Foreclosure is a scary word. It means that the bank is seeking to gain ownership of your home or real property to repay the money lent by them for the purchase. This action can cost you your home. The filing of the Complaint in Foreclosure is not the end of the process. You have time and options to exercise.
The process of a Foreclosure is this:
- Complaint filed
- Answer of Defendant (you) or if no Answer, a Motion for Default Judgment by the bank
- Judgment in Foreclosure granted either at trial or upon Motion of the bank
- Appraisal of the property by the Sheriff
- Listing of the Sheriff sale date in the local newspaper
- Sale goes through and the home is purchased
- The Sheriff sale is confirmed with the court
- You receive notice to vacate the home
The process has many opportunities for you to work with your lawyer to slow or stop the Foreclosure.
- If you want to keep your home or have a chance to do so you want to file an Answer. This is a response to the allegations of the bank listed as the Complaint that was filed. If you do not answer the bank, this can proceed to a judgment on a Motion for Default. You will have no option to stop that judgment if you have not filed an Answer.
- Once you file your Answer, you can request Mediation, if your jurisdiction has that option. If you can enter mediation, you and your attorney work with the mediator and the bank’s attorney to pursue a mortgage modification or other option to save your home. This can slow the process of the foreclosure to allow you to pursue other options or result in a modification of your mortgage. If you accept the modification, then the Foreclosure stops. You can choose to file bankruptcy, either a chapter 7 or 13, during the mediation phase of the process.
- If you file bankruptcy, each chapter offers a different solution. In Chapter 7 bankruptcy, you can discharge your other debt, along with the obligation on the promissory note the bank is suing on, and that may facilitate the mortgage modification going through or if you choose to surrender you home you will not be responsible for the debt you still owe the bank for the purchase of your home. If you file a Chapter 13 you can pay your regular mortgage payment and the back payments over up to a 5-year period and the foreclosure will stop.
- If you choose to surrender your house, there are several options. You can work with the bank to assess if they use the cash for keys program (gives you some moving expenses money), you can let the process run out to buy you more time in your home before you have to move. You also can seek a solution through a short sale or Deed In Lieu.
- If a judgment is granted and the home goes to a Sheriff sale, you may still have more time if the bank or another entity does not purchase the property. The Sheriff sale process would start again, and you can remain in your home.
- Once the property is purchased at the Sheriff sale and the sale is confirmed with the court, you will have approximately three days to vacate the home. Once the sale is confirmed, there is no option left to save your home.
Mortgage Modification Option
There are options if you have fallen behind on your mortgage payments. The 2008 bailout resulted in government-mandated programs that banks were required to offer to help people who were in danger of losing their homes due to the inability to make the mortgage payments. Not every bank has to offer every program. They could pick and choose which program to participate in, which means that there is no standard response to a modification request.
If you have fallen behind in your mortgage payments, you can contact your bank and request a modification packet. The bank will send you the packet, and it is your responsibility to return it and follow up. A common stall tactic of banks is to state that they have not received the packet, that it was not completed, or wait until the documents that you have sent become “stale” and you are either denied or have resubmitted the paperwork for months. If you are working with an attorney to complete and submit the modification paperwork, you will get better responses and timely action from the bank. This will not guarantee that you will get the modification but the likelihood is greatly increased.
If the bank has already filed a foreclosure, you can hire an attorney to respond to the filing and request mediation if your jurisdiction allows for mediation. The response is necessary to avoid a Default Judgment (a judgment in favor of the bank if you do not respond to the Complaint). If your jurisdiction allows for mediation, this is the way to go. The mediator will work with you, your attorney, and the attorney of the bank to ensure that the modification packet is timely submitted and reviewed.
The mediation process can help you determine the best option for the retention or surrender of your home. You can receive a loan modification, and if you accept the terms, the foreclosure is dismissed. You can file a chapter 7 bankruptcy and discharge the obligation on the promissory note on your home and your other debts. The discharge of the other debts may make a modification more feasible financially. You can file a chapter 13 bankruptcy in which you pay the original mortgage debt and the back payments through the chapter 13 Plan. The foreclosure is then stopped, and as long as you complete the Plan, your home is saved.
If you choose to surrender your home, having the underlying debt discharged in bankruptcy will protect you from any collection efforts of the bank going forward. Most people are able to purchase a home 2-3 years after the discharge of a bankruptcy, so you truly get a fresh start.
These processes are best navigated with an experienced attorney. Moseman Law Office, LLC has that experience and is here to help you save your home.
Foreclosure Attorney Mentor, Ohio
This process is confusing and full of pitfalls, so it is best to work with an experienced foreclosure attorney in Mentor as you navigate the process and exercise the options that will work best for you.
To get in touch, give us a call at (440) 255-0832 or fill out our contact form and we’ll get back to you as soon as possible!
Moseman Law Office looks forward to helping you through your financial circumstances.