How To Delay Foreclosure

[Lucky]

Hopefully no one here is going to be faced with foreclosure, but there are websites designed to give free advice on how to handle it when the time comes. Banks, faced with more foreclosures than they ever anticipated, are often willing to deal, or at least delay a foreclosure if you make some good faith effort to make some of the payments. Better to get some money than to go ahead with the costly and unpredictable process of foreclosure.

Here is some of the advice easily available on the internet:

From foreclosurefish.com

How to Delay Foreclosure for As Long As Possible

July 22, 2008, 9:36 am

Posted by Nick in Legal Information

Rating: 5/5

The most important element of the legal process known as foreclosure is time. Homeowners never seem to have enough of it to recover fully from their financial hardship, to work out a solution with their lender, or move out of the house before eviction. However, there are a number of ways to put the process on hold even just for a few extra weeks.

Even for families who have no desire or ability to stop foreclosure and keep making payments on a house, it may be helpful for them to live in the property for free for as long as they can. This gives them time to put together a savings plan, pay down other debts, or just begin to recover from the hardship that pushed them into foreclosure. And for homeowners who do want to save their homes, the longer they can try to find a way out, the more likely they will be to succeed.

Probably the most important tactic will be to contest the lender's foreclosure lawsuit at every turn, either through the use of an attorney or by diligently reading and understanding the rules to make motions in court. Banks are often given a free pass by homeowners to steal houses because the lawsuit is not challenged. The mortgage company gets a default judgment and the property is fast-tracked to sheriff sale, while the eviction date approaches ever closer.

The best way to make sure homeowners have more time is simply to answer, contest, or object to every paper that the bank files in court. With thousands of rules and laws and regulations at every level from local to state to federal, it is almost guaranteed the lender did something wrong. The trick is for homeowners to learn how they can identify these rules violations or contest the foreclosure based on other legal concepts, and make the best defense they can.

Of course, it is also vital for the borrowers to make sure that they are following the court rules as closely as possible. Many courts allow between 15-20 days for an answer to be filed after the date of service. The sooner homeowners file their answer, though, the sooner the bank will file its own answer again; thus, for homeowners looking for more time, it may be beneficial to file the paperwork on the 14th or 19th day (depending on when it is due). The lender also needs to be served with any motions filed in court, and sending the paperwork certified or registered mail will take up another few days.

With the length of time a typical lawsuit can take, and the complexity in a contract law case involving foreclosure, this simple tactic can give homeowners 1-2 years of extra time to remain in their home without making a mortgage payment. Two of the more creative methods of defending against a foreclosure that have come up recently is contesting who owns the original loan, and requesting the entire loan be rescinded due to violations of the Truth in Lending (TIL) regulations. Of course, these may not be successful in every case of mortgage foreclosure, but getting more time to work on a long-term solution is the main goal.

But combined with a contingency plan for bankruptcy, homeowners can take even more time to plan for their financial futures and eliminate one of the last remaining headaches -- their other debt. Declaring bankruptcy even just a few days or hours before a sheriff sale has the effect of immediately stopping the auction and putting the foreclosure process on hold while the issue is tied up in bankruptcy court. This can give borrowers another few months to stay in their home mortgage free and save up money.

Also, if the homeowners are in foreclosure because of a financial hardship, and have loads of other credit lines that are in default, it may make sense for them to discharge these debts and get a fresh start with Chapter 7 bankruptcy. Once the mortgage is finally dealt with and the owners have to move out (hopefully years after the initial missed payment), there may be little logical reason to keep paying other unsecured debts like credit cards or personal loans with skyrocketing interest rates and huge junk fees.

A few thousand dollars in credit card debt can quickly balloon to tens of thousands of dollars once interest rates go up to 29%, and homeowners just getting over a foreclosure may not want to deal with this past headache. As well, with two years of late mortgage payments and a foreclosure, their credit can not get any worse so it may be the perfect time for bankruptcy. Hopefully with two years of savings, homeowners will not feel compelled to borrow money at 19% interest ever again. Bankruptcy can give such families the one way ticket they need out of the debt trap.

Homeowners are facing foreclosure in record numbers due to the predatory lending, financing, and investing activities of the largest banks in the world. Much of the coming depression was engineered, either inadvertently or purposely, and it is up to the borrowers to defend themselves against the economic devastation anyway they can. It is a mistake for homeowners to give these lenders a free pass, allow them to foreclose with no objections, move out of a house too soon, and put the financial health of the banks ahead of their families' futures by continuing to make impossible payments on debt that was never designed to be paid back.

[Guest lurkerspeaks]

isn't another way to avoid/delay foreclosure to actually take the money you con/scam from others and apply it to your mortgage?

[Lucky]

isn't another way to avoid/delay foreclosure to actually take the money you con/scam from others and apply it to your mortgage?

I'm guessing that this is a rhetorical question! But, if not, then surely a bank would go slow when someone waved money at them. It's not as they don't have enough real foreclosures to deal with. And, even with those it reportedly can take two years from start to finish if you fight it.

[MsGuy]

Lucky, not all states use traditional mortgages. In Mississippi, for instance, 'mortgages' are in the form of a deed of trust. No court approvals in the process, four weeks published legal notice, the bank's attorney sells the property on the courthouse steps. Three weeks later (quick eviction statute) and bang you're out. The deputy stands there while you move your stuff to the curb. All very creditor friendly. I happened to walk by the courthouse one day and saw a bank sell a old gal's nice 3 bedroom brick home for $7,500 because she was 2 months late on a payment. It was a crooked up deal between a banker and his buddy (the buyer) but try proving it.

There's a lot to be said for Cali's system. At least there's someone overseeing the process.

[Lucky]

Let's hope we don't have Meg Whitman and Carly Fiorina overseeing anything come January. Whitman thinks if she just bids high enough, she can win. Fiorina is a failed executive at a big corporation, why does she think she can run a state?

[MsGuy]

"Fiorina is a failed executive at a big corporation, why does she think she can run a state?"

Maybe that humongous severance package went to her head?

[BiBottomBoy]

When I used to live in New Jersey we had a great system for avoiding foreclosure.

Step 1: Make sure your insurance is up to date.

Step 2. Light a match.

Step 3. Drop the match.

Worked every time.

[Lucky]

Apparently it pays to fight a foreclosure as the paperwork is too often not correct. Here's a very long, but good, look at the problem:

http://www.washingtonpost.com/wp-dyn/content/article/2010/09/28/AR2010092806523.html?hpid=topnews

[JKane]

One of my favorite facts about Fiorina is the extraordinary amount of money people who know her personally have given to her opponent. Especially within HP.

Can't wait to vote against her and Whitman in November. The scary thing is I've heard Whitman might have a chance. Because last time we voted for a Republican political neophyte of independent wealth it worked out *so well*...

As for the original topic of the thread, there's always plenty of lip-service about how banks are (or by logic must be) willing to work with those in trouble, but the people I know who've tried report otherwise. The banks don't seem to be in much of a hurry to be divested of the foreclosures they're holding either, at least in my area.

[Guest NeedSome]

Isn't the best way to avoid foreclosure to avoid buying a house that you really can't afford?

[BiBottomBoy]

The problem with that theory is that lots of people could afford the houses when they bought them and had no clue the economy was going to crash and they'd be laid off from their jobs.

[Lucky]

Remember back in the days when you could believe that people in business and government knew what they were doing? The mess in foreclosure documentation is just astounding:

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/06/AR2010100607227.html?hpid=topnews

[Lucky]

HuffPost lets us in on a joke:

UPDATE: An Obama administration official tells HuffPost that the White House has 'concerns' about the bill.

Challenging foreclosures could become more difficult for homeowners if the president signs a bill that passed through the Senate last week. The little-noticed bill comes at a time when the validity of foreclosure proceedings across the nation have been called into question.

The House passed the bill in April, and its brisk journey through the Senate has drawn scant attention, Reuters reports. If signed into law, it would require courts to accept certain documents that have been notarized out of state, streamlining foreclosure proceedings and stripping homeowners of one legal method of challenging a foreclosure. The legislation would come just as a foreclosure validity crisis is mounting: GMAC, JPMorgan Chase and Bank of America have admitted to not properly reviewing some of their foreclosure documents.

The foreclosure controversies that have emerged in recent weeks throw doubts on the larger foreclosure system. A non-bank entity, Mortgage Electronic Registration Systems, has been initiating foreclosures, the Washington Post reports, exercising an authority that judges have ruled it does not have. In response to the mounting scandal, House Speaker Nancy Pelosi (D-Calif.) called on Tuesday for an investigation into foreclosure fraud. "This is a very big deal," she told HuffPost.

Ohio Secretary of State Jennifer Brunner told Reuters the timing of the bill's passage was "suspicious," implying that mortgage companies might have engaged in behind-the-scenes lobbying.

[Guest NeedSome]

The problem with that theory is that lots of people could afford the houses when they bought them and had no clue the economy was going to crash and they'd be laid off from their jobs.

Are there people who were gainfully employed, were judicious with what they bought, and then lost their jobs and couldn't make the mortgage? Absolutely. And I sincerely feel for these people.

Were there also people who, regardless of their employment and wages, bought way over their heads because they wanted the biggest and best house they could? Absolutely. Hey bigger is always better, this is America after all. So they went out and got some crazy interest only ARMed and dangerous mortgage and were foolish enough to assume that everything would always be rosy and that the housing market would continue to go up up and away. Hey, it will all work out, who needs to worry about the future. After all, I make 100K a year so why shouldn't I be able to live in a 1M house with no downpayment. I work hard and I deserve it. And all my friends have nice houses so I need to keep up. I'll worry about that increasing interest rate later, when and if I need to.

Then the ARMs start to reset and the mortgage crisis ensued. Refinancing was out of the question. Housing values tanked so they couldn't sell. Now don't get me wrong. I really feel for these people. I would not wish foreclosures on anyone. It's got to be a miserable and frightening experience that I have (thankfully) never had to deal with. And yes, the banks and lenders played a big part because they were taking enormous profits from these shitty mortgages. And they weren't regulated (thank you Ronald Reagan) so they did what they wanted. But I've seen so many people that got swept up and weren't able (or more likely willing) to deal with a scenario when everything wasn't as rosy. Those $100K earners buying the million dollar houses? That's not an exaggeration. I bought in 2005 and it was a house with a mortgage that was 60% of what I got approved to borrow. Why? Because what I was approved for was absolutely crazy and there was no way I'd be able to cover an increase in the ARM when it reset. Christ, had I borrowed what I was offered, I don't know that I would have even been able to make the monthly payment.

I guess I just don't understand why people would put themselves in a financial situation where they were going to be royally fucked unless a very specific set of unusual market conditions continued to exist. But then I don't understand a lot of what people do relative to their finances. Case in point, credit card debt, but that's another tome.

[Guest Conway]

I have always found paying my mortgage in a timely manner as the greatest tool for holding off foreclosure. I guess I'm just old fashioned like that.

[Lucky]

NeedSome, welcome to the forums. I look forward to reading your posts.

I think we agree that many people who followed the rules were left holding the bag when the economy collapsed. You could put down 20%, invest more in improvements, make your payments, and then see it all lost when home values plummeted. That's my neighborhood. Hundreds if not thousands of people who bought at the wrong time, in retrospect. Sure, there were plenty that bought too much, and they seem to be really knowledgeable about how to avoid responsibility, but something has to be done for those who did follow all the rules. Many now are foreclosed, and foreclosed by companies that did not follow the rules:

http://www.nytimes.com/2010/10/09/your-money/mortgages/09money.html?hpw

What a mess this is going to make, and what happens to the housing market in the interim? And what's the value of following the rules anymore if you just end up the sucker who pays off for the rest?

[MsGuy]

Well, on the bright side, Lucky, I saw where the Prez did veto that little mortgage bill you told us about in another thread. I wonder how much in "campaign donations" the banks paid to slid that one through Congress? Chalk up one small one for the good guys.

[BiBottomBoy]

I feel bad for the people who are making their payments but end up owing more than their house is now worth.

[Lucky]

Well, on the bright side, Lucky, I saw where the Prez did veto that little mortgage bill you told us about in another thread. I wonder how much in "campaign donations" the banks paid to slid that one through Congress? Chalk up one small one for the good guys.

That one was all in the timing. it would have not been vetoed but for the disclosure of the mess with paperwork. The outcry over that would have been strong.

Jon Stewart last week had a piece on the National Mortgage Association. They bought a $79 million building, with only 4 million down. About the same time that their president was on national TV talking about people's moral obligation not to walk away from their mortgage when underwater, they did just that, stiffing their lenders for $74 million . The hypocrisy is awesome.

[BiBottomBoy]

A lot of foreclosures on are on hold now because the banks completely fucked up the paperwork.