The year 2020 will go down as an unprecedented time in history, particularly and especially due to Covid-19. The pandemic has affected millions of lives across the U.S. in many ways. Millions of people were infected; hundreds of thousands died. Businesses were shuttered, many never to open again. Unemployment is at record highs across the country. Unemployed renters and homeowners faced, and still face, the very real possibility of eviction or foreclosure. All of this with no seeming end in sight.
There were a total of nearly 11,700 foreclosure filings across the country in October 2020, according to RealtyTrac. Foreclosure filings include default notices, scheduled auctions or lender repossessions. In New York City alone, there were nearly 100 bank repossessions during the month of October. And one in every roughly 4,500 homes were in some state of pre- or actual foreclosure in the top five counties in New York (Warren, Tioga, Montgomery, Putnam, and Suffolk) in November 2020.
Homeowners saved for years and toiled for years, putting their blood, sweat, and tears, into the homes they worked so hard to earn and keep. With these unprecedented times, you may find yourself at wit’s end, especially when dealing with a potential or real eviction or foreclosure. But there are things you can do to forestall or mitigate foreclosure.
How to Know If You Are At Risk for Foreclosure
You are considered to be in default of their loan if you’re 30 days or more behind on payments. Lenders, by law in New York, must file suit in court to begin foreclosure proceedings against someone. This is called judicial foreclosure. But this cannot happen until you’re at least 120 days in arrears on your mortgage payment. At that time, lenders will send a notice of default, per the terms in your mortgage agreement. Then a foreclosure settlement conference will be scheduled. This is a meeting between both parties and a court official at which several things will be discussed including loss mitigation alternatives on how to avoid foreclosure. Keep in mind, you must also file an answer to the foreclosure complaint, regardless of whether you attend the settlement conference. But the settlement conference is an excellent opportunity for you to learn how to prevent foreclosure.
How to Prevent Foreclosure
Over the last several months, the President and the State of New York have instituted executive orders and programs aimed to aid homeowners in the best way to prevent foreclosure. Options for the State of New York, can be found at the New York Department of Financial Services.
By law, you have to be given at least 90 days’ notice that you’re about to default on your loan and could face foreclosure. This is to give you time to explore ways to prevent foreclosure. The pre-foreclosure notice must give options for mortgage counseling and options for loss mitigation.
One such loss mitigation option is reinstatement. You can stave off foreclosure by paying off your past-due amount, along with any associated late and other fees, to bring your mortgage up to date.
Mortgage Repayment Plan
A second loss mitigation option is working out a mortgage repayment plan to avoid foreclosure. Under this, your past due mortgage payments would be divided up among and added to future mortgage payments to be paid off.
Under both federal and state rules, you have the right to ask for a 180-day forbearance, during which you won’t have to make any payments. There is also an option for requesting an additional 180-day forbearance for continued hardships. Keep in mind, forbearance does not eliminate the mortgage owed.
The federal CARES act provided for forbearance for residents. In New York, homeowners can also find forbearance relief under Banking Law 9-x if mortgages are held by state-regulated companies not backed by the federal government
You can see if your mortgage is backed by the federal government and CARES. But the best idea is to contact the foreclosure lawyer to discuss options.
Bankruptcy is another loss mitigation option to avoid foreclosure, but it should be considered as a last resort when other options have been exhausted. This option can allow you to keep your home, but this is best discussed with an attorney.
You can lease (or rent to own) a home, and there are a couple of options in New York that are best discussed with an attorney. There are also regulations that homeowners must follow if they lease out their homes to tenants, and those homes are occupied at the time of a foreclosure notice. This situation is also best discussed with an attorney.
Loan Modification and Refinancing
Under certain circumstances, you may qualify for a loan modification or refinancing to make the loan more affordable. You can work with the lender directly, but a loss mitigation option like this is best discussed with an attorney. An experienced real estate lawyer advises you on the best decision for your situation. This will ensure you get the best deal possible, especially if you’re unfamiliar with how the process works.
How to Avoid Foreclosure When It Is Inevitable
You may find themselves in an impossible situation where foreclosure is inevitable. A real estate agent can recommend the best course of action when foreclosure looms on the horizon. An attorney can best advise on any of the following below options on how to avoid a foreclosure on the homeowners record:
Sell Your House
Selling the house for the value of the mortgage before the foreclosure date will take care of any outstanding loan balances.
A lender may agree to a short sale of the property at fair market value to satisfy the mortgage if the home can’t be sold for the value of the mortgage.
Deed in Lieu of Foreclosure
You can give the deed to the lender to satisfy a mortgage debt on a to-be-foreclosed home, in this third loss mitigation option.
Tips To Prevent Foreclosure
Learn about your legal rights
Learn about your legal rights. There are self-help websites available to educate on foreclosure laws and options for preventing foreclosure or mitigating it, especially when it’s due to circumstances beyond your control. But more often than not, especially in this time of Covid-19, the services of an attorney specializing in preventing foreclosures will be more beneficial.
Don’t ignore the problem
Don’t ignore the problem of a potential foreclosure. Be proactive in looking for solutions to address any potential issues. Waiting until the last minute creates undue stress, and the risk of missing any potential deadlines increases, as some tasks take time to complete.
Review your budget
Review your budget. If you have trouble making ends meet, putting your expenses into a monthly budget can help you manage your finances. This allows you to see where you may need to make cuts or move money around in order to make your mortgage payments on time. Look up your local consumer credit counseling agency. These resources are often at no or low cost to you. There are also a number of self-help templates online to evaluate and sort out your budget.
Contact Your Loan Servicer
Reach out to your lender and ask what options are available for how to prevent foreclosure before you find yourself in danger of default.
Getting Help From Foreclosure Attorney
If you receive any court filings related to a potential or actual foreclosure, you should immediately seek legal assistance. You can go it alone but may benefit more from the professional advice of an attorney to see how to prevent foreclosure. An attorney can inform you of all options and particularly the best ones for you.
To start getting help on your pre- or actual foreclosure, fill out the form, and a customer service agent will be in touch with you to discuss your needs and your goals for avoiding foreclosure, or to more easily navigate the foreclosure process if foreclosure is unavoidable.