Section 4022 of the Coronavirus Stimulus Bill contains a moratorium against initiating judicial or non-judicial foreclosures on any property owner with a Federally backed mortgage loan.**
The moratorium prevents any foreclosure related action for 60 days beginning on March 18, 2020.
This moratorium applies to first and second mortgages on cooperatives, condominiums and 1 to 4 family properties.
If you need financial assistance...Be Proactive. Contact your mortgage lender or servicer immediately to get more information and make sure you refer to this section of the law when you speak to your mortgage lender or servicer.
**A Federally back mortgage loan is any loan insured by the Federal Housing Ad-ministration; insured under the National Housing Act; insured the Housing and Community Development Act of 1992; guaranteed or insured by the Department of Veterans Affairs; guaranteed, made or insured by the Department of Agriculture; or purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.
Section 4022 of the Coronavirus Stimulus Bill requires mortgage lenders and servicers to provide homeowners with up to 12 month forbearance on a Federally back mortgage loan**.
Section 4022 entitles a borrower to a 180 day loan forbearance with the right to ask for an additional 180 day forbearance so long as the borrower submits a hardship request stating that he or she is experiencing a financial hardship because of COVID-19.
The forbearance applies to first and second mortgages on cooperatives, condominiums and 1 to 4 family properties.
During a forbearance a borrower’s loan payments are postponed (or reduced) but interest continues to accrue during the period of forbearance. During the forbearance a mortgage lender or servicer cannot charge or collect any fees, penalties or default interest.
It does not require a borrower to submit any documentation to prove financial hardship due to COVID-19. A mortgage lender or servicer must provide a forbearance once a borrower says he or she is experiencing a hardship because of COVID-19.
If you make a request for a forbearance make sure you remind the mortgage lender or servicer that under Section 4022 they must give a forbearance upon request.
**A Federally back mortgage loan is any loan insured by the Federal Housing Ad-ministration; insured under the National Housing Act; insured the Housing and Community Development Act of 1992; guaranteed or insured by the Department of Veterans Affairs; guaranteed, made or insured by the Department of Agriculture; or purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association.
Strategic default is simple: it's the intentional
act of going into default on your student loans. However, there's still a
misnomer here Joshua Cohen, a student
loan debt attorney, sums it up best: "First, when we say
strategic, that almost sounds like it’s purposeful. I think that’s incorrect.
Many of these strategic defaulters have no choice but to default. They simply
cannot afford the payment. When I say strategic defaulters, it means there is a
plan to deal with the debt, not that they actually default when they could
afford the payment. It’s not the default that strategic, it’s the what to do
after it defaults that is." And it's that idea - what you do after
the default that is strategic - that is powerful for borrowers. Read
more at Forbes.
The city is taking on lenders of “zombie homes” —
decrepit, vacant, distressed houses with unpaid mortgages, which have forced
the city to conduct emergency repairs and maintenance. The city’s
Department of Housing Preservation and Development is seeking more than $1
million from CitiMortgage, Wells Fargo and other home lenders who have
allegedly failed to maintain houses on the brink of foreclosure, the
department announced. Read
more at The Real Deal.
Each state has different rules around credit
freezes, but in some states, it costs $10 to place a credit freeze on their
account and another $10 if they want to lift the freeze. Not anymore
though. Going forward, consumers can freeze their credit for free at
Equifax, TransUnion, and Experian. A credit freeze prevents lenders
or other credit providers from opening a new account without a consumer
unfreezing their credit. Read
more at Housing Wire.
In the second quarter of 2018, New York City foreclosures stagnated both year-over year and quarter-over-quarter. 881 homes were scheduled for auction for the first time, compared to 911 in Q2 2017...Citywide, the number of foreclosures is stable but high. Read more at PropertyShark.Com.
New York Judge Thomas F. Whelan in his article entitled, The Long Island Foreclosure Epidemic, projects a light on the causes of the extensive delays in New York foreclosure lawsuits. There is no question that a foreclosure lawsuit can take up to 8 to 10 years to finish. Judge Whelan writes that state laws created to protect homeowners can be used as a weapon instead of a shield to delay foreclosure lawsuits. He also observed that court procedures can contribute to lengthy delays. I believe it is also important to consider the lenders role in the foreclosure epidemic. First. Why are lenders so reluctant to enter into settlements that are "win win" i.e. modifying the loan with an interest rate reduction. Additionally a lender can defer payment of a portion of the principle balance by requiring a lump sum at the end of the loan. By restructuring a loan with a lower interest rate and allowing for a deferred lump sum principle payment a lender can recover most of it's money, a homeowner can begin to make affordable payments and a foreclosure lawsuit will no longer clog the court system. To often lenders allow the loan modification or settlement process to be extremely frustrating and down right degrading. Lenders create unnecessary processing delays and make unreasonable requests for previously submitted documents. In some instances a lender can take up to a 1 year before making a decision. There is no reason why a lender can't make a decision to modify a loan in less than 2 weeks after a homeowner submits their paperwork. Second. Lenders and their attorneys delay court proceedings by doing nothing. A foreclosure lawsuit can sit in court for years before a lender takes the next step in the court process. You will never find a single homeowner or property owner rushing to court to "force" a lender to foreclose faster. So a homeowner waits in foreclosure limbo while interests, fees and costs accrue. While it's true a good foreclosure defense attorney can use the law and court procedures to "extend" the life of a foreclosure lawsuit ultimately the lenders choose the pace of the case. Third. There may be an incentive for lenders to not foreclose quickly since a completed foreclosure sale requires the lender to assume the risks and costs associated with managing the property. Interests, fees and other loan costs accrue while a foreclosure lawsuit is pending. The homeowner ultimately pays the entire "bill" via a foreclosure sale. Currently property values continue to rise thereby increasing the likelihood a lender will collect all of its money. Additionally many loans in foreclosure have interest rates ranging from 6.5% to 11%. Does the lender say "cha ching" during a delayed foreclosure? I have been a beneficiary of the delays in foreclosure lawsuits. For over 10 years I have succeeded in defending foreclosure lawsuits brought against my properties. During the 10 years I obtained a loan modification, principle reduction and the dismissals of foreclosure lawsuits. In one such case, due to my lenders inaction, I filed a quiet title action under New York State law (RPAPL section 1501(4)) which led to a court ordered cancellation and discharge of my mortgage. You can read the decision here: Augustine Diji v. Deutsche Bank. You can read the entire case here: Diji v. Deutsche. Judge Whelan confirms the ongoing trend to find and implement real solutions to end foreclosure delays and to reduce foreclosure lawsuits in the New York court system. Bottom Line: A lender should not have to wait a long time to collect money it is rightfully owed. Yet a homeowner is duty bound to defeat a lender who does not rightfully attempt to collect a loan.
More homeowners taking loan modifications, avoiding foreclosures 8-17-2016 The mortgage industry completed over 100,000 permanent modifications during the second quarter, according to HOPE NOW, the voluntary private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors. Of the 100,000 loan modifications, about 69,000 homeowners received proprietary loan modifications, or in-house loan modifications, and 31,684 homeowners received loan modifications completed under the Home Affordable Modification Program. Some homeowners didn’t qualify for long-term permanent loan modification, in which cases the mortgage servicers looked for a short term options that, in many cases, led to a permanent solution. Read More at the Housing Wire Nearly 650,000 borrowers to receive more money from Independent Foreclosure Review 8-8-2016 The clock is now at zero for the borrowers eligible for payment under the Independent Foreclosure Review Payment Agreements who have not yet cashed or deposited their check, and their money is going to the borrowers who already cashed their checks. The Fed said last year that borrowers who had not cashed their check had until Dec. 31, 2015 to request a replacement check. According to the Fed, the Independent Foreclosure Review Payment Agreement, overseen by the Federal Reserve and the Office of the Comptroller of the Currency, provided $3.9 billion for borrowers of 13 servicers whose homes were in any stage of the foreclosure process in 2009 or 2010. Read More at the Housing Wire
For the past several months, loan modification activity have been evident to be in a decline according to data from sources such as the Hope Now alliance. Moreover, the vast majority of the modifications were made via proprietary programs, while a smaller portion were completed through the Home Affordable Mortgage Program. However, this drop does not necessarily always indicate bad news as depicted from the analysis described below.
For thousands of US short-sellers, a big gift 12-26-2014 The Senate’s 11th-hour extension of the Mortgage Forgiveness Debt Relief Act ends on Dec. 31. The federal tax code treats forgiven debt as ordinary income to the borrower, taxable at regular rates. But under an exception that took effect in 2007, qualified home mortgage debt that is canceled by a lender as part of a short sale, loan modification or foreclosure is treated as non-taxable... So how do you know whether your short sale, loan modification or foreclosure is covered by the extension for 2014? The key points you will need to know include: 1. The house securing the mortgage debt must be your principal residence. 2. The maximum amount of debt that qualifies for relief is $2 million ($1 million if you are married filing taxes singly.) 3. Any portion of the mortgage debt forgiven that was used for purposes other than improving or building the house will not qualify for the exclusion and may be taxable. Read More at the Real Deal Future SHOCK for Older Homeowners: You Won’t Get a HELOC, a Second, or Refi based on your Equity 10-15-2014 The reality is that with the private RMBS securitization market still largely frozen, government lending essentially the only game in town, the prevalent and entirely reasonable fear of “buy backs” among bankers, actions by the Consumer Financial Protection Bureau (CFPB), Dodd-Frank’s impact, new QM rules, and whatever else you’d want to throw in under the category of new and increased pressures on lenders… it should not be a surprise that loans are harder to come by than at any time in recent history. Today, your assets don’t matter when applying for a mortgage… only the amount of income you earn is considered when assessing your ability to repay the loan. That means that today, the fact that you own a home free and clear that’s worth $1 million, by itself, is not going to get you approved for a Home Equity Line of Credit (HELOC), second mortgage or refinance... to get approved for a HELOC, or a second home, not only do you need significant equity, but you’ll also need actual income that’s deemed sufficient to repay the loan… and a glimmering FICO score… like we’re talking 760+… that sort of thing. Read More at Mandelman Matters Americans face post-foreclosure hell as wages garnished, assets seized 10-14-2014 Many thousands of Americans who lost their homes in the housing bust, but have since begun to rebuild their finances, are suddenly facing a new foreclosure nightmare: debt collectors are chasing them down for the money they still owe by freezing their bank accounts, garnishing their wages and seizing their assets... Using a legal tool known as a "deficiency judgment," lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come. Read More at Reuters Foreclosure Dispute Pits Mortgage Lenders vs. Investors 10-14-2014 Mortgage lenders and housing investors are squaring off in Nevada over a court decision that has allowed thousands of foreclosed homes to be sold for pennies on the dollar, in a case that could have big implications on an already-tight home-loan market across the country. At issue are homeowners associations and the liens they put on properties when a homeowner stops paying dues. Homeowners associations enforce rules in a community and collect dues to maintain common areas and pay for repairs... In a court filing Tuesday, the Mortgage Bankers Association wrote that because of the decision, “mortgage lenders stand to lose millions—perhaps even billions—of dollars in security interests.” Read More at The Wall Street Journal Fair housing group challenges U.S. Bank over foreclosure upkeep 10-8-2014 On Wednesday, the National Fair Housing Alliance accused the Minneapolis-based bank of racial discrimination in its upkeep of foreclosed properties in Minneapolis, renewing a debate over who is responsible for maintaining foreclosed properties — and to what extent. This was the housing group’s fourth announcement of claims against U.S. Bank, and its complaint now covers neighborhoods in 19 metro areas across the country... The group has been aggressively pursuing charges of racial discrimination in foreclosure upkeep for the past few years. It has filed claims with the U.S. Department of Housing and Urban Development against Bank of America and Wells Fargo. Read More at Star Tribune
Good News About Housing Recovery… Your Kids Will be Living With You for a Long Time 2-22-2014 Recently released surveys from both Gallup and Pew Research Center showed that as many as 36 percent of Americans 18 to 31 years old are still living with their parents… the highest level ever recorded. And Time Magazine says we’ve got 25 million adults kids still living with mom and dad... You’ve heard about the housing recovery, right? How could you not? On any given day these days, you can find the good news about housing markets in this country all over the media… prices are recovering, or so the story goes. The only problem with the “news” is that as of January 30th of this year, sales of existing U.S. homes plunged to the worst pace in 18 months. Read More at Mandelman Matters Homeowner Alert: Scammer Masquerades as Bank, Offers Fake Loan Mods 2-22-2014 As if REAL loan modifications weren’t often illusory enough, now there are scammers masquerading as banks, offering FAKE LOAN MODIFICATIONS… and if that weren’t bad enough, the fake mods require homeowners to pay thousands of dollars for nothing. This past week, Illinois consumer attorney Rick Rogers reported that a homeowner in the Chicago area, a school teacher who had been trying for a couple years to get her loan modified had not been approved… and her home was going into foreclosure. She kept trying though until one day this past fall she received a letter that appeared to say that Bank of America was now approving her loan modification. Read More at Mandelman Matters Uncertainty in the Loan Mod Process is Barrier to U.S. Economic Growth 2-21-2014 "...why doesn't anyone talk about the monument to uncertainty that's been placed square on the collective chest of the American homeowner... the loan modification process? It's the proverbial life preserver for the underwater homeowner at risk of losing a home to foreclosure that sinks more often than it floats... and often times no one knows why. And it's the poster-child for uncertainty.'' Read More at Mandelman Matters
What the new mortgage rules mean for you 1-10-2014 New mortgage lending rules are going into effect Friday that aim to put an end to the worst mortgage lending abuses of the past... The new rules are designed to take a "back to basics" approach to mortgage lending and lower the risk of defaults and foreclosures among borrowers, according to the Consumer Financial Protection Bureau, which issued the new rules. Mortgage lenders are being asked to comply with two new requirements: The Ability to Repay rule and Qualified Mortgages. Read More at CNN How the CFPB plans to empower homeowners 1-8-2014 The Consumer Financial Protection Bureau is living up to its name — putting consumers first as the bureau rolls out tools to help borrowers hold financial firms accountable... The CFPB intends to make homeowners more empowered to fight back. Just this week, the bureau announced a series of materials – from sample letters to new mortgage rule guides. All of those materials aim to educate borrowers on when a bank has violated a key mortgage provision and how to resolve those errors. Read More at the HousingWire Florida housing market may get a boost from ‘boomerang buyers’ 12-28-2013 Founders of the San Diego-based company AfterForeclosure.com said last week that millions of banned borrowers nationwide will be eligible for a mortgage next year, while Jupiter mortgage broker Skip McDonough said his firm is already doing deals with home buyers who were forced into default during the housing bust... Under the FHA's "Back to Work" program, it will approve certain borrowers for a home loan just one year after a foreclosure, short sale, deed in lieu of foreclosure or bankruptcy. The FHA's previous timeline was three years for a short sale and foreclosure and two years for a bankruptcy. Read More at The Globe and Mail
Both the Fair
Housing Act and Civil Rights Act were designed to protect consumers and
homeowners from being trampled in the way they have been repeatedly… if you
were told you did not qualify to apply, should not apply, or otherwise
discouraged from applying for a loan or modification for any reason it could be
a Fair Housing violation; if you believe you are qualified for loans you can
repay to keep you in your home but believe you have been improperly denied a
loan or modification it could be a Fair Housing violation; if during the course
of the loan, from beginning to now you believe you were discriminated against,
treated differently, or harmed by your Servicer or Lender it could be a
violation of the Fair Housing Act. Read
More at The Huffington Post
With home prices
on the rise and foreclosures down nearly 30 percent from this time last year,
the major issue distressed homeowners face today is the lack of laws that
mortgage servicers are forced to abide by… During the housing crisis, the
sloppy and unscrupulous collection practices were exposed as millions of
homeowners could no longer afford to pay their mortgage. Because of this,
various laws came into play and the CFPB has established a new set of rules
servicers must follow – beginning January 1, 2014. Read
More at LoanSafe
The
Massachusetts Division of Banks has adopted amendments to its debt collection
and loan servicing rules that prevent third-party mortgage servicers, including
banks, from foreclosing on mortgaged property if an application for a loan
modification is in process. The amended rules, which became effective on
October 11, are meant to complement the recently adopted foreclosure prevention
rules that require home mortgage lenders and servicers to modify certain
mortgage loans if the cost of modification is less than the cost of
foreclosure, according to the Division… Under the amended debt collection and
loan servicing rules, third-party mortgage servicers are required to consider
options to avoid foreclosure and third-party mortgage servicers are prohibited
from initiating a foreclosure when an application for a loan modification is in
process, a practice also known as “dual tracking.” Read
More at Lexology
New law tightens foreclosure rules in Minnesota 7-31-2013 Minnesotans who have struggled to make their mortgage payments will get new leverage for saving their homes beginning Aug. 1 under a law that tightens foreclosure rules in the state. The new law doesn’t necessarily spare homeowners from losing their properties… it seeks to ensure that eligible borrowers have fair and clear access to every available option to avert foreclosure. The law also bans so-called “dual tracking” of foreclosures… [Where] a lender and/or mortgage servicer can’t move to sell a home until the borrower has had a fair chance to seek a loan modification. Read More at MINNPOST Boca Raton homeowner wins multi-million dollar foreclosure suit after legal misstep 7-26-2013 A Boca Raton homeowner whose waterfront mansion has been in foreclosure since 2008 had her case voluntarily dismissed by her lender Thursday in Palm Beach County court after a legal misstep during trial. Homeowner Valerie Kaan bought the 13,000-square-foot home in 2003 for $8.4 million. The outstanding balance as of Thursday was up to about $10 million… “Maybe this will send a message to banks that when people come to the table in good faith with a reasonable offer, they should more seriously consider it,” said homeowner attorney Roy Oppenheim. Read More at The Palm Beach Post Lenders seek court actions against homeowners years after foreclosure 6-15-2013 Lenders are filing new motions in old foreclosure lawsuits and hiring debt collectors to pursue leftover debt, plus court fees, attorneys’ fees and tens of thousands in interest that had been accruing for years. It’s all part of a legal process known as a “deficiency judgment,” which is allowed in the District and 40 of 50 states, including Maryland and Virginia. Freddie Mac spokesman Brad German said Freddie Mac is targeting “strategic defaulters,” which the agency defines as “someone who had the means but chose to go into default, that there were no extenuating circumstances that affected their ability to pay…” Read More at The Washington Post
It is very important to understand the difference between judicial foreclosures and non-judicial foreclosures. In simple terms, a judicial foreclosure requires a proceeding in a court. A non-judicial foreclosure does not require any proceeding in a court. In each type of procedure, a lender has the right to auction a property if the lender has properly filed all of the necessary paperwork. Let’s review important aspects of each.
HappyNewYear. We all made it to 2011. Somehow, someway, to breath another day.
The feeling of change in the beginning of a new year can be used to create a meaningful focus in our lives. For those of you who read our website...Thank You for visiting and taking time to read our content.
We believe that your primary concern is how to strategically default the right way with the least financial and emotional impact. We believe you are seeking solutions to protect yourself, family, cash, savings, and wealth when deciding to not pay a debt.
One thing is for certain in 2011, strategic defaults will continue to rise. Thus the demand (and need!) for solid, reliable, and actionable information will continue to be strong.
We will be coming out with a new look and feel for our website. It will be easier to access our content based on categories and interest. We will be adding a strategic default calculator, forms, and other tools to better help you with a strategic default. We will continue to provide detailed steps for an effective strategic default. We will be adding a forum for our readers to share their experiences. Our goal is to continue to provide the best and free strategic default resource on the planet.
We are predicting that the key issues for strategic default this year will be:
First off, your website is great, thanks for all the information you've posted. I know you cannot take the place of paid legal advise but I was hoping to get your opinion on my situation.
My wife and I currently live and own a home in Oregon. It's small and we are ready to move on. We owe about what the house is worth so selling it has not worked. Due to our income and low debt we have qualified for a home loan on another house and plan to buy it and move there.
We would rent out our current house, and if we run into any financial trouble, just stop making payments on the rental and focus on keeping our new primary residence. Since Oregon is a non-recourse state, the lender should not be able to come after our assets or primary residence for not paying the rental house mortgage correct?
Get Answer: The issue of non-recourse/anti deficiency is an important one. Keep this in mind: even if Oregon is a non-recourse state, you need to now how Oregon implements its rules. It may not be an absolute, blanket ban against the collection of a deficiency debt by a lender. Please check this link to learn more about Oregon's deficiency laws : https://www.oregonlaws.org/ors/86.770. So yes...please consult with a qualified attorney in your area.
What if we refinance the soon to be rental house to get a better interest rate?
Get Answer: That would lower your payment and perhaps make it profitable to rent the house. Even with no current equity. Yet you are not totally upside down.
I was told that if you refinance, your loan becomes full recourse, regardless of what state you are in, is this true?
Get Answer: It may be true. Generally, if a loan was not used to purchase the house then there may not be any protection under relevant non-recourse/anti-deficiency laws. So please consult with a qualified attorney.
If we want to keep and rent this house long term, a refinance makes the best financial sense, but I don't want to take away the option of a strategic default by refinancing into a full recourse loan. An extra $100 in interest payments per month seem worth the cost to keep all options open.
What is your opinion on this?
Get Answer: Well said. Essentially the $100 monthly cost is your insurance payment for staying protected under Oregon's anti-deficiency laws. Yet, if you refinance the loan you may earn income. Furthermore, if you refinance into a fixed rate mortgage then over time the principle balance will be lowered. You may gain equity if property prices have stabilized in your area. However it may not be likely. Keep in mind that if the foreclosure sale of your property satisfies the lender in full then there is no deficiency. Also any difference owed to the lender may be settled for less than what is due or it may be forgiven. Forgiven debt may be considered taxable income. However, under current Federal law forgiven debt may not be taxable if it involves a primary residence. Focus on acquiring the other property as soon as you can. Spend more time considering your strategic default alternative. Please read this link to learn more about debt obligations and deficiency. Also speak with a qualified professional to round out your thinking.
Thanks
JA
Thank you for reaching out.
---- Below Is JA's Response To Get Answers...----
Thanks for your response, that was helpful.
I've done a little more research on Oregon's anti deficiency laws and it seems its not as clear for us as recourse vs. non-recourse state like I first thought.
This is what I understand from reading the statutes:
If a non-judicial foreclosure is an option under your loan contract (if a power of sale agreement was signed as part of your loan, which is likely) in Oregon, then the bank can go this route seize your house and sell it with proper notice. They are not allowed to come after you for any debt deficiency resulting from the sell of your house in a non-judicial foreclosure.
If there is no power of sale agreement, or if the bank simply chooses to go this route, they can choose a judicial foreclosure. This will result in a public auction of your house and a deficieny judgement against you for the difference in what the bank gets and what you owe. Because this option is more time consuming for the bank, it is less likely, unless you are significantly under water and the bank thinks you have enough resources to make a deficiency judgement worth thier effort. Luckily for us right now we owe about as much as the house is worth so the bank most likely would not pursue this option. If housing prices continue to fall that might not be the case.
So it turns out the walk away options is less do-able then I had hoped. Especially because the mortgage debt tax foregiveness only applies to primary residences, not rentals. For now it looks like we will proceed with buying the new house, renting out the first house and hoping that property values stabilize or rise. If not, we'll have to think a little bit more about the consequences of a strategic default.
I purchased my home new three years ago, and had a swimming pool installed. This spring my pool collapsed. Estimated repair costs are approximately $30,000. Neither my homeowners or flood insurance will pay a dime. My home has always had drainage issues; and I came to find out that half of my lot was developed on mitigated wetlands, not disclosed at time of purchase by developer/builder. Both developer and pool builder say this is an act of nature and not their problem. I've been trying to find an attorney, but none seem very interested. Any advice? I live in Alabama, and I am an active duty USCG member. How would a default affect me?
KU
GET ANSWER…
Dear KU:
Thank you for contacting me.
If you decide to strategically default then you face certain consequences.
1. It will negatively impact your credit score.
2. Your peace of mind and space will be disturbed by collection calls, letters, and perhaps visits.
3. It will expose you to a possible deficiency judgment. A deficiency judgment is an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note or mortgage loan, in full.
If you live in a state that does not allow for deficiency judgments then this may not be an issue. A state that does not allow for deficiency judgments is called a non-recourse state. I believe Alabama is a recourse state therefore Alabama may allow lenders to obtain deficiency judgments. There may be new laws in Alabama that protect homeowners from deficiency judgments. Since you are an active member of the coast guard there may be additional state and/or federal protections against deficiency judgments.
You may also consider contacting the bank and telling them about your situation. While the bank may not be sympathetic to your pool problem, they should listen to your “mitigated wetlands” problem. You can tell the bank that the property has a drainage issue and you were not given full disclosure of certain defects in the property. You can offer to give the property back to the bank in exchange for the complete and full satisfaction of all of the debt that is owed to the bank. This is called a deed-in-lieu of foreclosure. This will eliminate any deficiency judgment risk. The key is to get any agreement with the bank in writing.
You would have to look at your original contracts to determine if the builder and/or pool installer are liable. Just because they say it’s not their fault does not mean it is.
You mentioned you were unable to find an interested attorney. I am surprised. You will need a qualified professional to help you. I am sure there is someone who can take your case.
Please feel free to contact me with any questions.
This is a video by hip hop artist, Chamillionaire. He has made the decision to strategically default. He did not make this decision lightly. In fact there was negative press regarding the foreclosure of his home. Based on this video, he clearly received advice from financial professionals. Furthermore, his personal circumstances made a strategic default the best decision for himself and his family. At times he is emotional, yet his decision to stop paying his mortgage, walk away from his "million dollar mansion", and apparently turn the keys over to the lender was all business. There is no shame in strategic default. Pure and simple.
Many Borrowers In Default Stay Put As Lenders Delay Evictions. Alana Semuels from L.A. Times writes "[d]espite being months behind, many strapped residents are hanging on to their homes, essentially living rent-free. Pressure on banks to modify loans and a glut of inventory are driving the trend". The primary reasons for this are not as sympathetic as it may seem. Banks do not want to maintain empty properties. By allowing former homeowners to stay, the cost of upkeep and maintenance is shared.
Homeowners Facing Worst Simply Abandon Homes. A news story by Thomas Olson of the Pittsburgh Tribune-Review puts a different spin on strategic defaults by focusing on the emotional costs. While describing the effects of homeowner's walk aways in Pittsburgh, he concludes with the following "Psychologist Rex Gatto, Mt. Lebanon, has counseled about 10 people in the last two years or so who walked away from their homes, 'which I had not seen before in my 25 years of practice,' he said, declining to name patients. 'The outcome is heightened anxiety and often, depression,' he said. 'When people lose their homes they also feel a loss of community and friendships, and if they have kids, a school district... all the things they belong to."
If you are a tenant, that happens to be living in a property in foreclosure. No need to sweat. There is a recently enacted federal law that gives tenants time to get it together and move or even stay.
If you purchase a property at a foreclosure sale or you are a lender that takes the property at a foreclosure sale and there are tenants in the property, you better start sweating.
Under the Helping Families Save Their Homes Act, a tenant has the right to stay in the property after a foreclosure sale for a minimum of 90 days. If the tenant has a lease, then THE LEASE STAYS IN EFFECT after the foreclosure sale.
Now let's review specific provisions of the relevant law under sections 701 to 704:
The law applies to a federally related mortgage loan on any dwelling or residential real property.
The new owner after foreclosure sale, which includes a lender who takes the property must give a "bona fide" tenant a 90 day notice before the tenant can be evicted.
A tenant with a "bona fide" lease entered into before the notice of foreclosure has the right to stay until the lease ends. EXCEPT that the new owner after a foreclosure sale can terminate a lease, if the new owner intends to occupy the property as his/her primary residence. This is still subject to a 90 day notice delivered to the tenant.
Section 8 Tenants are protected under this new law.
Who is a "bona fide" tenant? It is an individual or individuals that are not the prior owner of the property and are not the child, spouse or parent the prior owner.
What is a "bona fide" lease? the lease or tenancy is based upon an arms-length transaction and requires rent that is not substantially less that the fair market rent for the property, which includes any reduced rent or subsidy due to a Federal, State, or local subsidy.
This law helps tenants stay in a property after foreclosure. Most important if a tenant has a "bona fide" lease, then the tenant gets to ride it out.
So the net effect is this. No one will bid for a property at a foreclosure sale that has tenants in it. The lender will end up taking the property back. More properties on the books of lenders. Not good for lenders. Lenders are in for it now. A big positive is that lenders will have an incentive to modify a mortgage loan or strike a deal before a foreclosure sale, if the property has tenants.
I must admit, I like this law because it tips the scales towards the people and away from the lenders.
We'll talk about this some more later on. Enjoy your day.
