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If you happen to live in a non-judicial foreclosure state, the foreclosure is authorized under a deed of trust or other contract containing a "power of sale" clause, which says that your home can be auctioned without any court supervision.
The foreclosure timeline is approximately 200 days. A Notice of Default (NOD) cannot be issued earlier than 120 days from the date of your last missed payment. After the NOD is recorded, the loan servicer only needs to wait another 90 days before setting an actual date when your home will be auctioned, which can be a mere 21 days later (12 C.F.R. § 1024.41(f)).
In judicial foreclosure states, the foreclosure timeline could be more or less than 200 days, and the sale of the property is supervised by a court. Rather than receive a NOD, those domiciled in a judicial foreclosure state typically receive a letter (a/k/a "breach letter") from the lender/noteholder that the foreclosure process will begin unless the missed payments are made up.
After the expiration of 120 days, the lender/noteholder files a civil complaint in court asking a judge for the right to sell the home and apply the sale proceeds to the mortgage debt.
Whether you live in a judicial foreclosure state or non-judicial foreclosure state, you need to create a strategy now. Alternatives to foreclosure are not determined by the borrower (loss mitigation options). Rather, they are solely up to the loan servicer.
However, your loan servicer also relies on guidelines that are mandated by federal and state law, the noteholder, guidelines mandated by the type of loan, and guidelines mandated by the individual, institution, or company that insures or guarantees your mortgage loan.
This is where our expertise lay. Contingent upon where you presently find yourself on the foreclosure spectrum, knowing the best strategy is the first defense in keeping your home. Call our office for more information.
Programs to help people avoid foreclosure are called loss mitigation options [Lo-Moes]. The options available are contingent upon the type of loan you have, and dictated by your participating loan servicer.
The range of Lo-Moes available can typically be found in a borrower's assistance letter you may have received from your loan servicer. Standard options are (1) Reinstatement, (2) Sale, (3) Refinance, (4) Deed-in-lieu, (5) Loan modification, (6) Short sale, and (7) Forbearance.
Despite the range of options imposed by the servicer, most homeowners are unaware of the power they have working within the servicer's guidelines.
The CFPB's official interpretation of 12 C.F.R. § 1024.41(b) says that when a servicer provides a borrower information about their loss mitigation program and the borrower expresses an interest in applying for a loss mitigation option and provides information the servicer would evaluate in connection with a loss mitigation application, "the borrower's inquiry or prequalification request has become a loss mitigation application" (12 C.F.R. § 1024.41(b) (1)-1.i -1ii).
In other words, the homeowner can take charge of the process by proposing their own loan reformation strategy so long as it falls within the servicer's guidelines, and they provide the requisite information needed to complete the servicers due diligence.
We have developed a novel and proficient way of strengthening the range of loss mitigation options available to the homeowner, including loan reformation. Our due diligence 'PHASE ONE' strategies include:
1. Obtaining a debt validation, title validation, loan transaction, and loss mitigation reports from your loan servicer.
2. Filing a complaint with the Consumer Financial Protection Bureau (“CFPB”), and using the
3. Filing an application with your state's Homeowner’s Assistance Fund (see article on HAF programs).
Call our office for more information.
Are you a homeowner due to divorce, inheritance, death of joint tenant, or by operation of law? If that is you, then your loan servicer considers you a successor-in-interest.
The Consumer Finance Protection Bureau (CFPB) has created laws that protect successors in interest only if they have been confirmed by the loan servicer. If a servicer receives a loss mitigation application from a potential successor in interest before confirming that person's identity and ownership interest in the property, the servicer need not review and evaluate the loss mitigation application.
However, the servicer must review and evaluate their application after they have been confirmed, and the confirmation process does not require a loan assumption (12 C.F.R. § 1024.30, 1024.41(b)(1)(i) and (ii)). Once confirmed, the succesor is now considered a borrower.
Pursuant to 12 C.F.R. § 1024.30(d), a confirmed successor in interest must be considered a borrower for purposes of this subpart and § 1024.17. Therefore, according to the CFPB, a confirmed successor-in-interest must be considered a borrower regardless of whether or not they assume the mortgage loan obligation.
If you are not on the original loan; if your servicer refuses to confirm your status as a SII; if your servicer is requiring you to assume the mortgage loan in order to be deemed a successor in interest, call us now!
Homeowner assistance programs are available in each state. They are funded by the federal Homeowner Assistance Fund (HAF) established by the U.S. Department of Treasury under the American Rescue Plan of 2021.
The assistance provided is 100% free, and in some states qualifying homeowners can obtain up to $80,000 to pay back missed mortgage payments. Other states may pay up to $20,000, which is applied towards their principal outstanding mortgage debt, enabling the homeowner to qualify for a loan modification as the loan is recast (re-amortized).
For example, the state of Ohio was awarded $280 million from the U.S. Department of Treasury Homeowner Assistance Fund. Operated by the Ohio Housing Finance Agency (OHFA), OHFA created the 'Save the Dream Ohio: Help for Homeowners" program to provide assistance to eligible homeowners facing foreclosure as a result of economic hardship caused by the COVID-19 pandemic.
Alabama's 'Mortgage Assistance Alabama' (MAA) program is designed to help homeowners make up to 1 year of missed mortgage payments as long as the missed payments resulted from financial hardship caused by COVID-19 as of or after January 21, 2020.
We believe that taking advantage of your state's HAF program goes far in putting your mortgage loan, and your life, back on track. Call us now for more information, or visit your state's local homeowner assistance fund program
[*Visit www.ncsha.org. Some states such as Florida, Louisiana, Arkansas, and Alabama have run out of assistance funds and are no longer accepting applications]
The Consumer Financial Protection Bureau (CFPB) is an independent agency of the United States charged with promulgating rules and issuing interpretations under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. §§ 2601–2617. One of the primary purposes of the CFPB is to hold banks and lenders accountable and protect American homeowners from predatory lending practices. The CFPB was created by the Dodd-Frank Act in the wake of the 2008 subprime loan scandals. Most residential lenders are subject to the oversight of the CFPB.
The CFPB is one of the most active rule makers in our government. They have created numerous mandates that regulate the borrowing process, and they have imposed numerous limitations on lenders seeking to foreclose. For example, it was the CFPB that created a federal law requiring lenders to wait at least 120 days after a loan becomes delinquent before beginning the foreclosure process (12 C.F.R. § 1024.41(f)).
Unknown to many, the CFPB also offers homeowners a direct medium to file a complaint against their respective loan servicers, and to which your servicer is legally obligated to respond. In many cases, the replies sent in response to the homeowner's complaint reveals facts and information not previously disclosed by the servicer. It is information like this that gives our clients an edge when negotiating a loan reformation or exercising an alternative loss mitigation option.
[*For more information on the CFPB, visit www.consumerfinance.gov].