How to Avoid Foreclosure

By Andrew J Thompson

If you are a homeowner facing default or other difficulties in meeting your mortgage obligation, here are some suggestions for avoiding foreclosure.   It’s likely if you’re reading this, that you have issues with your lender, and you’ve been treated unfairly somewhere in the process.   This article assumes you’ve fallen behind on your mortgage and you need help understanding your options.  The odds are good that you’re not getting that help from your lender.

  1. Don’t Rely on the Wrong People for Help:  If you’re counting on the one-to-one relationship you’ve initiated with the lender, you’re likely to be disappointed before long.  There is tremendous turnover in mortgage areas today, constant reassignment of personnel, and the loans themselves are often re-assigned to new lenders.  It can be even worse to rely on the help of out-of-state parties, or non-attorneys – especially if they act as if they can provide legal help and are not licensed to practice law.  Unfortunately, the thorny issues that arise when you have problems with a mortgage are unlikely to be solved without the intervention of a court at some point – it may take months or even years to resolve, but a court needs to be involved in the process.
  2. Stay in Control of the “Mitigation” Process: When you truly cannot meet your payment schedule, start asking questions of the lender, and be sure to ask the right questions.  If you leave the whole process up to them, no one will win – they do not have the vested interest in your home that you do.   The right questions begin with asking, “how do I know I’m dealing with the right party on this mortgage?”  You are likely to hear that they are, in fact, the right party to communicate with, but this isn’t always the case – the note could have been transferred numerous times, and they need to document their rights as a holder in due course of your note on the mortgage before you should deal directly with them.  This is probably a very good time to consult an attorney.  You should put the lender or its servicer in a position to show that it is, in fact, the “real party in interest” to the transaction, because it is likely that your note has been sold, and the mortgage may have been assigned to a different party.  This creates a problem for the lender – not you.  You may need an attorney to help you sort this out.
  3. Proper Use of a Loan Modification to Address Your Problems:  Loan modification arrangements are generally structured by the lenders to serve their needs, not yours.  When all is said and done, the bank will try to collect all of any arrearage, and as quickly as it can.  It may also shift the escrow payment schedule in a way that means you will end up paying a higher payment than what you originally owed.  This can be a no win situation, if the lender is unwilling to act in compromise, and unfortunately, there are actually only a few homeowners who come out ahead with a modification – it’s worth trying, but don’t count on it as a magic bullet.
  4. The Value of a Settlement Conference: A settlement conference is designed to put the homeowner on a more level playing field with the creditor who is foreclosing.  The goal is to keep the homeowner from losing the home unless it can be sold, and he/she/they can walk away with a situation that will enable them to find suitable housing afterward.  At a settlement conference, you are entitled to be represented by an attorney, and the creditor is required to account for the history on the loan, and to have a representative available with authority to settle the case.  The parties are encouraged to enter into a Foreclosure Prevention Agreement that meets the homeowner’s needs, as well as the creditor’s.
  5. Prepare with Every Valid Defense and Claim Against the Lender You May Have:  You need well versed, competent counsel to do this effectively.   There are issues relating to the transfer of the promissory note, assignment of your mortgage, the real party in interest on the mortgage, the fairness in their dealings with you, and more, that you should consider.
To schedule a free consultation concerning  your rights regarding your mortgage, call the Thompson Law Office at (317) 564-4976 today.

“Cash for Keys”

By Andrew J Thompson, attorney

What does “cash for keys” mean?  In essense, it’s a shorthand reference for a deed in lieu of foreclosure arrangement.   This means the homeowner signs over a deed tot he mortgage holder in order to avoid the process of foreclosure.

This can be a good arrangement for a homeowner, but not always.  Sometimes it backfires.  This happens when a deal if offered to the homeowners by a bank, and the bank gets the home, but the homeowner is not discharged from the debt.  Many homeowners don’t understand or doubt the banks can do this – but they can.  They do it often even when the homeowner may actually have superior rights in the property to the mortgagee.   Nonetheless, the bank may offer an agreement to withhold foreclosure against a homeowner if the homeowner merely agrees to move out of the home.  But the documents used to accomplish this goal, confirm a debt obligation on the part of the homeowner, perhaps unwittingly.

Cash for keys programs, on the other hand, normally take the deed in lieu process and turn it into something more beneficial for the homeowner or occupant.  Instead of leaving the debtor owing money even after moving out of the home, the homeowner is paid to move out of the home and give the bank a deed.  When this happens, the bank normally extinguishes the entire debt and pays consideration to the homeowner to avoid foreclosure.  Why would a bank do this?  One reason is that often the bank do not have a clear claim on the home and there is at least some risk in going through the foreclosure process.  The other reason is simply that foreclosure is expensive and lengthy, and by settling a claim, paying the homeowner and getting the deed to the property, the bank can avoid a long and expensive battle.

If you choose to consider or pursue an arrangement that would enable you to collect a payment in return for the deed to your home, you should take care in how the documents are drafted, and consult knowledgeable counsel to help you with your needs.    If we can serve your needs, please contact the Thompson Law Office today to schedule a free, initial consultation to discuss your rights and the possibilities.