When you are facing foreclosure, there are a lot of confusing, moving parts to handle. It’s difficult to know what to do when there is so much pressure, stress and uncertainty coming at you. Further, the thought of potentially losing your home can overwhelm you into making mistakes you wouldn’t have otherwise made. When you are in this situation, your next steps are critical, and it’s advisable to obtain foreclosure help from a knowledgeable foreclosure attorney in New York.
An attorney can advise you through the confusing process of foreclosure and ensure that the correct actions are taken to help avoid foreclosure or get through the process as unscathed as possible. This article details the steps you can take in getting home foreclosure help.
How to Know If You Are at Risk for Foreclosure
People often think they have more time to catch up on their payments when they are served with foreclosure payments. In New York, as per the Consumer Financial Protection Bureau’s January 10, 2014 ruling, after 120 days from the initial missed payment, a lender can begin foreclosure proceedings with the court. More below on how having more time may help to stop foreclosure.
If you are concerned with missing a mortgage payment, you may be at risk of foreclosure, and it could be in your best interest to consider your options before the bank or lender files with the courts. If you think you are facing mortgage foreclosure, fill out this form for a free consultation with our New York foreclosure attorneys.
Who Can Help with Foreclosure
If you’re in this precarious, unfortunate situation, there are a few routes you can take to finding more information and ultimately getting to a resolution. Amid the pandemic, there have also been some government actions that offer help for homeowners in foreclosure, which we will detail in the following sections.
The legal structure of a foreclosure procedure is complex. The process requires a lot of specialized knowledge, as regulations, rules and policies around foreclosure change quite regularly. It’s a great strategy to have a skilled foreclosure lawyer by your side to walk you through the ins and outs of your specific situation. In New York, it could take as many as three years to finalize the process, which is a lot of time for mistakes to occur, if a skilled professional isn’t advocating for you. We’ll outline how a lawyer can help you through foreclosure in the following sections of this article.
There are some government assistance options out there to support the homeowners facing foreclosure as well as the overall health of the housing market. Additionally, New York State and the federal government have both enacted legislation that protects those affected by COVID-19, which this article specifies in the following sections.
How to Avoid Foreclosure in the First Place
Avoiding foreclosure at the beginning is the best remedy for defaulting on your home loan. We understand that sometimes this cannot be helped, especially in difficult times. If you’re asking “what kind of help can I get to avoid foreclosure,” here are some options to consider.
What Can Help to Stop Foreclosure
If you have found yourself in financial trouble, there are viable options you can take at the very beginning that help to stop foreclosure.
Making Up Your Payments
Homeowners should check their home loan contracts for specifics, but, generally speaking, in New York, one missed payment won’t totally disrupt your life. Typically, in New York, home loans have a 15-day grace period, which means that being 15 days late to pay your mortgage will not result in any late fees or legal consequences. After the 15-day mark, homeowners may incur a late fee, which is usually about two percent of the missed payment. Refer to your specific mortgage statements, promissory notes and other lender notices to understand what your late fee percentage might be according to your obligations. That is to say, if you’re only a few days late on your mortgage, all is not lost. You should contact your loan servicer as soon as possible to speak with them about your options, or to inform them that you intend to make a payment. The longer you wait, the greater your chance of foreclosure will be.
Spreading out the Payments over a Longer Term
Another highly sought after way to avoid foreclosure is through mortgage modification. Home loan modification allows you to restructure your mortgage to avoid default and get back on track without losing your home and with minimal damage to your credit. There are a few different ways to modify your mortgage:
- Reduction of your mortgage principal
- Decreasing your interest rate
- Temporarily pausing your payments
- Switching from an adjustable-rate mortgage to a fixed-rate mortgage
- Rolling late fees into your mortgage
- Combining all or some of the above options
One viable option for some homeowners is to lengthen the term of your mortgage. This allows you to spread out your payments over a longer period of time, decreasing your monthly payment, so you can get back on track more quickly. Talk with your lender as soon as possible to understand what modification options you may have.
Adding the Back Payments to Your Loan Balance
There are a few ways to work with your lender to modify your mortgage and get back on track with your payments. A repayment plan may be an option if you feel like all of the late fees are piling up, making it impossible to catch up. With a repayment plan, you are able to spread out your late payments and add them onto your monthly mortgage payment over a period of time. This might be the right choice for you if:
- You do not qualify for refinancing, or you don’t want to refinance
- You are going through short-term financial hardship
- You are a few months behind on your mortgage
- You can now afford your monthly mortgage payments again
- Your mortgage lender deems you eligible for a repayment plan
You should contact your loan servicer as soon as possible to discuss the viability of this option, if it seems like an appropriate solution for you.
Refinancing your home allows you to take out a separate loan to pay off your existing mortgage. Refinancing may present you with a lower interest rate, too, which will decrease the amount you pay. Refinancing increased at the height of the pandemic because of historically low rates. Refinancing can be difficult to qualify for if you’ve already taken hits to your credit score. To qualify, you’ll need a reliable income, steady credit score and likely some equity in your home.
To understand what the best route is for you, schedule a free consultation with our foreclosure lawyers today!
How to Get Government Help to Stop a Foreclosure
To answer the question of who can help you with a mortgage foreclosure, there are a number of government programs that could assist you, including the following options:
- New York’s Homeowner Protection Program (HOPP), which connects homeowners with resources and professionals who can help them navigate their options
- Federal mortgage relief for persons impacted by the pandemic
- Governor Cuoumo’s COVID-19 Emergency Eviction and Foreclosure Prevention Act
- New York State Attorney General Foreclosure Scam Support
- New York Department of Financial Services’ Foreclosure Relief Unit
New York and the federal government offer quite a few programs to assist homeowners. In New York, there is the Homeowner Protection Program (HOPP) to offer some protection and resources to homeowners. HOPP connects homeowners to legal representatives who can help in foreclosure (see our free-consultation form below). HOPP also provides homeowners with counseling to understand foreclosure avoidance, loan modifications, refinance applications, etc. A housing counselor can also assist you in understanding your credit score and how it factors into your current situation.
For those already in the foreclosure process or at risk of losing their home, the New York Department of Financial Services has a Foreclosure Relief Unit that could offer some assistance, too. This is especially helpful to mitigate struggles for homeowners in the post-COVID economy.
For more information about what’s best for you in your specific situation and more data regarding the above state and federal foreclosure resources, we offer a free consultation with our foreclosure lawyers in New York. Fill out the form below to schedule yours now.
Foreclosure Help from State and Local Governments
In addition to government programs that offer mortgage foreclosure help to homeowners, there have been some developments amid the COVID-19 pandemic that also provide relief to those suffering from financial hardship.
In December of 2020, Governor Andrew Cuoumo signed the COVID-19 Emergency Eviction and Foreclosure Prevention Act into law. This act ensures a residential foreclosure moratorium for 60 days in the state of New York. This is effective until May 2021 and protects homeowners who own ten or fewer residential dwellings, permitting them to file for hardship declarations.
Further, the United States has established temporary mortgage relief to safeguard people financially impacted by COVID-19. If you own a single-family home backed by a federal or FHA-insured loan, you can request home loan forbearance, which will pause your mortgage payments.
What Can Help after Foreclosure Papers Were Served
After the foreclosure papers are served, there are still a few strategies to mitigate loss. Once this happens, we highly recommend contacting an attorney to help navigate this process and mitigate as much financial stress and hardship as possible. Your attorney may suggest one of the following strategies, depending on your legal situation.
If you owe more than your home is worth and you’ve not qualified for refinancing or any loan modification options, a short sale may be right for you. This allows you to sell your home quickly. Your lender will have to agree to let you sell your home for less than what you owe to satisfy the debt and avoid foreclosure. If your lending organization agrees to this and you sell your home in a short sale, you will not owe anything else on the home. However, all lienholders have to agree to this option, and that can be difficult if the secondary lienholder(s) have little incentive based on the amount of money they are set to receive after the short sale.
Note that if your lender(s) agree to this, and you sell your home, you will not owe anything on the original loan, however you may be subject to income taxes if the IRS deems any forgiven debt income. Your attorney can help you navigate this.
Declaring bankruptcy may be another strategy to help after foreclosure. Filing for bankruptcy triggers the court to release an order for relief (called “automatic stay”), which halts attempts of creditors to collect debt from you, including foreclosure.
If you prefer to keep your home, it’s typically advisable to file for Chapter 13 bankruptcy versus Chapter 7. Chapter 13 makes it allowable for you to catch up on payments in a 3-to-5 year payment plan.
Deed In Lieu
In a Deed-in-Lieu of Foreclosure, the homeowner will release ownership of their home to the loan servicer to fully satisfy the amount due. The title of the home must be free and clear of mortgages, liens and encumbrances. A lawyer may be able to negotiate a solution if there are other liens on the title.
For this strategy to be available, the lender must agree to it, and there may be tax consequences afterwards.
Loans aren’t ase assumable as they used to be– most mortgages include a “due on sale” clause, meaning, when signed, the loan borrower agrees to pay the loan in full if and when they transfer the property. However, in an effort to help with foreclosure, the lender may opt to modify your loan to remove this clause and allow another buyer to assume it.
A lease-option is a real estate strategy that allows you to take on a tenant to pay you for the option to buy your home at a later time, as well as your monthly payments, thereafter. Your tenant will pay you for the option to buy your property at an agreed-upon price, which should allow you to take care of any outstanding overdue payments and late fees you owe. This is a good option if you have the option to live elsewhere. Consult a professional who can help with foreclosure to learn if this is an option that might help you
There are a few steps in the foreclosure process from the time that you enter the loss mitigation period to the time of foreclosure eviction. Here are the usual steps in order from start to finish:
Lender files complaint
Homeowner receives a summons
Judgement is made
Foreclosure auction held
For detail on each stage, read this article.
Generally, the borrower is entitled to any extra funds resulting from a foreclosure after all lenders and lien holders have been paid.
You can contest a judicial foreclosure. Typically, you’ll have 20-30 days (depending on how you’re served your summons) to respond to the lawsuit. If you contest, this will require you to provide reasons as to why your lender should not be able to foreclose. Contesting will buy you some time. If your lender has failed to follow proper timeline and protocol, they may be forced to restart the foreclosure process, which will buy you even more time.
Yes, paying only partial payments will create a past-due balance, which could lead to foreclosure. If you need to modify your payments, contact your lender to work something out.
There are multiple last-minute strategies to stop foreclosure, save home and mitigate loss. Some of which include the following:
Filing for bankruptcy
For detailed information on the above options and additional strategies you could utilize to stop foreclosures, read this article.
Get Assistance Now
Are you struggling to pay your mortgage and on the way to losing your home? Act now– the longer you drag it out, the fewer options you have. A skilled New York foreclosure attorney is waiting to help you understand the best route for you. Schedule a free consultation with us today.