When Do You Need an Attorney?

By Andrew J Thompson

When a bank or your lender threaten you with foreclosure, it can get very uncomfortable in a hurry.  I’ve represented dozens of homeowners, borrowers and private lenders in mortgage protection and mortgage fraud cases, very few of whom have hired me in the early stages following a claimed default.  Usually, they don’t need to at this stage.  But that can change in a hurry and it can change with profound implications.

If you hire an attorney before you have the need for legal defense, you will expend badly needed financial resources trying to protect against claims that aren’t yet ripe.  But if you wait too long, the consequences can be dire.  In my experience, I have learned that I can help just about any homeowner if they come to me early enough.  But I have also had plenty of cases where it’s too late, or there just aren’t the resources at hand to defend the case in the way it needs defended. So how exactly does this play out, and what are the factors that dictate when an attorney can and should make a difference in your case?  Below is a summary of what is likely to happen at various stages of proceedings and how it is that an attorney should help, or alternatively may not or may not be able to help  under the circumstances.

DEFAULT/PRE-FORECLOSURE

Until the bank has indicated it intends to move ahead with foreclosure proceedings, you generally do not need an attorney working for you.  If you are considering a loan modification, or have applied for one, you know there is much paperwork involved, and hiring an attorney will usually do little for you except increase the cost of defending yourself.

There are exceptions, however.  If your claims against the lender are so clear that you have a suit to file against it (them), then you should hire an attorney sooner rather than later to pursue your rights, rather than sleeping on them until the bank establishes the upper hand against you.  Pre-emptive strikes can be very important in foreclosure litigation because the lender often takes advantage of the procedural tools (Trial Rules) at its disposal that enable it to move quickly and short circuit your rights of defense against foreclosure.  I have seen this happen to an unsuspecting homeowner many times over, so don’t let it happen to you.

NOTICE OF INTENT TO FORECLOSE

At this juncture, before a case is filed against you, but upon seeing a pre-foreclosure intent letter, it is wise at least to consult with an attorney to know your rights and help you decide on your own next steps, while wisely considering what to do more immediately.  Most typically I would say this is generally too early to hire counsel, and any earlier makes little sense except in the situation where you need to find an attorney to prosecute your own claims against the lender,

RECEIVING A SUMMONS

If things ever get to this point, it is time to hire counsel and to be as aggressive as you can defending your rights – whether as to ownership of the property, for a proper accounting of the loan, or otherwise.  The Summons means this is serious buisness.  You’ve been sued!  But chances are very high that if you use the special rules to your advantage.  You should not try to Answer a Complaint on your own, and you should not to begin staging a defense to the suit without the assistance  of counsel.

SETTLEMENT CONFERENCES/MEDIATION

In some ways the structure of a settlement conference lends itself to handling it without the aid of counsel, but the problem is the lender will take advantage of the rules if you don’t have someone on your side who knows what to look for.

POST-JUDGMENT PROCEEDINGS

Whether   it’s Default, Summary Judgment, or even a judgment at trial – in a foreclosure proceeding, the bank is going to want to  get the property sold and you out of the house – probably as soon as it can.  While it’s too late usually at this stage to make a difference, an effective attorney may still be able to employ a strategy that will buy considerable time in your favor.

All things considered, don’t delay.  There are so many good, viable defenses to a foreclosure action available to you, make use of them in the best way you can.  If you’d like the opinion of a seasoned experience mortgage defense attorney or may need actual representation, please call (317) 564-4976 to set an appointment speak with the author.

Can You Keep Your Home after a Short Sale?

By Andrew J Thompson

One of the requirements for any short sale is that the property must be owner occupied.   Obviously, this is a requirement imposed upon the seller.  Another requirement is that the buyer must not be a “related party”.  This means a spouse, ex-spouse, parent, child, sibling, or possibly a partner, employer, landlord, or even a friend. The lender has great latitude in determining who fits the definition of a related party.

OK, so let’s say you’re living in a home you bought for $250,000 several years ago.  The market has reduced the value of the home to around $175,000 today, you’ve fallen behind on your mortgage, and the bank says you now owe them around $325,000.  Regardless of income, a loan modification probably doesn’t make sense at this point.

But you could reasonably make payments on what the house is worth today, and have faithfully tried to work with the bank ever since you fell behind.   The house is very attractive at the price to a third party buyer-investor.  You don’t know who this is, but chances are good your realtor will know what the buyer is looking as much as he/she knows your situation, and they may well be looking for a good renter – and the best renter might just happen to be you.

Is this plausible?  Basically it depends on the underwriting requirements of the lender.  If they will allow it, or have no means of prohibiting it, then yes, it could be plausible.  The problem is they have to approve the short sale, and if they feel like they will get a little less than they could through another form of sale, they are not likely to approve it – or it could take a very long time to get approval.

But if it takes a long time – so what?  What do you lose when this happens?  Probably not very much, if anything.  It just means additional months you are living in your own home and that you cannot make payments while you do.

The scenario is definitely one worth exploring if your hope for a loan modification is minimal, and if it seems your potential for recourse against the lender – as in most cases – is minimal.

Our firm has helped dozens of homeowners in foreclosure situations figure out ways to save heir homes.  If you think there may be a way we can help you, please call us at (317) 564-4976 for a free consultation.

Foreclosure Prevention Agreements & Settlement Conferences

By Andrew J Thompson

Indiana law offers a rare advantage to homeowners in foreclosure through its requirements for a Settlement Conference between the bank and the borrower.   The purpose of the Settlement Conference is for the parties to try to come to terms on a foreclosure prevention agreement, so that the homeowner is not forced to leave his or her home, without having a good way to get into other suitable housing.

The Indiana legislature has recognized that it is in the public interest for the state to modify the foreclosure to encourage mortgage modification alternatives.  The purpose of the changes in the law is to avoid unnecessary foreclosures of residential properties and provide greater stability to Indiana’s statewide and local economies by

(1) requiring early contact and communications among creditors, their agents, and debtors in order to engage in negotiations that could avoid foreclosure; and

(2) facilitating the modification of residential mortgages in appropriate circumstances.

A primary tool in accomplishing this purpose is the Foreclosure Prevention Agreement.  A Foreclosure Prevention Agreement is defined under Indiana law as a written agreement that:

(1) is executed by both the creditor and the debtor; and

(2) offers the debtor an individualized plan that may include:

(A) a temporary forbearance with respect to the mortgage;

(B) a reduction of any arrearage owed by the debtor;

(C) a reduction of the interest rate that applies to the mortgage;

(D) a repayment plan;

(E) a deed in lieu of foreclosure;

(F) reinstatement of the mortgage upon the debtor’s payment of any arrearage;

(G) a sale of the property; or

(H) any loss mitigation arrangement or debtor relief plan established by federal law, rule, regulation, or guideline.

The homeowner is required to prepare a “Loss Mitigation Package” that includes financial information about income, assets and debts that is sufficient for a creditor to make underwriting decisions about the debtor and any modification to the mortgage and to bring documents in support of this information to the Settlement Conference.

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Under Indiana Code 32-30-10.5-10 (4), in any foreclosure proceeding of which the homeowner has properly requested a settlement conference, the creditor is required to:

(A) In a foreclosure action filed after June 30, 2011, send the debtor, by certified mail a the following transaction history for the mortgage:

(i) A payment record substantiating the default, such as a payment history.

(ii) An itemization of all amounts claimed by the creditor as being owed on the mortgage, such as an account payoff statement.

(B) Bring the following to the settlement conference:

(i) A copy of the original note and mortgage.

(ii) A payment record substantiating the default, such as a payment history.

(iii) An itemization of all amounts claimed by the creditor as being owed on the mortgage, such as an account payoff statement.

(iv) Any other documentation that the court determines is needed.

For a free consultation concerning Settlement Conferences and Foreclosure Prevention Agreements under Indiana law, call the Thompson Law Office at (317) 564-4976 today.

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.