One day you go to your front door and find a person standing there handing you papers that say you are being sued. That moment in time can send you into an emotional tailspin where you experience an overwhelming feeling of being out of control. Although you knew you were having financial problems, once a court action has been filed, everything suddenly feels real.
What do you do? What can you do? You have no control…or do you?
A number of my clients who have faced foreclosure experienced many emotions at the beginning of the process. The most common feelings included a sense of loss of control and fear of the unknown. I have always felt that my first job as their advocate and legal representative is to help them remove the emotion and address the situation logically, even if only temporarily. How do you do that? You eliminate the fear and take back control. Fear exists when you don’t know what to expect. The best way to conquer that fear is to know as many possible outcomes as possible, thereby eliminating the unknown. Basically, facing what the worst that could happen. The next is taking control back. To take control you need to know your options.
There are a number of options that are available to you. However, before deciding which option is the most beneficial for your situation you need to determine what you really want. What I mean is whether you want to stay in your home, which would require you to do whatever must be done to make that happen. Or do you just want to pay less. This may sound strange but let me give an example. I had a client who said he wanted to save his home. After a number of months negotiating with the bank I was able to secure a modification. I conveyed the good news to my client. However, the client rejected the modification saying that he didn’t want to pay that much because the house wasn’t worth it, the value of the house was down. So, the client’s first priority was not to save his house but to save money. Take this example to heart when you review the options below because your ultimate outcome will determine the best option to put you in control
One option has already been discussed in the previous article, a modification. The modification is simply a change in the terms of the mortgage contract including the length of the contract or the interest rate which would help to make the payments lower and/or bring your account current after a financial setback.
Another option could include an application with the New York State Mortgage Modification Program (NYSMAP). This program offers interest free loans to homeowners so that they may catch up on their payments. This program is great for homeowners that have experienced temporary setbacks but have recovered and now can afford to just start making payments again, without reduction. As of the writing of this Article, the MAP program will provide approved applicants up to $40,000.
Finding other methods of refinance, or purchase by a family member (other than short sale) may be an alternative for you as well.
If you decide that you simply want the situation to end and decide you do not want to retain your house, then there are options available as well. You could simply put the house on the market and sell. Remember, the house is yours unless the Court says it can be sold which would not occur until the “end” of the foreclosure litigation. Until then, you can do whatever you want, including selling the house.
If you want to sell the house but its underwater, meaning you owe more than the house is worth, you could do what is called a short sale. A short sale is a regular sale of the house as far as the agreement between you and buyer. However, to be able to give clear title, you need to pay off your mortgage. In a short sale you ask the bank to accept less than agreed and cancel the mortgage contract.
If you don’t want to go through the hassle of finding a buyer, you could do what’s called a deed in lieu of foreclosure. This means that you turn over the keys to the bank and walk away. If you are choosing this option, it is advisable you have an attorney help you because there is a potential of deficiency. Therefore, you want to negotiate with the bank to avoid the possibility of deficiency.
In some instances, especially where there is a pending foreclosure litigation, you may be able to negotiate for what is commonly referred to as “cash-for-keys”. This means that in exchange for ending the litigation, consenting to the judgment and signing the house over to the bank, the bank will give you money. Usually not significant but enough to help with moving costs.
These are only a few, yet most common, options available to homeowners. Once you know the options available in your situation, you can choose which one is best for you and work towards that outcome. This puts you back into control instead of the bank being in control.
It should be noted that sometimes achieving the outcome you want requires obtaining a little leverage against the bank. Although it may not make sense, Banks are less willing to cooperate with a homeowner that offers no challenge to their case. For example, if you ignored the foreclosure and did nothing to challenge the Bank’s case, the Bank has no reason to end the action because they are going to get the house in the end anyway. However, if you fight the foreclosure by exercising your rights and raising defenses, the Bank has a reason to negotiate a settlement because a win is no longer a guarantee. (Yes, Banks have lost Foreclosure cases). This adds just another reason why you should not ignore a foreclosure case if you are served with a summons and complaint.
To review your options and get the leverage you need against the Bank, contact the Law Office of Maggio & Meyer. Our attorneys take pride in our ability to defend homeowners in foreclosure cases. We believe in helping our clients before during and after foreclosure.
Please note that this series was created with New York State and its legal system in mind. The material found in this series may be applicable to other judicial and non-judicial states. However, consultation with experts in your state is recommended.