for a partial payment of less than the total outstanding mortgage indebtedness, the mortgagee releases the real property from its mortgage.

Important points to note about short sales include:

– The releasing mortgagee does not receive any direct or indirect interest in the property transferred.

– The releasing mortgagee is not controlled by or related to the grantor or the grantee.

– The actual purchase money paid by the purchaser constitutes consideration.

Loan Modifications

Although the Florida Supreme Court’s mandatory pre-foreclosure mediation program for residential mortgage foreclosure cases has been terminated, many circuit courts still maintain Administrative Orders that encourage mortgage lenders to engage in all forms of alternative dispute resolution at the early stages of a mortgage foreclosure lawsuit. 

Historically, the United States Department of Treasury has implemented various programs to prevent foreclosures. For instance, the Making Home Affordable Program aimed to stabilize communities by reducing homeowners’ monthly payments to sustainable levels. It encompassed the Home Affordable Modification Program (HAMP), which involved servicers applying a standardized loan modification process to enable eligible borrowers to obtain sustainable monthly payments for their first-lien mortgage loans.  The Home Affordable Modification Program (HAMP) has unfortunately expired. The Home Affordable Refinance Program (HARP) allowed borrowers with limited or no equity to refinance and obtain a “new” mortgage without additional mortgage insurance. However, the HARP program has ceased to operate.

Payment

Naturally, timely payment of the debt in full will prevent foreclosure. To determine the exact amount owed, a mortgagor can obtain an estoppel letter from the mortgagee. Refer to F.S. 701.04(1) for more details.

Within 14 days of receiving a written request from the mortgagor for an estoppel letter, the mortgagee must promptly deliver the letter, which should clearly state the loan balance, including principal, interest, any other charges due under or secured by the mortgage, and the per diem interest for the unpaid balance.  After 60 days of receiving the full payment of the mortgage, the person required to acknowledge the satisfaction of the mortgage must send the recorded satisfaction to the individual who made the full payment.

A debt collector may not use any false, deceptive, or misleading representations or means in connection with debt collection, including the false representation of the debt’s character, amount, or legal status, or any services rendered or compensation that may be lawfully received by the debt collector for debt collection.

Ocala Area Foreclosure Defense Attorney

Hiring a foreclosure defense attorney is a crucial decision, and experienced counsel can provide valuable insights and advice to help you keep your home. Contact Ocala area foreclosure defense lawyer Andrew J. Pascale today at 877-667-1211 to discuss your case. Please note that this blog does not constitute legal advice and serves illustrative purposes only.