Many of our bankruptcy clients and foreclosure clients are facing some of the same problems. One problem that seems to transcend many different groups of people is the inability to keep up on house payments. We see this happen to clients who experience unexpected events like the need for medical care, automobile repairs, and losing a job. I can’t think of a time where a client came into the office and said to me that they fell behind on house payments because they just didn’t feel like paying the mortgage any longer.
Normally when a person comes to see Ashley or myself about a possible foreclosure the person is confused and scared. The best I can tell is that the person is confused and scared because of the unknown. In this article I hope to convey information to clear up some areas of the unknown.
When Does A Bank Or A Lender Have The Right To Foreclose?
A bank or lender can foreclose when the borrower is in breach of the note (also called a loan) that was taken out and currently in force. The bank or lender must also be able to show that they own the Note and Mortgage (a mortgage is a lien against the real estate that serves as security for the Note (money borrowed)). Many people who read the previous sentence may say, “Duh Sam!!!! They aren’t going to try to foreclose unless they own the note and mortgage.” My response to those people would be, “not so fast!” Lately we have seen about 25%-50% of Foreclosure Petitions that on their face seem to show defects in ownership.
Anyway, if a person is in breach of the agreement to pay (the note) and the lender owns the note and the mortgage the bank or lender can begin the foreclosure process.
HOW DOES THE FORECLOSURE PROCESS BEGIN?
Most of the time Clients will think that the foreclosure process has begun once they start getting lots of phone calls and letters from the lender. While that may not be specifically part of the foreclosure process it is sort of like the gateway into it and therefore I would count it as part of the foreclosure process. After some effort (usually 2-3 months) the lender will send a letter known as a NOTICE TO CURE. This letter will notify you of the amount that is necessary to bring the loan current and tell you that you have 30 days to bring the loan current or legal proceedings will begin. This document serves two purposes. The first purpose is to try to encourage the borrower to pay money towards the loan. The second reason is because Iowa Law requires that prior to the commencement of a lawsuit to foreclose on property a Notice to Cure must be sent.
After the Notice to Cure has been sent the next letter the borrower gets is a letter from an attorney’s office. This letter is a NOTICE OF ACCELERATION. The letter informs the borrower that the balance of the loan has been accelerated and that the entire amount of the loan is now due. Normally this is written partly to encourage the borrower to contact someone to work something out. The main reason this letter is written is because it is required by Iowa Law that the Acceleration Letter be sent prior to a foreclosure petition being filed.
What Happens After I Get A Notice To Cure And An Acceleration Letter?
About 2-4 weeks after the Acceleration Letter the attorney for the bank or lender will file a Foreclosure Petition with the Clerk of Court. The lender is named as the Petitioner in the lawsuit and the Borrower (and sometimes other people or companies) are named as a Defendant. The Petitioner (Lender) must personally serve an Original Notice of the lawsuit and a copy of the Foreclosure Petition on all named Defendants. Some other time I will write a post about named Defendants and explain why everyone who is named is there. I will also explain who that guy by the name of “parties in possession” actually is and why they gave you his paper work.
Okay Sam – I Got Served The Papers You Said I Would Get Served And You Were Right They Gave Me Three Copies Of The Same Thing: A Copy For Me; A Copy For My Wife, And A Copy For That Guy By The Name Of “Parties In Possession.” Who Is That Guy Named “Parties In Possession?”
I told you that some other time I would write a posting about the guy called “Parties in Possession.” He has caused me and my clients so much anxiety but today is not the day to address his problems.
Most likely you were served by a Deputy Sheriff or a private process server. When they try to give you the papers don’t be a clown or try to be difficult. These people are just trying to do a job and besides do you think hiding behind a curtain will make the problem go away? I have never seen anyone get to keep their home because the person was successful in dodging service. If they can’t personally serve you the Petitioner will just ask the Court for permission to publish notice in the newspaper. One other thought to remember about being served is that if you want my help I NEED THOSE PAPERS THEY ARE TRYING TO GIVE YOU.
Once you are served the papers you should call Marks Law Firm right away and set an appointment for a foreclosure consultation. The documents you received must be responded to no later than 20 days from the day they were served. Bring a copy of the papers you received and give them to the attorney you meet with. Normally I will begin with some general questions and then I will take a few minutes to look over the Foreclosure Petition and the attached documents. The first 5 to 10 minutes I spend looking at the documents are the most important minutes I spend in an entire case. From there I will ask a couple of questions that include but are not limited to:
- If I had to sell your home how much would I get for it in the condition it is in today? NOTE: I don’t sell homes and I am not asking what you would get if you cleaned the home, put in new carpet and patched the leaky roof. I just want to know what someone would pay for the home in the condition it is in right now.
- Do you have one or more mortgages? Normally I can figure this out to some extent based on the foreclosure petition but I like to ask anyway.
- 3. When was the last time you made a payment on each mortgage?
- How much is the balance on each of your home loans? The same question might be asked as how much is the balance on each mortgage (that would be a terrible question since you don’t owe money on a mortgage but sometimes I even slip and use the wrong words).
- How much do you pay each month on each of your home loans? (see my remarks to number 4).
- 6. Can you afford your house payments?
- 7. Do you want to keep your home?
So Now I Came To Your Office For The Appointment And You Did Ask Me Those Questions – What Can You Do For Me?
Today I had a women come in for a foreclosure consult and told me that she sort of had a foreclosure going on and that she had issues surrounding a temporary order and mediation (I should have known I was in trouble right there and then because temporary orders and mediations are family law terms! Those who don’t know will know now. I HATE FAMILY LAW!!!!!). When I heard her say that she sort of had a foreclosure going on I made one of my smart remarks and told her that foreclosure was like being pregnant – you can’t be sort of pregnant. She didn’t laugh. Obviously she just didn’t understand my humor.
The lady wanted to know right away how much I would charge to help her with her foreclosure. I explained that I had no idea what work I would be able to perform for her and until I evaluated her case I wasn’t comfortable answering her question. Each foreclosure case is fairly unique from who the lender is, to the ability of the borrower to make payments.
One thing that I can promise is that I and the staff at Marks Law Firm have participated in a substantial amount of training with respect to foreclosure issues. The amount of experience we have can’t be measured but in 2010 we believe that we handled over 100 foreclosure defense cases. Normally we can promise that we can, at the minimum, keep you in your home for at least 6 months and more likely closer to 12 months.
Remember earlier I mentioned issues that had to do with the lender proving they own the note? If there is an issue about ownership of the note sometimes I can keep my clients in the home for a lot longer. It is too complicated to cover in this post. I will state that I have dealt with a number of issues surrounding the ownership of the note and I have lost twice. One time the Judge chose to enlighten me as to his point of view (his point of view has since been overturned by the Iowa Court of Appeals). The other time I just plain old screwed up and saw problems where there weren’t any. Oh well, we live and learn.
One of my clients was served with a foreclosure Petition in September of 2009. This was around the time that I was refining my legal strategy to deal with issues of ownership of the note. I explained to my client what I wanted to try and he reluctantly agreed to go along for the ride. I prepared the additional documents and began the process of executing on my legal strategy. The client asked how long would he have in his home and I told him I had no idea because it was the first time I had tried out this theory. I think that may be why he was somewhat reluctant. That was in September of 2009.
More recently, the same client and I spoke on the phone. We speak about every 3 to six months. During this conversation we talked about his pending case (yes, the case is still going on 18 months later). I am not sure if my strategy was supposed to work the way it did. What has happened is that we created a situation that has put the lender in a position where it can’t prove it owns the note in a satisfactory way. Because the ownership of the note is in flux the lender can’t get a foreclosure decree and until the Court grants a foreclosure decree my client gets to keep living in his home without making payments. Actually, the way we set it up the client will get to stay in the home at least another 6 months after the Foreclosure Decree is entered without making payments. As for where I see my client’s case going, I have no idea. The situation we created is bazaar and has been completely unpredictable. Oh well.
To summarize this over length post:
- You will get a Notice to Cure from the lender about 2-4 months after payments become delinquent.
- About a month after the Notice to Cure an Acceleration Letter will be sent to you from an attorney’s office.
- About 2-4 weeks after you receive the Acceleration Letter from the attorney, the attorney will file a Foreclosure Petition with the Clerk of Court.
- You will be served an Original Notice and a copy of the Foreclosure Petition.
- Set an appointment to see either Sam or Ashley as soon as you are served the papers.
- We can file papers with the Court that will buy you an additional 6 to 12 months (usually 8-10 months but I like to be safe).
- If you have one of the lucky cases where ownership of the note is in question we won’t promise but have had success in buying substantial time (more than 12 months) for our clients.
There are other tools available to homeowners who merely want to stay in their homes longer or force the lender to work out a resolution. You need to find an attorney who has experience in the area of Foreclosure Defense. Marks Law Firm has the experience you need. Contact Marks Law Firm today to look into what options you have if you are facing foreclosure.