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Foreclosure-Loan Modification-Bankruptcy Blog

In this section, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the blog section is for informational purposes only, and should not be construed as a legal advice on any subject matter.  Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.

Reply Date Post Date Topic Question Response Location
May. 25, 2016 May. 23, 2016

Is Bankruptcy an Option for Tax Consequences from a Short Sale?

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My bank approved a short sale of my house. The difference between the sale price and the balance on my mortgage is $20,000. Will I owe income taxes on the difference? If I file for bankruptcy, will it make any difference?

If you file a bankruptcy, your personal liability on the loan is discharged. However, if the property was your primary residence, there are laws in place to help avoid tax consequences. First, speak to your accountant and see if you need to consider a bankruptcy.  Tax liability on $20,000 might be minimal, or it could be completely avoided. Bankruptcy should be your last resort and it may be easily avoided.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Apr. 17, 2016 Apr. 15, 2016

Mortgage Company that Bought my Loan is Threatening Foreclosure, although my Payments were Up-to-Date with Previous Company

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I have a mortgage with a loan service company, which back in 2012 purchased my loan from another mortgage company. The original mortgage company received two loan payments from me, cashed my checks electronically, however they were not applied to my loan. The new loan service company is claiming I am two months behind. Since the original mortgage company cashed my checks electronically neither I nor my bank have cancelled check copies to prove payment. I am unable to get any statements from the original mortgage company, and the loan service company refuses to accept copies of my bank statement which shows payments were made. I also included carbon copies of my checks that were sent. The loan service company is threatening foreclosure even though the payments were made.

Try filing a complaint with your stateís financial agency and in your complaint, explain what transpired and then include copies of your bank statements with circled withdrawals as your exhibits. This way the file gets escalated and someone at the loan service company will be required to pay attention to what you are saying.

Brooklyn, New York
Mar. 10, 2016 Mar. 8, 2016

Is It Possible To Get the Home Back After It Was Sold In a Foreclosure Auction?

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My home was foreclosed on and the bank sold it at a foreclosure auction. Would it be possible for me to get my home back if we paid the bank the missed payments?

Once the house was already sold, it is very difficult to reverse the foreclosure sale. If the bank is the one that purchased the property, you may be able to buy the property from the bank. It is, however, very unlikely that the bank will be willing to accept funds from you now to reinstate the loan. That option only works before the foreclosure sale takes place. Unless you can somehow bring an Order to Show Cause with the court to show that the case was somehow defective where the judge will reverse the foreclosure sale, unfortunately, you have no other recourse.

Brooklyn, New York
Feb. 6, 2016 Feb. 4, 2016

I Was Never Served Foreclosure Sale Notice, Can I Stop the Foreclosure Sale?

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My property is being put up for foreclosure auction in the next month and I was never served official paper by an agent of the law. What recourse do I have in stopping this action?

I am not sure what you mean by agent of the law. You have to be mailed the Notice of Sale and the attorneys for the Plaintiff must file the Affidavit of Service with the court (within 10 days of the sale). If that wasnít done, you can bring an Order to Show Cause to show the judge that service of the Notice of Sale or any other foreclosure-related motions were defective and that the foreclosure sale should be cancelled. The Judge is likely to stop the foreclosure sale but then the bank will re-serve the papers properly and the foreclosure sale will take place a few months later.

Brooklyn, New York
Jan. 11, 2016 Jan. 9, 2016

Doing a Short Sale on a Property that Has an Order to be Foreclosed On

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If a property has an order to be foreclosed on, can the owner still do a short sale?

Essentially, the answer is yes but only if the bank agrees to put foreclosure on hold and the only way they will likely do that is if you send a contract of sale and a listing agreement. Once the bank receives it and starts reviewing it, they will then ask for additional documents but in the meantime, that is a way to stop the foreclosure sale.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Dec. 23, 2015 Dec. 21, 2015

Options Other than Bankruptcy for Someone Who Canít Afford their Property and Doesnít Want to Keep It

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I want to know what the options are for someone who is considering filing for bankruptcy.  I canít afford the  condo special assessments or the association fees. I am considering bankruptcy and concede that I will probably lose the condo. I understand that if I donít pay the assessments or the fees I could be evicted. Would that be better or worse for me?  I really want to know what options I have to turn this situation around. Is bankruptcy my only option? I have two loans on the condo. Any other options for someone who canít afford their place and doesnít really want to keep it?

You can try to sell the property. Even if itís a short sale, it is better than foreclosure or bankruptcy.  In my opinion, bankruptcy should always be the last resort. If for example, foreclosure takes place and the bank is suing the person for deficiency, then bankruptcy is the way to go to get rid of the debt. HOA canít evict an owner of the apartment (this is not a rental); they have to bring a foreclosure action, which can be quite lengthy in New York.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Nov. 25, 2015 Nov. 23, 2015

I Signed the Deed over to my Spouse to Avoid Foreclosure, Lost the Home Ownership and Remained on the Mortgage

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My house was going into foreclosure and I signed the deed to the house in lieu of foreclosure over to my wife. My wife has not lived in the house for 8 years. She was told by the court to sell the house, but instead somehow refinanced it for 44 years without telling me about it. She would not take my name off the original mortgage. Do I have the right to sell the house or any other rights? I donít have the money to fight this anymore, please help! When you signed the deed over to your wife, you gave ownership of the house to her. It did not change the mortgage obligation you originally had. Thatís why a quit claim deed was a must for your wife to modify the loan without your signature. At this point, you have no rights to the ownership of the house and cannot sell the property. The only way she can take your name off the mortgage is by refinancing the loan but since people in foreclosure have poor credit history, no lender will give her a loan and thatís why modification becomes the only option. It is very likely that your wife wanted to remove you from the loan just as badly as you wanted it but thatís not an option. Your wife did nothing wrong and if I were you, I would not invest money into fighting this. As long as the mortgage will be getting paid now, you will not be affected. Brooklyn, New York
Nov. 6, 2015 Nov. 4, 2015

Deed-in-Lieu of Foreclosure for Seniors Overwhelmed with Home Payments

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We are seniors, living on a pension. We had our home on the market for over 3 years and we were unable to sell it. We can no longer keep up with the home payments and we need to go live with our son for health reasons. We were told that we can sign the deed to our home over to our lender. What would happen if we did that? If you have a clean title, you can do a deed-in lieu of foreclosure where the lender takes the deed to your house and you walk away mortgage-free. The only caveat is the potential tax consequences but if itís your primary residence, there may be none. You would need to consult with your accountant. This depends on the amount of your mortgage in comparison to the value of your home and whether the lender has to forgive a lot of your mortgage debt. More likely than not, you will not face any tax consequences, especially since you are retired. It is a much better option than letting the bank foreclose on your property. Brooklyn, New York
Oct. 18, 2015 Oct. 16, 2015

I Paid Off My Mortgage in Full, Why Does Foreclosure Show Up on My Credit Report?

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Foreclosure proceeding were started on my house back in 2010. During these foreclosure proceedings, I was able to secure the funding to pay off the mortgage in full. This of course stopped the foreclosure proceedings. Can the mortgage company still put the foreclosure on my credit report? I am asking because I noticed it on my credit report recently. For the months that you did not pay and that you were in foreclosure, the lender reported you as delinquent. Once you become current or the loan is paid off, they have to notify the credit bureau of the updated situation. If they still report you as delinquent, you have to notify the three major credit bureaus of the error so can fix it. Brooklyn, New York
Oct. 8, 2015 Oct. 6, 2015

I Purchased a Foreclosed Home Full of Problems, What Can I Do Now?

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I recently purchased a foreclosure in New York. The inspection did not note any major issues. Now the home is having issues that I can't afford to deal with, mainly concerning rodents in the attic and the ducts. Altogether I canít afford to pay for my mortgage and the repairs. What's worse is, I can't cool my home on really hot summer days and I am suspicious that the contaminated ducts are making myself and my child sick. What can I do? Since you are now the owner of the previously foreclosed property, you can now only sell it to get rid of the property. You canít reverse the foreclosure sale. You bought the property as is. Thatís the disadvantage of buying foreclosures. You donít truly know what you are getting yourself into. Brooklyn, New York
Sep. 19, 2015 Sep. 17, 2015

The Area I Live in is No Longer Safe, How Can I Walk Away from my Underwater Home?

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My house is under water by over $100,000. I donít have a second home and I have just been discharged from Chapter 13 Bankruptcy. The area I live in is no longer safe. What would happen if I walked away from my home? Could I ever purchase another house?

If you walk away now, the bank will initiate a foreclosure action against you and will take away the property unless you try to fight it. Foreclosure will negatively affect your credit score which in turn dictates when and if you can get another mortgage. Eventually your credit will heal and you will be able to get another loan but it may be quite a while from now. I would definitely recommend avoiding foreclosure and recommend doing a short sale, which will impact your credit a lot less and you will still be able to walk away from the ďunderwaterĒ property.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Sep. 10, 2015 Sep. 8, 2015

How Can I Check if my Home was Sold at Foreclosure Auction and What Can I Do to Keep It?

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I own a home in the state of New York. The bank had a foreclosure auction at the court house and no one purchased the home. I expected to get a notice on my door to move out, but it has been 5 months since the foreclosure auction and nothing happened. I was told me to go to the county clerkís office and see if the bank filed a new deed. I checked yesterday and the bank has yet to record a new deed and take ownership of the house. Something might be wrong. I would like to keep the house if possible. What can I do?

It sounds like the foreclosure auction did not take place. You can check via e-courts, an electronic New York State court database, the notation next to the scheduled foreclosure auction date. If it says ANH (Auction Not Held), you will know for sure. If it says auction held, you can check with the Plaintiffís attorney. If itís been 5 months, itís more likely than not that foreclosure auction did not occur. Once the foreclosure sale takes place, you become a holdover tenant and the owner must file an eviction proceeding, same as in Landlord tenant cases. Most of the time, it is the lender that owns your loan that purchases the property. In the meantime, if foreclosure did not take place, you can: (1) apply for a loan modification, which usually leads servicers to stop the sale at their own initiative to conduct a review; (2) file an Order to Show Cause to stop the foreclosure sale; (3) file bankruptcy, which will immediately stop the foreclosure sale even if itís the day of the foreclosure sale.

Brooklyn, New York
Aug. 23, 2015 Aug. 21, 2015

Is the Bank Attempting to Claim an Interest in my Property by Paying Water and Property Insurance Bills After a Failed Foreclosure?

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A New York State Supreme Court Judge removed the notice of pendency, determined that the bank does not to have standing in the foreclosure matter and dismissed the bankís foreclosure efforts after I submitted my motion to dismiss. However, after the judge made her ruling the bank began to pay the DEP/ NYC Water Board and New York Property Insurance bills eight years after the purchase of the house. (All of the papers are in my name, as well as, payment agreements and contracts state that I have not missed any payments or breached the agreements.) It appears that the bank is attempting to claim an interest in my property, even after the judge has determined they are not the Rightful Holder in Due Course of my Promissory Note. What is the best course of action to take in order to regain control of my propertyís bills and interest?

Your problem should be analyzed in several steps. First, by winning a Motion to Dismiss, your foreclosure case got thrown out, most likely without prejudice, which means, the bank can start the foreclosure process again. In New York, the bank has 6 years from the date of default to pursue its rights in foreclosure. The bank can also appeal the Supreme Court Judgeís decision. Most of the time, banks try to fix their problems with assignment of mortgage and restart the case. Assuming you got the case dismissed with prejudice and the bank canít restart its foreclosure action, the bank can still sue you on the money you borrowed under the note as unsecure debt, where the bank canít foreclose but can likely get a judgment against you and record it as a lien against your property. Taxes and insurance are often escrowed when you have a mortgage but the New York City water bill is not part of your escrow. What happens is that when you stop paying your New York City water bill, you owe money to the government and government always trumps bankís interest in terms of foreclosing on the property. When New York City forecloses on the water bill, it is known as the tax lien sale. Banks, in order to preserve their position in the property, will pay the water bill to ensure that the New York City Water Board does not foreclose and cut the bank off. You can pay your water bill yourself to avoid a tax lien sale and thus avoid the bank having to pay it. That amount then becomes part of your escrow shortage and is split over your monthly payment. It doesnít affect the courtís ruling regarding dismissal.

Brooklyn, New York
Aug. 13, 2015 Aug. 11, 2015

Are We Still Responsible for HOA Dues and Insurance When our Home Goes to Foreclosure?

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We moved out 5 years ago when the home was discharged in Chapter 7 Bankruptcy. There were no bids at foreclosure so the bank bought it back for $100. We still pay Homeowner Association (HOA) dues and insurance on the property in case someone wanders onto the land, gets hurt and wants to sue us. My question is are we still on the deed and therefore still responsible for HOA dues and insurance? Even though the Chapter 7 Bankruptcy was discharged 5 years ago, the bank just put the home up for foreclosure three months ago. We were still on the deed so we were responsible for the dues and keeping up insurance. The bank paid for taxes. Now that the home went to foreclosure and the bank did not get any bids except their own $100, are we still responsible for dues and insurance? No, once the property is sold at foreclosure auction, the bank gets a refereeís deed so you are no longer on the deed and are not responsible for paying maintenance or HOA. Brooklyn, New York
Aug 3, 2015 Aug 1, 2015

Deciding between a Short Sale or Foreclosure on my Home

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I am trying to decide between a short sale or foreclosure on my home. On average how long will my house stay vacant during the foreclosure process? I am leaning toward a quick short sale only because I donít want to board up my house. Regardless of the duration of foreclosure, you should always try to do a short sale rather than allow the property to get auctioned off, which negatively affects your credit and keeps you on the hook for the deficiency. Foreclosure in New York, especially if contested, can take several years. Short sale can also be a lengthy process but besides potentially going away with monetary incentives, short sales in general are much better than the actual foreclosure sale.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
July 17, 2015 July 15, 2015

How to Reinstate a Delinquent Mortgage on a Foreclosed Property?

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I got a foreclosure notice with a specific reinstatement amount. The bank sent me an invoice and I paid that along with my enclosed letter stating that at this point I paid a full payment that the bank requested. I called the bank to verify that they received the funds and they said they did and would credit my account. They then called me back and said I'm still in foreclosure and I owe more money. What are my options? Once your case is referred to foreclosure, in order to reinstate the loan, you must get an official reinstatement letter from the bankís attorneys that would also reflect attorneyís fees and costs. If you only paid the amount on the bill, that amount may not be sufficient to fully reinstate the loan as there may be some additional fees and costs that were not fully reflected on the statement. Request an official reinstatement letter. See how much you owe. If itís a small amount, then you can probably pay it and get out of foreclosure. If the bank is still requesting a similar or higher amount to what you already paid, they probably bounced the check that you sent because technically you canít just pay what you owe without going through the official reinstatement process that is described on the reinstatement letter, usually requesting you to wire the money. I think you are close to rectifying your situation and should be getting out of foreclosure shortly. Brooklyn, New York
July 7, 2015 July 5, 2015

What Can Go Wrong if I Sign a Loan Modification Agreement without a Proper Review?

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I purchased my home in 2007. I lost my job in 2009 and did loan modification on my home. The loan modification got finalized with my bank in June 2013. They could never get the docs right and I had to sign twice. My credit history was damaged because it looked like I didn't make any payments for all these years. Now they are sending over a representative to have me re-sign these documents years later due to their mistake. I have not signed as of yet as I have a lot things going on, but they are threatening to foreclose on my home. I made all my payments and I am not behind. Should I hire a lawyer? I feel like I am being harassed. Have you seen the new loan modification agreement? What kind of mistake? When you signed the original loan modification, there may have been a part to the loan modification agreement regarding errors and omissions and if you signed that, then you agreed to future changes. You may need to get an attorney to see if the claimed mistake is harmful or beneficial to you. Unfortunately, as far as your credit is concerned, before the loan is current via permanent loan modification, you are considered to be in delinquent, hence, the negative credit reporting. Brooklyn, New York
July 3, 2015 July 1, 2015

How Can I Catch Up on My Delinquent Mortgage?

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I am several months behind on my mortgage. Can a bank foreclose on me if I make one complete mortgage payment a month and try to catch up little by little? Also, what if I can pay the principle and interest but not the taxes and insurance that are lumped into my loan payment? Generally, after you missed a full payment, the bank can send you Notice of Intent to Accelerate the loan or 90-Day Demand letter with the date by which the payment is due. The bank cannot commence its foreclosure action for at least 90 days following such letter. Most banks will not send it right away, so foreclosure will not typically begin for longer than 90 days. If you enter into an official repayment plan with your bank, then they will not commence foreclosure but if itís just your plan to gradually pay the servicer bank, the servicer may still refer you to foreclosure. I would definitely recommend contacting your bank because there are numerous options that could be explored that could help you avoid foreclosure (loan modification, repayment plan, forbearance plan, etc.). As for the 2nd question, your taxes and insurance are part of your monthly mortgage payment so by not paying your escrow, your payment is less than full and may be placed in a suspense account; then, once there is enough money in suspense, then it is applied towards the missed payment but late fees and penalties will continue to accrue on the loan. If there is just an escrow shortage (as opposed to intentionally not paying escrow), then the servicer can divide the payment over a number of months, usually 12 to become current. Brooklyn, New York
June 7, 2015 June 5, 2015

Repercussions of Walking Away from Underwater Home

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What are the repercussions if I walk away from my home for which I owe more than the home is worth? The main repercussion, other than ruined credit score, is that the bank go after you for the deficiency judgment, the difference between what you owe and what the bank gets at the auction during the foreclosure sale. Many banks donít file deficiency judgments but you should at least be aware that there is a likelihood of that happening, especially depending on where you live. I would definitely recommend the least harmful options, which include a short sale or a deed in lieu of foreclosure in order to avoid foreclosure.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
June 3, 2015 June 1, 2015

Recourse for Homeowners Who Faced Foreclosure Due to Delinquency of Ex-Spouses

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My ex-wife and I divorced in 2010. There was no property settlement. We own a house together but only my name is on the bank note, but both our names are on the deed. I moved out and she remained at the property. Mortgage was not being paid. The house was put up for a short sale and there is an offer, but title cannot be transferred because my ex-wife has debt and the debtors have attached liens to the property. She says she is broke and cannot satisfy those judgments and is planning to vacate the property. Do I have any recourse? If your ex-wife files bankruptcy, she may be able to get rid of the judgments against her that way. Otherwise, unless you find a buyer who is willing to pay off the liens or get permission from subordinate lienholders to sell the property for less than is owed, you may have some recourse. Otherwise, the bank may end up foreclosing on the property and you may need to do bankruptcy in case the bank later on chooses to go after you for deficiency judgment.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
May 21, 2015 May 19, 2015

Mortgagee Rights when Balloon Payment is not Disclosed in Loan Modification Agreement

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I am a mortgagee, who entered into a loan modification agreement and believed in all matters pertinent to it. After I made a couple of scheduled loan modification payments, the mortgagor disclosed to me an astronomical deferred interest amount I owe that was not disclosed in the loan modification agreement. The same mortgagor was also working with me on a cash for deed transaction and then all of a sudden I found out that the mortgagor sold the note to another company. What are my rights in this case? I would check the loan modification agreement to make sure that the deferred or balloon payment was truly not disclosed in the loan modification agreement. Balloon payment is a very common tool when modifying the loan because it helps decrease the monthly payment significantly and because most people are less concerned about 30-40 years from now (which in truth is the point of the balloon paymentóto help people with the payment now). I have seen loan modifications where the specific balloon amount is not disclosed but I have not seen one where it would be omitted altogether. Most loan modification agreements have a balloon disclosure even if itís not applicable so I would double check first. It is a very normal practice amongst servicers to sell the note so that itís not shocking whatsoever. You can still negotiate the cash for deed if the new servicer provides such option. Brooklyn, New York
May 12, 2015 May 10, 2015

Is my Investment in Property Secure after Homeowner on the Note Goes thru Bankruptcy and Foreclosure?

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I am on the deed (but not the mortgage) of my son's house. The son is planning bankruptcy and foreclosure without consideration of doing a short sale of the property. I have informed him that the short sale is less damaging in the long run, but he is not listening. I was trying to help him by giving money to buy the house and put my name on the deed to insure I protected my investment, but I fear now with the bankruptcy and foreclosure or the short sale I will be jointly liable for the issues. What are our problems now with the upcoming bankruptcy and foreclosure? The only party responsible for payment after foreclosure is the party on the note, so if itís your son, he would be the only one liable. If he will file for bankruptcy, then his personal obligation under the note will be discharged and he will no longer be responsible for the deficiency. Maybe he is doing a deed in lieu of foreclosure since foreclosure itself happens at the bankís initiative, not the borrowerís. Of course you will lose your initial investment in the house if there is a foreclosure but do not worry about paying the bank back.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
May 8, 2015 May 6, 2015

HOA would Rather Foreclose than Accept my Past Dues

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I am being foreclosed on by the HOA for past dues. I tried to pay the dues, but the HOA will not accept my payment. Is this allowed? The foreclosure process is started and I am doing everything I can to make the payment and get caught up. Also, there are thousands of dollars in attorney fees that are being billed to me as well. If I get caught up on the HOA fees can they still foreclose based on the additional attorney fees?

Foreclosure by HOA is tricky because HOA is typically more aggressive than the bank in their effort to foreclose. They prefer to get rid of an unpaying member as quickly as possible so they could get a paying member in. If you canít reach some sort of a payment plan with HOA, it is likely that the Judge assigned to your case would try to let you work this out rather than allow foreclosure. Otherwise, you would have to pay in full, including attorneysí fees and costs. Brooklyn, New York
May 3, 2015 May 1, 2015

Stopping Foreclosure without Full Delinquent Amount

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My property has been referred for foreclosure. Is there anything I can do to stop the foreclosure if don't have the full delinquent amount? Yes, you can try to apply for a loan modification, which would allow you to possibly lower the monthly payments without having to reinstate the arrears (typically arrears get added to the unpaid principal balance and that becomes the new principal balance). Modifying the loan is the most effective way of saving the property without having to reinstate it. Other alternatives require losing the property either via short sale or deeding the property to the bank.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
April 29, 2015 April 27, 2015

Filing Bankruptcy to Delay Foreclosure Auction

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My home will be going to foreclosure auction in a week or so. In my paperwork it states that lis pendens was filed. Can I file bankruptcy now? If I can, will it help slow down the foreclosure auction process? Yes, you can still file bankruptcy. Lis pendens is notice to the world that a party has an interest in the property, i.e. the bank is trying to foreclose. Lis pendens does not affect the filing of bankruptcy and by doing so, you will have 30 days of stay where the bank cannot foreclose and possibly longer if there will then be a subsequent delay by the bank to restore the auction. Brooklyn, New York
April 19, 2015 April 17, 2015

Ownerís Loss of Interest in Foreclosed Property While Never Signing the Note

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My husband and I are being sued for foreclosure. My husband is not on the loan. He is on the deed because he went with me to the closing and signed some papers. The complaint states that
"The secure payment of the Note, [my name] and [my husbandís name] executed a mortgage in favor of Mortgage Electronic Registration Systems, Inc...." Why is my husband being sued if he did not sign on any loan notes? If I don't answer it, will there be a judgement against me as well as my husband by default?
Usually, the person who signs the deed signs the mortgage. What your husband did not sign is the note, which is the contract where the bank lent you money. You are solely responsible for that money. Mortgage is the security instrument that allows the bank to take away the property if you default on your payments under the note. The reason both you and your husband are being sued is because your husband has an interest in the property as the record owner and the bank must cut his interest off by suing him, as well. You should most definitely answer the complaint and you are far away from the deficiency judgment to have to worry about it now. Many banks waive deficiency lawsuits. There are no default judgments in foreclosure cases in New York. By not answering the complaint, the bank can proceed with foreclosure more expeditiously so I would definitely recommend avoiding that and you want to preserve your foreclosure defenses. Your husband should not be pursued for deficiency, if there is one, since he did not sign the note (in accordance with the New York laws). Brooklyn, New York
Apr. 4, 2015 Apr. 2, 2015

Qualifying for Early Credit Line after Foreclosure

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I had a foreclosure completed in 2010. Since then I was told I need to wait seven years before I can get any type of home loan, equity loan or line of credit against another house I own, which has plenty of equity. It seems like after five full years I should have some options to borrow against my home or do I have to wait another 2 years? That would really depend on the status of your credit score and the amount of money you would be trying to borrow, among other factors. Mortgage brokers are best in answering these questions since they deal with the lenders directly. However, it is more likely than not that you would have to wait because you are still considered a risk to most lenders and they would be concerned to lend you money in anticipation of your possible default. Brooklyn, New York
Mar. 31, 2015 Mar. 29, 2015

Modifying Balloon Loans in Advance of Foreclosure Process

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I have a home equity balloon loan that was due to be paid back in full in third quarter of last year, but most unfortunately I couldn't repay it. The loan is in the amount of a couple of hundred thousands of dollars, but has since incurred a penalty of around ten thousand, making the total due slightly higher. I have been making monthly interest only payments since then. They just transferred my loan to specialized loan servicing LLC as of early this year. My home has a substantial amount of equity in it and has been up for sale since late last year. I owe nothing else on it. How long does the foreclosure process take and do I have any legal rights where my home is concerned? In New York, foreclosure process takes no less than one year and in many cases, it can take three to five years. Even though itís a lengthy process, I certainly do not advise just sitting around and waiting for foreclosure to happen. If you have good credit history, you can try refinancing the balloon by obtaining another loan. When you would sell you property, you will pay off the mortgage. You can contact SLS, your mortgage servicer, and inquire whether there is a possibility of modifying the balloon by giving you same terms as you would get in modifying your mortgage. In the meantime, you can try lowering your asking price to attract more buyers if your true intention is to sell the property. Best of luck! Brooklyn, New York
Mar. 23, 2015 Mar. 21, 2015

Choosing between Cash-for-Keys Offer and Foreclosure with Eviction

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My home was sold in a foreclosure sale and I received an eviction summons. I also received a cash-for-keys offer. If I accept the cash-for-keys agreement, does it make sense for me to answer the summons? I was told that as long as I keep the cash-for-keys agreement, the case will be dismissed, but I might lose some rights. In addition, if I answer the summons then a hearing will be set and it will be on the record. Once the property is auctioned off, the purchaser of the property (usually the servicer itself) will become the new landlord and you will become a holdover tenant that is residing at the premised property after the expiration of the ďso calledĒ lease. In order to get you evicted, the landlord must follow the same protocol as you would follow in getting rid of a non-paying tenant, thus, commencing a landlord/tenant action against you. You can answer the summons. You can appear in court and you may acquire a few additional months living at the premises. However, it may be your best bet to surrender the keys to the property to the bank in exchange for cash. You can even try to negotiate the amount and the date of your departure. Brooklyn, New York
Mar. 19, 2015 Mar. 17, 2015

Is It Possible To Reverse Foreclosure Sale?

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I spoke to my bank informing them that I was in the process of getting money from my pension plan to pay arrears and avoid the foreclosure sale of my home. I was told to keep them posted as to when I would have the funds available, meanwhile the foreclosure sale was postponed (that was a couple of weeks ago). I called my bank today to give them an update and I was told my home was auctioned off last week. What can I do? Do I have any legal claims against the bank? Unfortunately, once the property had been auctioned off, it is very difficult to reverse the process. You would definitely need an attorney to bring an Order to Show Cause to Vacate Judgment of Foreclosure and Sale with only a slim chance of being successful. It is possible that the bank marked the foreclosure sale postponed in their system by a couple of weeks but the attorneys for the bank might not have been notified or went ahead with the foreclosure sale anyway. You can contact the attorneys and see if they will allow you to reinstate the loan at this point, which may depend if the property was purchased by the bank itself or a 3rd party. Sadly, you are in a tough situation here. Brooklyn, New York
Mar. 8, 2015 Mar. 6, 2015

Unaffordable Mortgage following Expiration of Reduced Payments from Chapter 13 Bankruptcy

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My home is underwater by about $100,000. I filed Chapter 13 Bankruptcy six years ago and my bank gave me a reduced rate for those six years. Now that the six years are over, my monthly mortgage payment doubled, which is impossible for me to afford. Will a bank typically foreclose on a property thatís underwater as much as mine? What options are available to me? I would like to stay in my home, I just canít afford my new monthly mortgage payments. Yes, the bank will absolutely try to foreclose on your property even if there is no equity. If you do nothing (i.e, if you are not paying the mortgage), it is the bankís right to bring a foreclosure suit against you. You can apply for a loan modification, which may reduce your payments again. That might be your only option if you want to stay in your home. Oftentimes, while the bank is considering you for a loan modification, they may not be initiating the foreclosure process to determine if the case can be resolved without it. However, this is not a guarantee and many banks may begin foreclosure even if you are in review. If loan modification is not an option, you would have to consider doing a short sale or a deed in lieu of foreclosure. It is better to explore a short sale or a deed in lieu of foreclosure than to allow the bank to foreclose, as the bank may then initiate a deficiency judgment to go after you for the difference in the amount owed and received at the foreclosure sale.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Mar. 4, 2015 Mar. 2, 2015

HOAís Right to Foreclose and Collect Back Dues

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I am currently delinquent on my homeowner association (HOA) dues for over six years. In New York can a homeowner association foreclose on a property and collect on more than six months of back dues? Yes, the HOA can initiate the foreclosure proceeding in the same manner than the bank can. If there is no mortgage, the HOA may be in 1st position to foreclose. If there is a mortgage, the HOAís position shifts to 2nd, 3rd, or 4th, etc., depending how many lien holders are in prior position. Usually, if a person isnít paying his/hers HOA dues, they are not paying their mortgage either. What ends up happening is the HOA tries to expedite bankís foreclosure process so they could get rid of a non-paying member. The non-payment to HOA sometimes is worse than non-payment to the bank because the foreclosure settlement conferences that exist for settlement purposes with the bank statutorily donít exist with the HOA. However, most of the time the HOA will be inclined to accept some sort of a payment plan to settle your back dues. Brooklyn, New York
Feb. 28, 2015 Feb. 26, 2015

Avoiding Retaining an Attorney in Foreclosure Cases

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I received a foreclosure citation, however, I accepted an offer to sell my home for cash to a person Iíve known for a very long time. The sale is expected to take place about six weeks before the answer is due. Because I know the buyer, I know that the cash is available and the sale will go through. Do I still need to file an application and retain an attorney? To avoid having to retain an attorney when you are this close to selling your property, you can contact the attorneys for the bank and ask them for an extension, explaining that you are in the process of selling the property and paying the bank off. There is a high likelihood that they will grant you an extension. If you close before the answer is due, then your case will be settled beforehand and you wonít need to file an answer. If not, it is always best to file an answer to preserve your defenses and to avoid being in default of the lawsuit, as it is easier for the bank to foreclose on your property when you are in default. Brooklyn, New York
Feb. 19, 2015 Feb. 17, 2015

Defaulted Mortgage Affecting Chapter 13 Bankruptcy Filing

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My son and I own a house he lives in. He is responsible for the first mortgage on this property. I took out a second mortgage on this property and at a later point filed Chapter 7 bankruptcy, which discharged me from the second mortgage on the property. My son is trying to file Chapter 13 bankruptcy. Although my son did not sign any documents on the second mortgage, his attorney is suggesting that my sonís ability to file bankruptcy might be affected by this mortgage as its bank could foreclose on the property. Therefore, my son is being advised to get current on the second mortgage and continue making monthly payments on it. This is something he cannot afford at this time. Itís a little unclear why your son would be responsible for the second mortgage to begin with if he did not sign the note. If you are the only one on the note, and your liability was already discharged, then it doesnít affect your son. If you both signed the note and your liability is discharged but he remained liable, then itís a different story. For Chapter 13 bankruptcy purposes, he would have to make a payment plan to repay his debts but the equity in the home would also come into the picture. He may be able to get away with more if there is little or no equity. Otherwise, it is true, he may face difficulties in filing Chapter 13 bankruptcy. Brooklyn, New York
Feb. 10, 2015 Feb. 8, 2015

Deficiency after Deed-in-Lieu of Foreclosure on Property Discharged in Chapter 7 Bankruptcy

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I would like to do a deed-in-lieu of foreclosure on my property, which has already been discharged in a Chapter 7 bankruptcy. Since I canít afford the costs and maintenance of the property anymore, I would like to give it back to the bank sooner rather than waiting for a foreclosure sale. Would there be a deficiency judgment or any tax consequences for me if the bank files a 1099 and writes off a loss? If yes, how much would that deficiency be? Generally, once the bankruptcy gets discharged, your debts are extinguished. If you were not doing the deed-in-lieu of foreclosure, the bank could still pursue their foreclosure action but your personal liability of the debt would be gone, meaning they would not come after you for the deficiency. Since you are doing the deed-in-lieu, you should not worry about the deficiency. Brooklyn, New York
Feb. 6, 2015 Feb. 4, 2015

Obtaining Mortgage after Foreclosing on Property Discharged in Chapter 7 Bankruptcy

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I own a property that was part of a Chapter 7 bankruptcy discharged over five years ago. We decided to keep the property but never reaffirmed the mortgage. Attached to the property is a U.S. Small Business Administration (SBA) lien from a bank. Between the first mortgage and the lien there is zero equity in this home and there would not be enough to fully satisfy the second lien. If I were to foreclose on this property, how would that effect my credit? Would I be able to get a mortgage to purchase another property in the future? Your credit is already ruined from having filed for bankruptcy. I doubt until your credit restores from bankruptcy you will be able to get a mortgage. Obviously foreclosure never looks good on the credit report. You can mitigate your damages though by either doing a short sale or a deed-in-lieu of foreclosure but as far as credit is concerned, you shouldnít really worry. In due time, you will be able to recover and get another mortgage.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Feb. 2, 2015 Jan. 31, 2015

Best Option for Recent Mortgage Defaulter

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I can't afford to keep my home anymore and I recently stopped paying my mortgage. My bank keeps calling me daily because I defaulted and I haven't returned their calls. Would deed in lieu of foreclosure be the best option in my case? The collection department from the bank will be harassing you for your payment. You have several choices: a) apply for a loan modification to determine if you could lower your payment, b) do a short sale or c) a deed-in-lieu of foreclosure. If the property has equity, then itís better to just do a regular sale of the property. If the property has no equity and is ďunder waterĒ, then itís best to do a short sale or a deed in lieu but many prefer you list the property for sale first and will only consider a deed in lieu if the attempt at selling it did not work. You can also write a letter asking them to stop calling and/or writing to you under federal debt collection laws. This way, until the bank commences its foreclosure action, which in New York, may happen up to 6 years from the time of default, you can at least consider your options without constant harassment from the bank.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Jan. 29, 2015 Jan. 27, 2015

Last Minute Motion to Stop the Foreclosure Sale

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Our home is about to go into foreclosure. We've been reviewing ways to stop the sale and noticed that one of my secured creditors, who should have been notified, was not. Can I stop the sale by filing an emergency motion due to the fact that this creditor was not notified? You could try. It could be that the creditor filed a Notice of Appearance with a waiver for certain or all notices. Also, foreclosure can take place anyway and then a strict foreclosure lawsuit must be brought against the party that was not notified to cure off that partyís interest, so your strategy may not be that effective. You can try calling the bank and see if they will stop the sale while they review your documents for a loan modification, assuming you will submit them. Alternatively, you can file bankruptcy, which will temporarily stop the sale. Brooklyn, New York
Jan. 6, 2013 Jan. 4, 2014

Assignment of Mortgage Procedural Defects in Foreclosure Cases

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Sometime last year, a bank, which doesn't own my mortgage and is not servicing my mortgage, filed for foreclosure on my property. A week after, that bank withdrew the foreclosure and nothing has been done since. Yesterday, I was notified that a clerical error was entered on my property description by a company that I believe was hired by that bank. No one ever contacted me about this nor showed me how these changes affect me. I believe that the deed has been separated from the note by this bank that I never dealt with. Generally, when banks start a foreclosure action and immediately thereafter voluntarily discontinue it, there is a procedural problem that they realize may prevent them from foreclosing on your property. For example, if your loan is owned by the first bank and it was recently sold to the second bank and they have started a foreclosure action in the name of the second bank but the assignment of mortgage (document that transfers ownership of the note and mortgage) is in the name of the first bank, then there is a procedural defect in the case and the Plaintiff would have no standing to sue you because at the time of commencement of the action, the loan was still owned by the first bank. This is just an example. I am not sure exactly what happened that led to discontinuance of the case. Contact an attorney who is experienced in these matters to discuss how your legal position may be affected and what defenses you now have to a new foreclosure action.  Good luck! Brooklyn, New York
Jan. 2, 2014 Dec. 31, 2013

Foreclosure and Deficiency Judgment Resulting from Failure to Keep Up with Chapter 13 Bankruptcy Payments

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We had been in Chapter 13 Bankruptcy for a couple of years. Due to my disability, we were not able to keep up with the Chapter 13 Bankruptcy payments and were discharged from it. We are now trying to deal directly with our mortgage company to save our home from foreclosure. If we cannot come up with a deal and our home goes to a foreclosure action sale for less than what we owe, will the mortgage company come after us for the difference? Different banks have different policies on pursuing deficiency judgments. Lawfully, they have the right to go after you for the difference, i.e., deficiency. Many banks today, however, waive their right to sue borrowers for deficiency because they know many people have no assets to go after and it is not economically feasible for the bank to do so. If you feel that you may near foreclosure sale, discuss the short sale or deed-in-lieu options with the bank to avoid financial ramifications that could result from foreclosure action sale. Brooklyn, New York
Dec. 14, 2013 Dec. 12, 2013

Rights of Second Lien Holder in Short Sale

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I am doing a short sale on my house. Does the second lien holder in the form of a home equity loan have the right to collect the debt in full prior to approval of the short sale? With the completion of the short sale, does the mortgage company then take the loan in? If I find a financial institution to get my mortgage agreement back to its current status, what rights does the mortgage company have? If you pay off the loan, you get a satisfaction of mortgage and bank cannot foreclose. Please note that generally the banks don't want your house and will be much happier with getting their monies. As far as the short sale is concerned, the fact that it's a short sale means that your home is worth less than the amount of your mortgaged debt. Holder of home equity loan has to agree to get cut off completely or receive a small amount of money on repayment of their debt for you to be able to proceed with the short sale.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Dec. 10, 2013 Dec. 8, 2013

Submitting Loan Modification Documents Signed by One of Many Co-Borrowers

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My ex-husband modified our jointly owned mortgage without my signature. Do I have any recourse? As long as one borrower lives in the house and submitted their documents for a loan modification, they are entitled to a loan modification and your signature may not have been required unless both of you had to sign and he forged your signature. Generally, if there is a divorce decree awarding the house to one of the spouses, he may have been able to modify and sign the agreement by himself. Brooklyn, New York
Nov. 15, 2013 Nov. 13, 2013

Subordinate Defendant on Foreclosure Summons due to a Defective Quit Claim Deed

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I have been listed as a defendant in a summons for a mortgage foreclosure. The mortgage isn't in my name. It says that I am "subordinate, junior and inferior to the lien of plaintiff's mortgage, including, but not limited to, possible interest due to defective corrective quit claim deed." What does all this mean? What that means is that you are put on notice that foreclosure action has been commenced against the borrower who defaulted on his/hers mortgage. Since you have an interest in the property, by adding you as a defendant to the action, the bank is essentially trying to cut off your interest in the property in case foreclosure sale takes place. You cannot be sued for a deficiency since you are not the borrower. Brooklyn, New York
Nov. 11, 2013 Nov. 9, 2013 Unexpected Costs to Reinstate a Mortgage in Foreclosure

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I am currently in foreclosure. I came up with the money the bank first demanded but now they are saying that the offer expired and they want 20% more. What are my options at this point? The longer you are in foreclosure, the more interest and late fees accumulate, as well as attorney costs and therefore the amount you owe to the bank to reinstate the loan grows along with it. When you get a reinstatement letter, it is only good through a specific date. After that date, arrears are calculated again and the amount grows. If you feel that the amount should be less than the amount sought and feel some additional fees are unfairly added, make a demand for an itemized breakdown of all the fees so you can discuss them with the bank or their attorneys. Sometimes (but not always) they make mistakes! Brooklyn, New York
June. 29, 2013 June. 27, 2013 Do Trial Loan Modification Payments Reaffirm Original Mortgage Debt that was Discharged via Bankruptcy?

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I need to know if paying one or more 'trial payments' toward a potential mortgage loan modification will 'reaffirm' the original mortgage note which was discharged in a Chapter 7 bankruptcy several years ago. I do not want to reaffirm that debt and worry that a 'trial payment' might do that. The only reason to make the trial payments is to postpone the inevitable foreclosure sale. Making trial payments doesn't reaffirm the debt. Unless you selected that you are indeed reaffirming the debt in your Chapter 7 petition, all you are doing is making payments towards your loan so the bank wouldn't commence a foreclosure action or proceed with the foreclosure sale. Loan modification stays foreclosure actions. If the loan is modified, the case is settled and property will not be sold (unless you stop making payments again once the loan is modified). Also, trial loan modification after 3 months has to convert into a permanent loan modification. Once the permanent loan modification is executed, you no longer have to worry about the foreclosure sale taking place. Brooklyn, New York
June. 25, 2013 June. 23, 2013 Rejection of Loan Modification and Foreclosure due to Incorrect Calculation of Income by Bank

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When I was attempting to get a loan modification, the bank incorrectly counted my income, in order to correct their mistake, they requested that I reject the current offer and reapply. I followed their instructions. I reapplied and for 6 months they kept on saying that they were reviewing my new loan modification application and I would be getting an offer or denial in the mail. I was following up with them every month if not more often than that. They kept on saying it was under review each time I called and that I should be patient and wait for the response in the mail. Within a week or two of these follow up calls, I received a foreclosure notice on my door. When I asked the bank what was going on, they "escalated" my account to be reviewed based on their erroneous information to some department that I could never talk to. Nevertheless, my home was foreclosed on with an option to do a deed-in-lieu of foreclosure, short sale, etc. I believe this has adversely affected my credit score and job opportunities as almost every employer looks at my credit and sees this negative information on my background. What chances do I have in seeking damages for this unethical practice? As a side note, this was not a subprime loan, it was a full doc. Unfortunately, seeking a loan modification is a not a waiver of foreclosure. When you stop making payments, the bank can indeed start a foreclosure action and proceed with foreclosure unless your file is specifically placed on loss mitigation hold (which would stay foreclosure action). It is surprising though that the bank was able to foreclose so quickly because foreclosures these days last substantially longer than in the past. Also, banks are usually more inclined to try to settle the matter with you via loan modification rather than foreclosing so it's a bit surprising that they foreclosed. Also, if you are told after 6 months that the file is still in review, something is wrong. The banks are allowed 30 days to complete review once a complete package is received. You have to be very aggressive in following up at least once a week because documents become stale after 60-90 days and then you can't be reviewed with old documents. I doubt that you have grounds for a lawsuit against this bank. Brooklyn, New York
May. 27, 2013 May. 25, 2013 Saving Your Home after Filing for Bankruptcy

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I deeded my home to my son to start his business a few years back.  Soon after, the business failed. He filed for bankruptcy. The final judgment from bankruptcy court dissolved him of the bills concerning the business including the mortgage on the home. Soon after the end of the bankruptcy, the bank that was holding the mortgage sold the property to another mortgage company. We are in final foreclosure procedure now. I tried to negotiate with them for fair market value with no luck and so far we continue to accumulate interest. What are my options? When one files for bankruptcy, the obligation under the note is discharged but the bank's right to pursue foreclosure under the mortgage agreement remains. The bank has a right to foreclosure on the property. To stop it, you may need to become current on the mortgage. Most banks do not like to negotiate a short payoff with the borrower so the person who originally obtained a certain amount doesn't benefit from the transaction by now having to pay less. So, it is hard to accomplish. When you go to court, you should realistically weigh your options and see if you want to save this property.  After filing for bankruptcy, the bank cannot sue the owner for deficiency since the obligation under the note no longer exists. Brooklyn, New York
May. 15, 2013 May. 13, 2013 Garnishing of Wages in a Foreclosure

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I am several months behind on my mortgage payments in an "under water" residence. If foreclosure begins, will my wages be garnished? The only way for garnishment to take place is if the bank wins foreclosure action and then brings another lawsuit to obtain a deficiency judgment against you. If they are successful, they have to find a way to get the money from you and then garnishing wages is an option. You can try to fight the foreclosure. You can try to get a loan modification or a short sale. Foreclosure should be your last resort. If it takes place, however, please note that some banks today waive lawsuits for a deficiency judgment. So, while it is possible down the road, it is not certain that it will happen. Brooklyn, New York
May. 11, 2013 May. 9, 2013 Taking out a Mortgage after Filing for Bankruptcy or Losing a Home to Foreclosure

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My home was included in a bankruptcy that I filed a couple of years ago. When I recently tried to purchase another home, I was told that I have to wait for approximately three years after the foreclosure process and the fact that my home was included in a bankruptcy is irrelevant. What makes the matters worse is the fact that my initial lender sold my mortgage to another bank, which didn't start working on my foreclosure yet. Can you please confirm that I indeed have to wait for three years after the completion of foreclosure to buy a new home or I can do so because my home was included in the bankruptcy? Once you file for bankruptcy, your credit is damaged and needs time to repair before a lender will extend credit to you again. It is easier to get a credit card a couple of years after the bankruptcy than getting a new mortgage. It may take longer than three years.  Bankruptcy takes 7-10 years to go away from your credit report. It is a slow process to build it up but it is possible, mainly through obtaining new credit, which you will timely repay in the future. Brooklyn, New York
May. 7, 2013 May. 5, 2013 Destroyed Property Now in Foreclosure: Rebuild or Walk Away?

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We are in the early stages of foreclosure on our home as my wife has been laid off for a while. We have payments in arrears with an attorney, who helped us get a loan modification on our mortgage, but our home was destroyed in a fire and is now a total loss. We got a payment from the insurance company, so I would rather rebuild our home than walk away. My wife is starting another job in a month. Will the bank move forward with the foreclosure or allow us to rebuild our home? If you are not paying the mortgage, the bank may start a foreclosure action. You can try to get a loan modification to avoid foreclosure. However, if you now have the money to reinstate the loan (i.e. pay back the arrears and get current on the mortgage payment), the bank will be happy to get its money back. Once the loan is reinstated, you no longer in danger of foreclosure and I don't see a reason why you shouldn't be able to rebuild your home unless it is not feasible for you for some other reason. Brooklyn, New York
May. 3, 2013 May. 1, 2013 Compliance with Bank's Financial Information Requests in Short Sale Process

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We were in a short sale process with our lender and now they transferred our loan to another lender. The new lender says we have to start the short sale process all over and provide extensive financial information, which was provided in part to the original lender. Is this legal and if so, I only plan to provide limited information and state that we filed Chapter 7 bankruptcy in 2011 for much of the questions. Short sale process can be rather complicated and must be approved by the bank. If your servicer has changed, you must now comply with new servicer or short sale will not be approved. If you filed for bankruptcy, there is nothing shameful here and should be disclosed. The bank usually pulls your credit report and will be able to see it anyways. Every bank has their own process for short sale and I am not sure what it is that this particular bank is asking of you in this case but most of the time they just want to get an offer similar to the market value of the property to approve the short sale (also unaffordability of current mortgage).

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Apr. 19, 2013 Apr. 17, 2013 Allowing a Deeded Home Go into Foreclosure

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My son and his wife were in financial trouble several years ago and, in order to help them out, they deeded the home to my wife. She obtained two mortgages on the home which they took care of until their divorce. My son currently lives in the home with his child and is making most of the mortgage payments but he will be moving soon. My wife passed recently and the property went to me through her estate. The mortgage, however, needs to be refinanced since I did not enter in. The house is underwater by tens of thousands of dollars and I can't afford to make the payments and need to get rid of it. What would happen if I let the house go back to the bank? Would it affect my credit since I am not on the mortgage? No, it wouldn't affect your credit. If you know you can't afford to keep the property, it is the wisest solution to contact the bank and negotiate surrendering the property to them. The bank will usually consider a deed-in-lieu of foreclosure if you can't find a buyer for a short sale and if the property is vacant. Regardless, you have options. You just have to explore them to avoid the lengthy and stressful foreclosure process. Brooklyn, New York
Apr. 8, 2013 Apr. 6, 2013 Can the Bank Put a Lien on my Primary Residence for a Deficiency Judgment on my Foreclosed Investment Property?

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I currently have an investment property that has been in a short sale for several years and I am unable to sell it. When I took out the mortgage for that property, the home was appraised to about double of the mortgage amount I was requesting. I had several offers, but my bank keeps changing the price of the home after the bid was received. After Hurricane Sandy, this home ended up in foreclosure. My question is can the bank put a lien on my primary residence due to the foreclosure process that is going on with my investment home? Foreclosures take a while. In order to put a lien on your primary residence, the bank first has to foreclose on your investment property and then sue you for a deficiency judgment and only then, if they prevail, they have to find a way to get the money owed to them and can put a lien on your other home. This is such a lengthy process that it may take years. Also, you can fight foreclosure and try to mitigate your damages in advance. If you can't do a short sale, you may be able to do a deed-in-lieu of foreclosure or cash for keys. Contact the bank and see what they would be willing to do if you are willing to give up the property. You can also request a settlement conference with the court where you can try to reach a settlement with the lender (usually bank's attorney appears for those conferences). Brooklyn, New York
Apr. 4, 2013 Apr. 2, 2013 Who Has the Primary Claim on my Foreclosed Home: the Bank or HOA?

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Do we qualify for the state or federal foreclosure settlement? We filed for bankruptcy a couple of years ago as the loan modification of our mortgage was taking too long. Subsequently, we had a mediation to try and remedy our situation, but the mortgage company traded or sold our account to another lender. We showed up and were not even notified. While we were trying to mediate our case, our HOA had our home up for foreclosure sale within a month. If HOA is suing you, their position is subordinate to that of the mortgage company and they have to wait for the bank to foreclose upon your apartment/house in order to get the money owed to them. If the money received by the mortgage holder is less than what is owed under the mortgage, HOA may not be getting anything at all. HOA usually likes to expedite foreclosures because they want the apartment with unpaid fees gone and to get a new owner who will pay the fees. But as far as a foreclosure conference with them, it is not mandatory but they will often appear for settlement conferences you will have with the lender. Brooklyn, New York
Mar. 19, 2013 Mar. 17, 2013 Do Charged off Mortgages Fall under the Mortgage Forgiveness Debt Relief Act?

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Our home was foreclosed on several years ago. We had two mortgages with the same lender. The bank charged off the second mortgage and back-dated it for the same month as the foreclosure for the first mortgage. Is this charged off second mortgage something we should be concerned about or does it fall under the Mortgage Forgiveness Debt Relief Act? When the loan is charged off, it is generally just written off as a loss by the lender. It becomes unsecured and in most instances, lenders sell charged off loans to collection agencies for pennies on the dollar. Collection agencies will make money even if they settle with you for a penny more. It's a matter of bargaining. In your case, however, the property was already foreclosed on. It is very unlikely that they will be going after you other than for deficiency judgment (which lately has been waived by most lenders). Some charged off loans can be forgiven under the federal program but then it would state that and you would likely receive notice of that. I doubt anyone would retroactively be forgiving this loan on the property that was foreclosed on. If no one is bothering you, then just don't worry about this loan. Brooklyn, New York
Mar. 15, 2013 Mar. 13, 2013 Appeals in Foreclosure Cases

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If the Plaintiff wins a foreclosure case against me in Summary Judgment, can I still appeal? How long do I have to appeal? Generally, the time to appeal is 30 days but even if the Plaintiff wins on Summary Judgement, Plaintiff still has to win on his/her next motion--Judgment of Foreclosure and Sale (JFS). Unless JFS is granted, the bank cannot foreclose on the property. If you think your argument is weak on the merits and you would like to enter into a settlement, start negotiating with the bank in advance or contact a professional attorney to do it for you. Don't wait until it is too late. Brooklyn, New York
Mar. 11, 2013 Mar. 9, 2013 How Does the Bank Evict Holdover Tenants following a Foreclosure?

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We received a notice to quit after our home was sold at an auction due to a foreclosure. We did not vacate the property within the three days. What happens next? We are looking for a place to live, but have not moved yet because we need additional time to find a place. A neighbor claimed that since we received a notice to quit the Sheriff could come any day and physically remove us or lock us out. If an unlawful detainer notice is filed, shouldn't we be served with a copy and given the opportunity to respond before the Sheriff can do this? Shouldn't the Sheriff have a judgment? Once the property is foreclosed upon and you remain on the premises, you become a holdover tenant and if you don't leave voluntarily, the bank will have to bring a Landlord/Tenant action against you to get you evicted. You have to be served with the papers and you should have an opportunity to appear in court. Since evictions can be quite a lengthy process, banks often tend to offer some money to holdover tenants just for them to agree to leave and save the time and expenses on Landlord/Tenant process. Brooklyn, New York
Mar. 7, 2013 Mar. 5, 2013 Can the Bank Evict me from my Foreclosed Home without any Legal Process?

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We have been working with our bank on a loan modification for over a year. When we recently came home, all of our belongings were in the garage and workers were in the house painting. We were given no notice of a sale nor were we given eviction papers. The workers also changed the locks, although we still have access to the property. We filed papers with the Attorney General to stop any foreclosure action. We are missing some of our valuable personal belongings and some of our property was damaged. We did not abandon the property. We were considering changing the locks back and making them evict us as the Sheriff was not notified. What can we do to stop the foreclosure action right now and get the workers out who are using the services we pay for? Were you in foreclosure? Foreclosure is a long, legal process and even while you are trying to modify the loan, foreclosure process can still occur unless the loan is in a trial plan or permanently modified. However, the court must first grant the Judgment of Foreclosure and Sale, the bank then has to advertise the sale in the newspaper for the next month and afterward, the sale property is sold off at an auction and goes to the highest bidder (most often to the bank itself). If someone is still occupying the property, the bank cannot just come in, change the locks but would rather have to evict the holdover tenant through Landlord/Tenant court. Unless the property was vacant, I can't imagine someone getting so confused as to assume the property is not occupied. Being that the process takes quite some time, it is possible that it is not contractors from the bank who are occupying the property but someone who noticed that the property has been vacant for some time and is taking advantage of the situation. Also, if the foreclosure sale did indeed take place, you would need to do a Motion to Vacate Judgment of Foreclosure and Sale. It can be rather complicated and I would suggest finding a professional attorney for help. Brooklyn, New York
Mar. 3, 2013 Mar. 1, 2013 Foreclosure after Bank's Refusal to Honor an Executed Loan Modification

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My bank refused to honor a signed loan modification offer that was presented about two years ago. We fulfilled all obligations, returned all paperwork and made payment via cashier's check. We have not heard from the bank and now they claim the loan modification offer did not receive final approval and are threatening to start the foreclosure proceedings. We have made all payments on time. Do we need to retain an attorney and will we need to sue them? It is very likely that when you received a loan modification, it was given prior to stringent requirements that are taking place now. Banks used to give out loan modifications like candy and then deny everyone. Most people then had to reapply for a loan modification once the bank was able to verify all the necessary documents. Have you tried reapplying for a loan modification? It is likely that they could review you again and grant a loan modification this time around. If not, even if the bank commences a foreclosure action, you have good arguments for the court, which will most likely take your side and will exert pressure on the bank to enforce the loan modification or grant another one since the bank is not acting in "good faith." Brooklyn, New York
Feb. 27, 2013 Feb. 25, 2013 Can I File an Answer to Foreclosure Complaint Myself?

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I received a summons about foreclosure on my house.  As of beginning of this year we were accepted into a Home Modification program (HAMP) and have already made a couple of payments. The servicer of our loan is telling us that this just crossed in the mail and is a matter of formality since we are in the trial payment period. I searched for a date and have just realized that the motion or the answer needs to be filed this week. I just want to file the motion. If anything additional should occur I would hire an attorney to handle this. Is this something I can do myself? I have contacted a number of attorneys to get more information on this. If you are in a HAMP trial period, the loan will convert into a permanent loan modification and the foreclosure will be discontinued by the bank's attorneys. To be on the safe side, you should do a simple answer that would allow you to preserve defenses in case the loan modification option does not work out. You don't need to do a motion especially since you are on the path of modifying your loan. Just keep making timely trial payments and the loan will be modified and the case will be discontinued. Brooklyn, New York
Feb. 16, 2013 Feb. 14, 2013 HAMP Loan Modification and Credit Report

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Will getting a HAMP loan modification be reflected on my credit report? Yes, if the loan is permanently modified under HAMP, the bank will report that to the credit bureaus and your credit report will state loan modified under HAMP or under a government program. Initially, the credit score will drop but once you begin making timely payments again, the credit score will start increasing. Brooklyn, New York
Feb. 9, 2013 Feb. 7, 2013 What's Less Costly: Foreclosure or Short Sale?

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I have a mortgage with one bank and an equity line of credit with another bank. If I let my home go into foreclosure, can the bank sue me for the equity amount? How does this work? My mortgage balance is slightly lower than the value of my house. With the real estate prices down, if I put my home on the market for its market value, with all the additional fees and closing costs, I would have to make an investment into having it sold. You are better off doing a short sale than letting it go into foreclosure. Foreclosure should always be the last alternative as it will most adversely affect your credit. Based on your description, both loans are secured by equity in your home, i.e., if the house sells for its market value or even less, both lenders will be able to obtain what is due and owing to them. However, if you are concerned about putting money out-of-pocket, then consider a short sale since the bank will pay for all sale-related expenses and even offer you money to do a short sale, if the house is your primary residence. However, to answer your question specifically, the lender that gave you an equity line is unlikely to go after you because based on the description you provided, they will likely get their money (ex: if the house sells for its market value, the first lender will get what is owed to them, the balance will go to the second lender, and if anything is remaining, you can even claim the rest).

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Feb. 5, 2013 Feb. 3, 2013 Negotiating Time with a Bank to Move from Foreclosed Property

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My house is supposed to be authorized for foreclosure by the court tomorrow. How much time do I have to get my things out? I have tried HARP in the past and failed as I was unemployed for some time. After foreclosure takes place, the bank or whoever purchases the property will become the new owner and you will become a holdover tenant if you remain on the property. Oftentimes, the bank will offer money to a holdover tenant to leave or will have to bring an eviction proceeding in the landlord/tenant court to get you out. It is likely that you would be able to negotiate with the bank that you need a certain amount of time to leave and they will let you to avoid additional legal expenses. Brooklyn, New York
Feb. 1, 2013 Jan. 30, 2013 Stopping Foreclosure by Reinstating the Mortgage

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We were served with foreclosure papers last week, is there any way to stop the foreclosure? We have a way to obtain the past due amount. We thought the payments were getting automatically withdrawn and did not receive the notifications due to the wrong email address the bank had for us. We tried to call the mortgage company, but instead were told to contact the attorney that filed the papers. Request the reinstatement amount from the bank's attorneys, reinstate the loan, and they will discontinue the foreclosure action. Foreclosure is a lengthy process and before the bank can even proceed with a residential foreclosure, you will attend a mandatory settlement conference, where you too will have an opportunity to try to work out an option to save your home, i.e., loan modification, reinstatement, short sale, etc. Brooklyn, New York
Jan. 28, 2013 Jan. 26, 2013 Considering Foreclosure for my Underwater Home

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I am considering letting my underwater house go into foreclosure after not being able to reach an agreement with my mortgage holder. How long do I have before I have to leave my house and will they be able to put a lien on another home I just purchased? I have tried contacting the bank that originally underwrote my mortgage, but they refused to help me and sold my mortgage to another bank. I tried to unsuccessfully refinance my mortgage with that bank. My current bank says it will modify my loan, but never calls me back with the information. If your objective was to get a loan modification, try to modify it first. The banks are so overwhelmed with all the borrowers who defaulted on their mortgage payments, their response time can be quite slow. Be as aggressive as you can in reaching the bank at your own initiative if that is what you are interested in or hire a professional attorney who can help you with preparing the documents. Do not let the house go into foreclosure as it will affect you negatively in many different ways, from affecting your credit to a deficiency judgment. It is much better for borrowers and the bank alike if you do a short sale. With a properly negotiated short sale, you will not be responsible for the difference in the amount of debt owed to the bank and the sale price (although there may be consequences with the IRS). Brooklyn, New York
Jan. 21, 2013 Jan. 19, 2013 Mortgage on my Foreclosed Home Remained Active in Error

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My investment property was foreclosed on ten years ago. The house had a first and second mortgages on it. The house was foreclosed on and sold, but the lender for the second mortgage was never notified that I no longer have the house and up to now, they were still reporting me with an active loan. The second mortgage company has now been informed and they are now reporting my loan as a charge off. How did the law office foreclose and sell my home with an active loan on it and not inform the second mortgage company? Do I have any recourse to go after the law firm that foreclosed on my investment property? A charge off is when the bank writes off a loan and usually ends up selling it to a collection agency. Loans generally get charged off when you haven't paid in a while and there is no more equity in the home for the bank to go after. You can look at your foreclosure papers to notice if the 2nd mortgage holder was put on notice by checking if their address is mentioned there. If a mistake indeed occurred, then the first mortgagee would need to conduct a strict foreclosure, i.e., commencing another foreclosure action and serving only the unnamed defendant. Otherwise, the 1st bank does not have clear title to the property and would not be able to conduct a foreclosure sale. You should definitely write a letter to the three major credit bureaus, reporting a dispute of the reported information and sending them the supporting evidence. Brooklyn, New York
Jan. 14, 2013 Jan. 12, 2013 Can a Mortgage Become an Unsecured Instrument after a Bankruptcy Filing?

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I filed for bankruptcy a couple of years ago. Prior to that I asked for financial assistance on my home from my lender, who did not respond. When the bankruptcy was discharged, I again contacted my lender requesting to relinquish title in lieu of foreclosure. Still I got no response. I quit making payments on the property later that year. About a year later the lender contacted me. I asked again about title in lieu of payment and was told I would need to complete a financial statement. Since my financial health had improved since the bankruptcy, I declined. I have not heard from the lender in over a year except for delinquent payment notices. Can I be held liable for any property other than the secured property when the bank finally gets around to foreclosing? A mortgaged property is a secured property (mortgage itself is the security instrument). When you file for bankruptcy, a mortgage does not become unsecured unless there is not enough equity to preserve the bank's interest. In that case, only that portion can become unsecured (ex: mortgage $300,000; fair market value=$240,000; unsecured amount=$60,000). By signing a mortgage document, you give the bank a right to go after your home if you default on your payments. When the property is unsecure, the creditor can still go after that amount but they cannot go after your property. So, if foreclosure takes place, the bank can essentially go after you for a deficiency judgment. Consider filling out that financial statement to do a deed-in-lieu of foreclosure or a short sale. What the bank looks for is affordability of mortgage payments. Just because your financial situation improved does not mean you can pay all of your arrears back and stay current on your payments. If the property is clear of any tenants, there is a chance that the bank would accept a deed-in-lieu of foreclosure. Brooklyn, New York
Jan. 5, 2013 Jan. 3, 2013 Mortgages Not Discharged by a Bankruptcy

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I have a question about bankruptcy. After filing for bankruptcy a few years ago, I thought my mortgages were discharged. I never heard from the bank except when they would inform me about how much I owe in order to catch up with my payments, but now I am in a desperate need to understand if and when the bank is going to proceed with a foreclosure. How long does it take for foreclosure to take affect? You should contact a bankruptcy attorney so he/she could answer your questions about whether your mortgages were or were not indeed discharged. If they were discharged, then the trustee will be the one to sell the properties to satisfy the mortgages (whether partially or fully). If they were not discharged, then you are responsible for the mortgage payments. Foreclosure these days takes a lot longer than it did in the past and can be a matter of months or years, depending on when you stopped making your mortgage payments, who the servicer is, as well as your intentions for the home. If you do not intend to keep the property and will not resist foreclosure, then it takes a shorter amount of time. However, waiting for foreclosure to take place is never advisable. If discharge of your mortgages did not take place, please consider looking into a short sale or a deed in lieu of foreclosure. Brooklyn, New York
Dec. 27, 2012 Dec. 25, 2012 Filing a "Pro Se" Motion to Have a Foreclosure Case Dismissed

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A foreclosure suit was filed against me in 2010. The home was sold through a short sale, with the involvement of the bank in late 2011. The price was within 90% of the mortgage amount and the bank waived any right to collect "shortages" in the suit they filed. When I checked with the court recently the suit is still active. Although there is nothing pending, no judge assigned, etc. What language would I use in a "pro se" motion to have the case dismissed? From your description, it appears that short sale took place approximately a year ago. At this point, the case is sitting in court without any activity. Because of the backlog of foreclosure cases, sometimes, it takes banks longer than generally anticipated to proceed with their action, or as is the case here, with the discontinuance. Once the property sells and the bank receives its proceeds (short sale cannot take place unless agreed by the bank), the foreclosure action must be discontinued and the bank will get to it sooner or later. If you wanted to bring a motion at your own initiative, you would have to be the one to file for the Request for Judicial Intervention (RJI), thus assigning a judge and then you could bring a motion. Alternatively, you could bring an Order to Show Cause to have the judge hear you out. Essentially, it would be a lot of time and effort on your part when the case is already closed. Brooklyn, New York
Dec. 18, 2012 Dec. 16, 2012 Can Loan Modification or Refinancing be Offered to the Estate of the Deceased?

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My husband is listed on the mortgage of our home only, he passed away a few years ago, the bank will not refinance or let me assume the responsibility for the mortgage. I am on the title, if I let the home go to foreclosure will I be responsible for any tax issues. My home is under water by a substantial amount. I tried refinancing with my current bank and other lenders, but was denied several times as the lenders said that I am not the original borrower on the loan. Situations like these are very tricky. Your deceased husband signed the contract (note and mortgage) with the bank, therefore, he was the one in privity of contract with the bank. You are not in privity of contract with the bank and you have no rights to sign a new agreement, whether it would be a refinancing or a loan modification. Only the borrower can sign the new contract. So far, I have only witnessed one bank offer a loan modification to the Estate of the Deceased. Generally, that is not the case. Some banks will consider an assumption where you take over the original terms of the loan but you have to show qualifying financials. This does not work if you have no income, i.e., your income has to support the mortgage and any arrears, if applicable. If you want to stay in the house, the best option is to continue making payments as before until the loan is paid off unless you are already in default and can no longer reinstate the mortgage. Finally, if the bank forecloses on the home, you, personally, would not be responsible for the deficiency. However, the bank may go after the estate and in a case like yours, it could affect you similarly. As of recently, many banks have stopped pursuing deficiency judgments because it is very hard to collect that money from people who don't have much to begin with and lost their last assets. Whether they choose to pursue it or not, they do not waive that right. Brooklyn, New York
Dec. 6, 2012 Dec. 4, 2012 Should I still be Responsible for a  Surrendered Property through Bankruptcy?

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I filed for bankruptcy over a year ago in New York State; all of my debts were discharged. I opted to surrender my home. I have not heard from my bank since before the bankruptcy filing. I was unaware that I still owned the property until earlier this year when I was cited by the city for code violations. I fixed the problems, but do not have the means to continue to care for this property. It is currently unlivable. I recently received a notice of tax sale from my county. Can I sell this property? Will the county take it at a later date and sell it for taxes owed? I have doubts that my bank will ever get around to taking claim of the house. I tried to do a short sale and received many offers which were all turned down by my bank. They repeatedly lost paperwork and misdirected my calls. Once the bankruptcy went through last year I stopped trying. If you surrendered the property through a bankruptcy, then maintenance is no longer your responsibility. Trustee is the one who disperses the assets and maybe there is a delay, but considering that you willingly surrendered the property, it should no longer be your concern. Brooklyn, New York
Nov. 25, 2012 Nov. 23, 2012 Stopping Foreclosure When Time is of the Essence

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My house has been foreclosed upon. At no point during the proceeding did the bank produce, in spite of legal demands made upon the bank, an original copy of the promissory note and Deed of Trust. It is my understanding, under New York law, that a foreclosure cannot go forward without the original instrument. Nevertheless, in my case, foreclosure was allowed to proceed. I now have to vacate the property within two weeks. Please let me know any winning strategies to stop the foreclosure. Time is of the essence in a case like this. If there are faults with the procedural aspects of the foreclosure process, you need to consult with a professional attorney who would be willing to bring a Motion to Vacate Judgment of Foreclosure and Sale. Of course, you need winning arguments to actually get the motion granted. It is very important to do this as soon as possible because the more time goes by, the more prejudicial the outcome becomes to the bank and the chances of a favorable resolution become less likely.  Good luck! Brooklyn, New York
Nov. 17, 2012 Nov. 15, 2012 Bringing Order to Show Cause with Temporary Restraining Order (TRO) vs. "Produce the Note" Suit to Postpone  Foreclosure Sale

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My home has a pending foreclosure for next week. My lender is willing to modify my loan for a significant down payment, the full amount of which I will only have in two weeks. They are unwilling to extend my deadline for that long. Can I file a "Produce the Note" suit to buy me the extra time needed to complete the loan modification? Generally, when a foreclosure sale date is scheduled, the banks are unwilling to do a loan modification unless you can request to postpone the public foreclosure sale date. Whether they will consent or not is in the bank's discretion but they will generally agree to it if your loan modification process is active and likely to happen. Also, if the bank is unwilling to do that, you can bring an Order to Show Cause with a Temporary Restraining Order (TRO) through the court and have the judge make a determination on an emergency basis. Most likely, judges will grant these petitions, especially if you can show them good faith on your part in trying to save your home. Brooklyn, New York
Nov. 13, 2012 Nov. 11, 2012 Negotiating with a Bank to Avoid a Deficiency Judgment

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What can I expect from a real estate short-sale as far as deficiency judgments? I am in the process of attempting a short sale, but am worried the bank will allow the sale, but a judgment will remain that can come back and haunt me years later. I've been told that it may come down to me needing to just let it foreclose and go to auction for a better chance of eliminating a deficiency judgment. When you do a short sale, you can negotiate with the bank to avoid a deficiency judgment. In this economy, most banks agree. However, at the end of the year, you will receive notice from the IRS regarding the debt cancelled. The amount forgiven by the bank (difference between what you owed and what you sold the house for) will be regarded as income and you would have to pay capital gains taxes on that. Speak to your accountant about rules governing the cancelled debt. In 2012, that requirement was waived. I am not sure if it will be extended through 2013 and so on. However, if you do not short sell your home and the bank forecloses, then the bank can come back after you for the deficiency judgment in this case as well.  Short sale is more favorable than foreclosure. Brooklyn, New York
Oct. 23, 2012 Oct. 21, 2012 How to Reverse an Unlawful Foreclosure?

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I have a problem with  foreclosure/eviction. I am being evicted from my home that has been in the family for many generations. I was never served with a foreclosure sale notice and was not notified that the property was in foreclosure. When we found out, we have been trying for several years to get a payoff amount so we could refinance but no one would give it to us. Now we are being evicted. Can you help? We want to keep and buy our property but there is no one willing to work with us. You have to get a knowledgeable attorney who will bring a Motion to Vacate the Judgment of Foreclosure and Sale. If you can prove that you were never properly served and foreclosure took place unlawfully, the court can reverse the original decision. Generally, if that happens, the bank will then have to recommence the foreclosure procedure and start from scratch. You can win some time in trying to either reinstate the loan or try to modify the loan to save your home. The trick here, of course, is winning on reversal of the judgment (time is of the essence here). Brooklyn, New York
Oct. 6, 2012 Oct. 4, 2012 Can the Bank Garnish a Senior Citizen's Retirement Income in the Process of Recovering a Deficiency Judgment from a Foreclosure?

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I co-signed for a mortgage for one of my kids and they are now in a foreclosure. What can the bank do to me if foreclosure goes forward? I am a retired senior citizen and I have a mortgage with no equity. I have a military service retirement income and a social security income. Please let me know what I can do. Since you co-signed, you are financially obligated under the note and mortgage. You will be a named Defendant in the lawsuit and if foreclosure goes through and the bank tries to recover a deficiency judgment for the amount owed to the bank after the foreclosure sale takes place, the bank will be seeking how to actually recover that money. Your pension and retirement income cannot be touched. You have a home without equity but the bank can still record a lien against it in hope of recovering its money when you decide to sell your home. You can't sell your home with a lien on it. If you keep living there, then the lien will just stay there but you can continue to live in your house. If your kids have assets, the bank may go after their assets instead. If your kids are not planning to fight to save their home, then they might as well do a short sale or a deed-in-lieu of foreclosure to avoid the deficiency judgment. Brooklyn, New York
Oct. 1, 2012 Sep. 29, 2012 Can Banks Foreclose Over Two Missed Mortgage Payments?

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My bank is threatening me with foreclosure over two missed payments. We have been in contact with them to try to work it out but we got nowhere. Can they start foreclosure over two missed payments?  They told me that they would not accept any more payments unless we paid the full amount of missed payments. The bank likes to threaten a lot but their words are often empty threats. In order to start foreclosure, they first have to send a notice of missed payment(s) and the amount due and 90-day letter stating that if balance is not paid, they can start foreclosure. Until you get this letter(s), foreclosure process cannot begin and if it does, it is defective. Whether you can get a loan modification depends on the bank/servicer. You can go on MakingHomeAffordable website to see which servicers participate in HAMP. If you get a loan modification, your missed payments will be added to unpaid principal balance and you won't even feel them in your payments over the years. It may be too soon though to discuss a loan modification since banks generally wait until three missed payments. Brooklyn, New York
Sep. 27, 2012 Sep. 25, 2012 The Bank is Enforcing a Deficiency Judgment Against Me, What Can I Do?

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I just went through a foreclosure and now the mortgage insurance company wants the difference of tens of thousands of dollars from me as this was the difference between what I owed and what my home was sold for at foreclosure auction. Can they access my bank account? I do not have a job right now and am attending school. Yes, but first the bank has to sue you to get a judgment against you and then try to either garnish your wages or your bank account or your tax refund or put a lien on your property if you own another home to satisfy that deficiency. If you know you are anticipating being sued, it is best to appear in court and try to work it out and maybe settle for a lesser sum than to wait until a default judgment is granted against you and the bank will look for a way to seize your account. Brooklyn, New York
Sep. 23, 2012 Sep. 21, 2012 Attempting a Short Sale After the Motion for Default Has Been Filed

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If a foreclosure process is in progress and owner has failed to file a pleading within the time required by law and a motion for default has been filed by the bank for the purpose of accelerating the foreclosure process, can the property owner attempt a short sale? Generally, until the foreclosure sale is scheduled or the property has already been sold, the borrower under the loan can attempt loss mitigation options to avoid foreclosure sale, including the short sale option. However, from the question, it is not clear at what stage the foreclosure process is in. If the borrower did not file an answer and the bank is proceeding with the borrower being in default, it may be possible for the borrower to file a motion for late answer. If you show a reasonable excuse for lateness, the court may grant it (ex: you were not properly served with summons and complaint, hence you did not know about answering the complaint). If it is too late for that, it is best to contact the bank's attorneys' office to inquire if short sale option is still available. Since everyone benefits more from short sale than foreclosure, they will oftentimes work with you to do the short sale and not schedule the foreclosure sale.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Sep. 19, 2012 Sep. 17, 2012 HAMP 2.0 for Homeowners, Who Defaulted on Their Loan Modifications

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I previously had a loan modification under HAMP. After my spouse lost her job, we could not afford even the modified payment. We are back on our feet now but the bank has refused to work with us again and constantly tells us we are in active foreclosure. Is there any way we can try to save our home? We don't have the money to reinstate the loan. In June of 2012, HAMP 2.0 came out, a new federal program designated to help people like yourself who previously had a HAMP loan modification but then defaulted or people who defaulted during the 3-months trial period. If you have not submitted the documents after June 1, you should try to resubmit your paperwork now. The bank actually uses 25% of your gross monthly income (as opposed to 31% under HAMP) to determine if you are eligible for a loan modification. Brooklyn, New York
Sep. 15, 2012 Sep. 13, 2012 Undecided between Foreclosure and Short Sale

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I am facing foreclosure on my home. My spouse passed away a few years ago, my home has not sold and I have not been able to pay my mortgage for a number of years now. My mortgage company refused to allow me to do deed-in-lieu of foreclosure, and my realtor knows that I am trying to do a short sale. I know I canít save my home, and I am wondering what I can do to make the foreclosure process any easier on myself. Do I need to hire a lawyer to get me through the foreclosure process? It depends on what you are trying to accomplish. If you want the bank to take away your home as soon as possible, then don't fight foreclosure and the bank, in due time, will be allowed to foreclose on your home by the court. Alternatively, if you want to stay in your home as long as possible, then you should get an attorney who will attempt to fight foreclosure and thus prolong the process and maybe give you the necessary time to do a short sale.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Sep. 11, 2012 Sep. 9, 2012 Foreclosure, Short Sale or Deed-in-Lieu on a Vacant Property

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My home was put up for sale multiple times in the last few years with no success. I have refinanced my mortgage in the past and I am current on my payments, however I have not lived in that home for many years because of work. I am paying a mortgage on a house I don't live in. I need to know the best course of action to get out of this situation, so that I can buy a house closer to work. I am at the point of walking away from it, however I have a great credit history and I don't want to take that big of a hit on my credit score. What is the best option for me: foreclosure, short sale or deed-in-lieu of foreclosure? Foreclosure is always the last alternative. You can either try to do a short sale or a deed-in-lieu of foreclosure if the property is vacant. Otherwise, under HAMP 2.0, you can try to get a loan modification on the mortgage, to make payments more affordable, rent it out and essentially use the rent money to pay for the mortgage. However, all these methods will negatively affect your credit score but not nearly as badly as foreclosure. Also, while you have good credit, it is better to purchase a new home now while you still can but you need to be able to show affordability for two mortgages in order to get another mortgage. You can show the listing agreement for this property in question so the bank at least knows that it is a matter of time until you sell this home.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Sep. 7, 2012 Sep. 5, 2012 HAMP 2.0 Allows Loan Modifications on Up to Three Properties

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I own two properties, one that I use as my primary residence and another that I use as a rental property. I cannot afford to pay the mortgage on either, but would like to avoid foreclosure, keep both homes and modify each loan. Is that possible? Prior to June 1, 2012, only mortgages on primary residences could be modified. However, with HAMP 2.0 that became effective on June 1, 2012, you have an opportunity to modify loans and avoid foreclosure on up to three properties. With that in mind, you must be able to show affordability as the bank will count all your mortgages as expenses and add them to your debt. If you have two loans with the same bank, then you would have to submit two packages with different loan numbers in order for each property to be separately reviewed for a loan modification. Brooklyn, New York
Sep. 3, 2012 Sep. 1, 2012 Duration of Lis Pendens Filing

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How long is a lis pendens filing valid? Does the lender only have a certain amount of time to actually follow through with foreclosure in New York? If a lender initiates lis pendens, how long do they have to follow through - if the borrower is trying to work something out (i.e. get a loan modification) for example, and let's just say it's over a year since the original papers were filed with the court, can the lender still foreclose or is there an "expiration" to these documents? Lis pendens is valid for three years and after three years if foreclosure did not take place, the bank, through its attorneys, files for a renewal. In New York, there are mandatory settlement conferences, where you can try to resolve your case (i.e. by attempting loan modification, short sale, reinstatement, payoff, etc). Unless a foreclosure sale date has been scheduled, there is still a good chance you can try to work your case out. In New York, after over a year of foreclosure filing, the case is still in its preliminary stages. Brooklyn, New York
August 30, 2012 August 28, 2012 Funds Owed to the Bank on a Foreclosed "Under Water" Property

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Do I owe money to the bank after my home is foreclosed on when I have no equity in the property? I haven't tried anything yet, but I am ready to give up the property. Following a divorce and without spousal support I can no longer afford this home and there is no equity in it. If foreclosure takes place, the bank might sue you for a deficiency judgment, which is determined based on the sale price minus your debt owed to the bank. Whatever the difference is the amount you will owe to the bank, which the bank must find a way to recover. Short sale or a deed-in-lieu of foreclosure are better options than foreclosure. Brooklyn, New York
August 26, 2012 August 24, 2012 When Does the Bank Stop Accepting Short Sale Offers?

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In State of New York: if a home is sent to foreclosure attorney by the lender, can the lender accept an offer of a short sale from a creditable buyer, if the short sale is offered within a day or two of the monthly deadline for the mortgage payment? For example: December 31 is the deadline for mortgage payment. If not made, lender says property automatically goes to the foreclosure attorney and they cannot accept short sale offer, and the foreclosure attorney proceeds with foreclosure. Also, when does homeowner receive foreclosure notice from lender's foreclosure attorney? The actual legal commencement of foreclosure can take anywhere from a few months to a few years, depending on the lender and the laws of the state. Short sale is one of the ways to avoid foreclosure. Once a foreclosure sale is scheduled, it is hard to go another route and do a short sale but until the sale is scheduled, you can list your property for sale and send the package to the bank for approval. The bank will always choose a short sale over foreclosure.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
August 22, 2012 August 20, 2012 Short Sale Always Better Than Foreclosure

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I have a modified loan and a second loan with the same bank in New York City, which are now current. I recently lost my job and am unable to continue making mortgage payments. I also have no possibility of sale as the combined mortgage principles and the home value may be the same at the present time. If I decided to go for a short sale or go into foreclosure, does the lender here in New York City have the right to go after me with a deficiency judgment, and if they do how long the foreclosure procedure will take before eviction? It is always better to do a short sale than to go into foreclosure. As a result of foreclosure, the bank can try to obtain a deficiency judgment against you but of course getting it satisfied is a matter of having assets. Short sale, on the other hand, if properly negotiated, does not result in a deficiency judgment but rather debt forgiveness, as it gets reported to the IRS. This year, you don't have to pay taxes back on the amount of debt that gets forgiven and you basically walk away without liability. As a matter of fact, most banks will offer you money to do a short sale. Please note that foreclosure in New York City can take several years if you are trying to wait it out and see if you can get back on your feet and then reinstate your mortgage.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
August 18, 2012 August 16, 2012 How Soon is Foreclosure Process Started in New York?

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I walked away from my home several years ago, which was due to illness and financial distress. I mailed the keys to my home to my mortgage company and have not made any payments since. My home has not gone into foreclosure, and now there is a collection company calling me. How soon is the New York foreclosure process normally started? Foreclosure in New York can be quite a lengthy process. Many cases depend on the quality of the paper work that the bank has to process with foreclosure. If you are not resisting foreclosure and are in default, then generally, it should be quicker but a multi-year time span is not surprising. However, the fact that a collection agency is harassing you for payments most likely indicates that you are not in foreclosure. What probably happened is that bank could not move standing of your mortgage to foreclosure or the loan was so minimal that it was not economically beneficial for the bank to pursue foreclosure and charged your debt off, selling it to a collection agency for pennies. You should do some investigative work as to the status of your case because it is possible that you could have been living mortgage free all these years. Brooklyn, New York
August 16, 2012 August 14, 2012 Procedure to Initiate Foreclosure

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I have first mortgage which is current, not past due, all payments made on time. I have a HELOC, which is delinquent by several months and the bank sent a foreclosure letter. Even though they are secondary can they foreclose? Procedurally, to begin foreclosure, the bank must first send a 90-Day Letter, giving you 90 days to get current on the loan. If foreclosure process is initiated sooner, it can be dismissed on the grounds of failing to send the 90-Day Letter. Having said that, most banks are so backed up that just because you have received that letter does not mean that foreclosure will begin exactly 90 days later. In some cases, it is months later, and in other cases, it may take a couple of years. It is trickier with the second mortgages. The bank must evaluate if it economically feasible for them to pursue foreclosure, i.e., if the first mortgage takes up all the equity of the home and there is nothing left for the second, then, many times, the second position will charge off the loan. It is more likely to witness foreclosure of the second mortgage if there is equity left in the home once the first mortgage is subtracted (ex: fair market value=$300,000; 1st mortgage=$200,000; 2nd mortgage=$100,000--there is enough equity for both lenders to recover the amount of the debt). So, it is definitely possible for the second mortgagee to foreclose, hence you sign the mortgage at closing as security instrument for the lender, allowing the bank to take away your property if you default on payment. Brooklyn, New York
Aug. 12, 2012 Aug. 10, 2012 Negotiating a Settlement with a Bank to Extinguish Mortgage Debt

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We were facing foreclosure and we filed for Chapter 7 Bankruptcy, which was discharged earlier this year. At that time, we owed about half of our total mortgage debt on the first mortgage and half on the second and both mortgages were with the same bank. The value of the home at that time was listed in the bankruptcy at about as much as our first mortgage was worth and most of the second mortgage was unsecured. Presently we owe slightly more on our first mortgage than at the time of bankruptcy (we are current with our payments but with interest it has gone up since the bankruptcy) and have not been able to pay the second mortgage for three years now. I got a personal injury lawsuit settlement recently and we would like to approach the bank that holds the second mortgage with a settlement lump sum amount. I believe we had to reaffirm the first but if we approach the second and they do not go for a lump sum, will they be able to come after us for the payments like they did before the bankruptcy? Will we have to reaffirm the second and what exactly does that mean? How do we best go about approaching the bank? You should contact the attorney who filed bankruptcy for you and find out if bankruptcy already wiped out the second mortgage, or at least the unsecured portion of it. In any case, lenders in second position entertain settlement offers with much more enthusiasm than one would think since the main concern is to receive something than be wiped out completely. In your case, if you are still obligated under the second, you should definitely negotiate into a lump sum payment and there is a high probability that the bank will accept a lump sum (usually in proportion to the fair market value of the home minus first mortgage is what's left for second to recover). Otherwise, find out if there is a possibility of a loan modification--that could be another way out or you will be back at square one where you were before you filed for bankruptcy. Brooklyn, New York
Aug. 8, 2012 Aug. 6, 2012 Steps for Qualifying for Loan Modification

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I have been given a run around by my bank regarding a loan modification. They put me in a foreclosure and then rescinded. They assigned multiple representatives to my account. Recently they sent me a letter stating that I am not eligible for a loan modification, because I did not provide them the documentation they requested, although they had this documentation from me on file for a while now, but according to them it now needs to be updated. Our biggest fear is that they can put us in foreclosure and take our home away whenever they want to. So far, I tried working with the bank directly with no third party assistance. We sent them all requested documents months ago, only to be asked to start all over. We thought we were going to be approved for a loan modification, so that we can move on with our lives. But now we are at square one again. We have sufficient income, so we can afford the mortgage. There are a lot of criteria that need to be satisfied to be approved for a loan modification. Banks are so overwhelmed by the number of homeowners who are in default and are seeking assistance that is it almost impossible to find a bank that completes its deadlines to review the documents timely. You have to be patient and annoying and call the bank at least once a week to find out the status of the review. If anything is missing, it needs to be supplemented immediately. Otherwise, documents have such a short life span that within 60 days, documents will go stale and will need to be updated again and again. It is always best to send everything at once. If something is missing or income cannot be verified immediately and you need two new bank statements, you will have to resubmit all documents again (including updating all the forms which sometimes change its format). That's the first part of the puzzle. Second is actually qualifying for a loan modification. To get a loan modification, you must qualify, which means you have to be within specific income brackets to qualify in proportion to your total debt (including arrears). You can't make too much and you can't make too little since both of those reasons could disqualify you, among many others. Receiving a denial for missing documents is not the end of the road. Rather, it is the beginning for a new submission with all new documents. Before you submit, it is better to speak to a professional who has knowledge of this area so your financial situation could be properly assessed whether you qualify. Brooklyn, New York
Aug. 4, 2012 Aug. 2, 2012 Bank Attorney's Fees in Foreclosure Cases

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The bank I have my mortgage with is saying that I have been behind on my mortgage for several months. I acknowledge that I am behind on my mortgage but by much fewer months than my bank suggests. When I tried to make a payment, I was told that I had 48 hours to pay the outstanding balance. I got the money together, but then the bank representative told me that they would not accept my payment because my case had gone to foreclosure and I need to pay the foreclosure attorney's fees now as well. On the other hand, my account manager told me to send the payment in, so I did and now he says that my case will be taken out of foreclosure and the bank will inform them if I owe them anything with regards to the foreclosure attorney's fees. Who do I believe and what will happen next? Generally, if your loan was referred to a foreclosure attorney, the bank cannot accept the money anymore and it has to go through their attorney's office to reinstate it so all the fees could be properly evaluated. In your case, you are not behind by much and it seems that the bank referred your case into foreclosure at its first chance. Generally, what it means is that the attorneys for the bank have to draft a summons and complaint and serve you with the papers. So, if their attorneys just received a referral but they haven't done anything that would have incurred fees yet, then it is very likely that the amount of arrears is still the same as you were told. You can also call the attorneys for the bank to double check but based on the short amount of time in default, the scenario you described could make sense. Brooklyn, New York
July 31, 2012 July 29, 2012 Is Mortgage Company Obligated to Stop Foreclosure Proceedings by Accepting my Past Due Payments?

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My mortgage company offered to accept the past due payments on my account in the foreclosure process in exchange for stopping the foreclosure proceedings. Is the mortgage company obligated to stop the foreclosure by accepting the payment? I am not the mortgage holder but I am in the house with a filed quit claim deed in my name. Since I am not the mortgage holder I can't get anything in writing legally from the mortgage company stating their terms to me.
I have had a consultation with a real estate attorney, who answered some questions for me.
That's right. As long as the bank receives its payment, they will keep on taking it. They will reinstate the loan, the payments will go back to their original terms and the foreclosure proceedings will be stopped. You can't get anything in writing because you are not the borrower. You would have to assume the loan to make it in your name and to have any new terms stated in writing. But if you are not trying to get a loan modification on your mortgage and just trying to resume to making payments, then you can just send the check to reinstate it and then continue making monthly mortgage payments. As long as you do, the bank will not bother you. As soon as you stop, again, the borrower, who is the person financially obligated under the note will end up in foreclosure, thus, risking losing the home that you own. Brooklyn, New York
July 27, 2012 July 25, 2012 Am I Responsible For 2nd Mortgage on My House (That Was Charged Off), If the Bank Forecloses On the 1st One?

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Our home is in foreclosure and we have been working with the lender to get a loan modification on it for over a year. There was a second loan on the house, with the same lender, that we thought was "settled" but when we called the lender about a year ago to confirm that it was "settled", we were informed that it had been charged off about three years ago. If the first loan is foreclosed upon, will the bank come after us? If they don't for the first, will they for the second loan? We contacted an organization called NACA, and they have been assisting us with trying to achieve an affordable monthly payment on our house, and to avoid foreclosure. I'm getting divorced and the Judge told me he would award me the house, but that I would have to sign a waiver claiming sole liability on the home. I don't know yet if I will be able to get the loan modification and I don't want to claim all liability if the house goes into foreclosure with the second loan being charged off and me still being responsible. Once the second loan is charged off, the lender generally sells it to a collection agency to try to recover some money from you (generally a percentage of what is owed). The fact that your loan was charged off to begin with indicates that the property had no equity and that it was not economically feasible for the 2nd lender to pursue foreclosure. Therefore, if foreclosure actually takes place, all or most of the money recovered will go to the 1st lender to satisfy the debt. By having charged the second loan off, the loan is no longer secured. It will be treated as any other unsecured debt, like a credit card debt. If you have no assets that the bank could take if the home is foreclosed upon in order to satisfy a deficiency judgment (if the bank chooses to pursue it), then it is very unlikely that you could be at risk. Worse comes to worst, you might be able to file for bankruptcy to discharge your unsecured debts. You should note, however, that you can't get the loan modified if you divorce unless you assume financial obligation of the debt. In order for the loan to be modified, you need to be able to show financial affordability, or 31% of your gross monthly income should pay off your mortgage in 40 years at 2%. NACA is a 3rd party that works with the bank to help you get the loan modified. Generally, the bank cannot deal with you directly once NACA is involved unless that agreement is severed. Just stay on top of what's going on to make sure your loan is reviewed for a loan modification. If the first is modified, then it is most likely you won't have to worry about the second until you sell the home. Brooklyn, New York
July 23, 2012 July 21, 2012 What Can a Bank Do to Satisfy a Deficiency Judgment from a Foreclosure?

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We are being sued by our bank. Our property went into foreclosure about five years ago. Can our bank garnish our wages or reach into our personal bank accounts? What can we do to minimize our exposure? We agreed to a payment schedule but never heard anything back. Recently we received new communication from the bank, where they are asking for more documentation, such as personal bank accounts information, property ownership, etc. The first lien holder sold our mortgage to our bank, which retained an attorney to collect the difference between the amount that the property sold for at foreclosure sale and what we owed on our principal balance. Yes, the bank can go after the deficiency judgment, which in this case appears to be the difference between the amount the property sold for at foreclosure sale and your principal balance. The only way the bank can satisfy this debt is if you have assets, i.e., another property, bank accounts, W-2 job, tax refund from the IRS, etc. If you have no assets, then you are considered judgment proof, meaning that the creditor will not be able to recover anything from you. If you are employed, then up to 10% of your wages can be garnished. Perhaps, you can negotiate with the collection company or the attorney that is pursuing collection of this debt to settle for less. Oftentimes, they will take a lump sum that could be less than half the cost to make it go away. Brooklyn, New York
July 19, 2012 July 17, 2012 Qualifying for Loan Modification After Filing Chapter 7 Bankruptcy

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I recently had to file a Chapter 7 Bankruptcy to keep my property from foreclosure. Subsequent to the filing of Chapter 7 Bankruptcy, can I still manage to get a loan modification or sell my property through a regular listing? Yes, after you assume the loan through the Chapter 7 Bankruptcy and the stay is lifted or Chapter 7 Bankruptcy is discharged, you can still try to work out loan modification with the bank. Foreclosure or possibility of loan modification is not affected by Bankruptcy unless you surrender the property or the property is taken away. Now, you have the option to try to work out different loss mitigation options (i.e. loan modification) through the Bankruptcy court. Talk to an experienced attorney to determine the best option for you. Brooklyn, New York
July 16, 2012 July 14, 2012 Retrieving your Equity from Foreclosure Sale and Filing a Motion for Surplus Money Proceeding

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Our home was recently foreclosed on by the mortgage company. There will be a sum of several hundreds of thousands of dollars in equity owed to us after the mortgage company takes the money that is owed to them. We have been contacted by individuals and lawyers stating that we should retain their services in securing our equity from the foreclosure sale. They want a substantial percentage of the proceeds that will be due to us to handle this procedure. The New York City rules seem to indicate that the money owed to us are simply dispersed as a matter of law in a timely manner. I can't understand why we would need such an expensive representation for this as our case is not so complicated. Do I need to file anything along the way and do I need an attorney? You will likely need an attorney who can bring a motion to the court for the Surplus Money Proceeding. It takes time for the court to hear you on your motion, then decide it, and thus, for the money to be disbursed. You will need to go through the New York City Department of Finance to obtain the funds eventually. Paying a percentage of the recovered amount seems a bit excessive. Look for a professional who would agree to do it based on a fixed retainer fee. Brooklyn, New York
July 12, 2012 July 10, 2012 Homeowners Association's (HOA's) Precedence in Claims on your Property over the Bank

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We recently got a loan modification on the mortgage on our primary residence with very attractive terms. We have two HOA's and we communicated to them that we would catch up on our dues when the loan modification became permanent. One of the HOA's put us in collection. What will happen if we stop paying anything to the HOA? Will they foreclose and get someone to pay the bank the amount due on the note. What risks do we take if we don't pay one of the HOA's? Can the HOA foreclose and ignore the bank and the money owed to the bank? Who pays the money to the bank? You are better off not messing with the HOA. HOA can put your home/condo for sale, recover its fees, pay the rest to the bank. Oftentimes, the bank will itself pay the amount due to avoid any type of lien sale and then charge you for it. HOA fees are not even extinguished when you file for bankruptcy. So, they will not be extinguished in foreclosure. If you want to save your property, you should make an arrangement with HOA to catch up on arrears. Brooklyn, New York
July 4, 2012 July 2, 2012 Can the Bank Garnish my Wages and Go after my Assets through a Deficiency Judgment?

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A few years ago, I took out a second mortgage from my primary residence and made a few unsuccessful investments with that money. Subsequently, I was forced into Chapter 13 Bankruptcy and I surrendered all of assets I had acquired as investments. Chapter 13 Bankruptcy did not take care of my second mortgage. Now I need to get a loan modification on both: my first and second mortgages to stay in my primary residence. So far the banks have not been cooperating. I will stop paying both mortgages as I can save that money to find another house to rent. The first mortgage will be covered in a foreclosure sale, but the second will not. Can the bank come after me for the difference and garnish my wages? Essentially, foreclosure should be your last resort. Mainly, it is because of the deficiency judgment. Yes, banks can obtain a deficiency judgment and go after your assets or garnish your wages to satisfy the debt although sometimes the bank can make an exception. If you know you are willing to surrender your property, then you are better off doing a short sale, especially because on your primary residence this year, any debt, that is forgiven is not subject to capital gains taxes.  Consider doing a short sale or deed-in-lieu to avoid negative financial consequences. Brooklyn, New York
June 29, 2012 June 27, 2012 Does the Bank Have Claims to my Future Assets because of a Short Sale of my Old Property?

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We just completed a short sale on a home financed by our bank. We are getting another home as a gift in a few months. Can the bank come after us because we now own a home debt-free? Our old home was purchased using a standard loan that we refinanced. We sold the home for about $60k less than what we owed to the bank. My wife is unemployed and cannot work due to a medical disability. No, that shouldn't be an issue since at the moment you did a short sale on your home, you did not own another asset. Once you do a short sale, the amount that is forgiven gets reported to the IRS as a taxable income. But if you did a short sale this year on your primary residence, any debt that gets forgiven is not subject to capital gains and you won't have to pay any taxes to the IRS in relation to the short sale.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
June 25, 2012 June 23, 2012 Is Strategic Default the Best Path to Loan Modification?

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We are looking for a strategic default because we got no help in adjusting our mortgage down to reflect the drop in value of our home. We have called the bank many times over several years. We can afford the payment, but our payment is scheduled to go up in the future and the house doesn't justify the cost. We have inquired about merely getting our rate down to going rates and every time no matter what new so-called loan modification program exists have been told you have to initiate default by missing a payment for the bank to even start discussing it with you. Should we get legal assistance in the strategic default process? Numerous factors come in play here. It is true that most banks will not even consider you for a loan modification unless you missed three (3) payments. But if you miss three (3) payments, then you have to beware that you are at risk of foreclosure. If your current mortgage payments are affordable, then you may not even qualify for a loan modification. Loan modification is not automatically granted. You must submit documents; the bank reviews them; and if you qualify, you may get a loan modification. Certainly, you could be risking a lot more. If your credit history is good, then you should try to refinance and you can still get a good market rate today. If you decide to try for a loan modification, consult with a professional in advance to ensure that you qualify. Brooklyn, New York
June 6, 2012 June 4, 2012 Making Mortgage Payments During Short Sale Process

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We are considering a short sale on the home we owned for many years. We contacted a short sale agent but we did not contact our bank. I lost my job last year. The agent advised us that we are $10,000 under water on the property not including an additional home equity line. We are current on our mortgage payments but we are wondering if we should continue to make the payments during the short sale process? You should have no problems doing a short sale, especially if you are only $10,000 under water. You need to contact the bank to initiate the short sale process. They will absolutely have to verify your financials to ensure that there is no way to repay the entire debt. In your case, where the amount of debt that needs to be forgiven is $10,000 but if you have other assets, it may be a problem. Since every bank has its own process in place, you need to contact the bank to determine if they will agree to a short sale in your case. It doesn't seem that there should be a problem with such a small amount being forgiven. As far as stopping payments goes, you need to know that when you stop making payments, you are always at risk of facing foreclosure. At the same time, if you stop making mortgage payments, by the time the short sale takes place, you will owe more money to the bank, and thus, a greater amount might or might not be forgiven. The amount that banks will generally accept at the short sale is roughly equivalent to the fair market value of your home.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
May 25, 2012 May 23, 2012 Bank's Rights to Deficiency Judgment Following Acceptance of Deed-in-Lieu

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We have been approved for a Deed-in-Lieu of Foreclosure. My case is very straight forward (i.e. one mortgage, no liens, etc). The Estoppel Affidavit that we received mentions the cancellation of debt. Does the bank's acceptance of Deed-In-Lieu of Foreclosure waive their right to a deficiency judgment? No, you avoid a deficiency judgment by opting for the Deed-in-Lieu of Foreclosure. However, when any portion of the debt is cancelled, the amount that is cancelled is then treated as part of your annual income, on which you would have to pay taxes at the end of the year. However, if the debt is cancelled on your primary residence, then you don't have to pay taxes on that amount. Essentially, if the property is not an investment property, then you should have no monetary consequences. Brooklyn, New York
May 14, 2012 May 12, 2012 Deficiency Judgments in Foreclosure Cases

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I'm in foreclosure on my property. The auction date is set for next week. If there is a deficiency in the sale price, will I be liable for the deficiency? Should I file bankruptcy prior to the foreclosure? I've spoken to some mortgage brokers, but I'm getting mixed feedback. Yes, the bank can go after you for the deficiency. Generally, though, in order to be able to enforce the deficiency judgment, you must have some other valuable assets, like another property or sufficient sum of money in the bank account. It is generally more advisable to do a short sale or a deed-in-lieu of foreclosure. Then, if the property is your primary residence, you don't have to pay taxes on the debt that was cancelled. Bankruptcy is always an option as an emergency backup to stop the foreclosure sale. Once you file for Bankruptcy, there is a 30-day stay of foreclosure proceedings. Within that time, if you can't work out the way to keep your home, then the bank can move for a motion for relief from stay, thus, allowing it to proceed with the foreclosure, and hence, the foreclosure sale, once again. Brooklyn, New York
May 7, 2012 May 5, 2012 Starting the Short Sale Process

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I would like to put my home up for a short sale. How do I start? If anything occurs in my home (i.e. it incurs internal damages), will the bank come after me? Will the bank come after me for the difference in their short sale price and the amount I owe? To start the short sale process, you need to contact the bank first. You will have to fill out a package of documents and the bank must determine that you qualify for short sale. The bank is not a purchaser of your home, so the bank cannot come after you for broken things. Since your are selling your home to a 3rd party buyer, once the short sale takes place, you are not responsible for any damages to the home if the purchase is "as is" unless you have intentionally concealed the truth about some material defects of your home. When the bank agrees to do a short sale, they agree to cancel part of the debt that is non-recoverable under current market conditions and they write off that amount as their loss for the year. IRS will send you a form with the amount that was cancelled to report on your taxes. However, if the property is your primary residence, then you won't face any tax consequences.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Apr. 29, 2012 Apr. 27, 2012 Loan Modification for Homeowners, who Have just recently Regained Employment

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My mortgage was transferred from first bank to second bank in December 2011, I lost my job at the end of that month. My mortgage is current through January. I contacted HOPE in January to assist me while I looked for employment. I sent countless documents to HOPE, who in return sent them to the second bank. The second bank, however, has not been effective in trying to help me stay in my home. They have said I am ineligible because I am receiving unemployment benefits. I have asked about the Unemployment Program listed under the Making Home Affordable Act (HAMP) and I was told that I am ineligible even before the list of documents was sent from HOPE. I just recently landed a full-time position in public sector, which I am about to commence very soon. I told the second bank this, in hopes to stave off the foreclosure process, but I was told that the foreclosure process will begin shortly. I want to stay in my home. My new job will produce less income than my previous job, but with a lower interest rate, currently I am above 6%, I feel I just need a little time. I was never late nor missed a payment while I was employed and I feel that the second bank is just going to continue to regard me as ineligible for loan modification or any other assistance. Please, tell me what options I have to stay in my home. It is unclear if the second bank is about to set a foreclosure sale date or commence a foreclosure? Your home cannot be foreclosed upon until the bank exercises its legal right by suing you in court as a result of the default under the terms of the Note and Mortgage. If you have not gone through the lengthy court foreclosure process, then the second bank cannot be setting a meaningful foreclosure sale date any time soon. If, however, the bank initiated its foreclosure action a long time ago, then it is likely that a foreclosure sale could take place shortly. If that is the case, then you may want to consider filing for bankruptcy to stop foreclosure and you can even try to obtain a loan modification through the Bankruptcy Court. On a different note, if you just started your job this month, then you would not have enough financial documents to verify your income. You would have to wait 2 months, get 30 days of pay stubs and 2 months of bank statements, along with all the forms, and most recent tax returns and try to submit the documents again. It is very hard to get a permanent loan modification when you are unemployed because then you obviously show unaffordability of the monthly mortgage payment to the bank and the last thing the bank wants is another default. Unemployment program under Making Home Affordable Program (HAMP) is a temporary solution. To get the monthly amount reduced permanently, you need sufficient income. Now that you are employed again, there is a great chance of success to your story. Brooklyn, New York
Apr. 20, 2012 Apr. 18, 2012 HARP qualification for  homeowners, who are on the deed but are not the borrowers on the note

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My spouse has recently passed away. Our mortgage was in his name only. The bank says I am not eligible for HARP 2.0 because the loan was in his name only. My name is on the deed of trust. They have suggested short sale or foreclosure. I really want to keep my home and have my payments reduced. Is there a way to do this? I already tried calling the bank several times to try to find a solution to get my home in my name and apply for HARP 2.0 to refinance, but so far no luck. Unfortunately, even though you are on the deed, you are not the Borrower under the Note. Therefore, the bank cannot refinance or modify a loan, which you are not financially obligated to. The way to do this would be to first assume the loan but you would have to qualify for assumption, i.e., you must be current on your monthly mortgage payments and you should have sufficient income to qualify. Then, at some later point in time, if you are actually having financial difficulties, you can discuss the options of refinancing or loan modification with your bank. Brooklyn, New York
Apr. 16, 2012 Apr. 14, 2012 Limited loan modification options for loans involving servicing and investor banks

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I received a foreclosure notice after 3 plus years of trying to get a loan modification through my servicing bank. They told me after many tries that the investor bank would not allow my loan modification. I would like to fight them in court as to their right to refuse my loan modification after they rejected my payments. Do I have any options? I've sent payments but they were returned, tried loan modification but that didn't work. Is it possible to fight the validity of my bank in court as the trustee of my note is considering they probably purchased my mortgage with thousands of others and are looking to write off the debt. I have saved up the 90% of my arrears, but I don't want to give it to them without getting better mortgage terms. Should I hire a lawyer to fight this case for me? It sounds like your case will involve some serious litigation. It is very likely that the bank in the foreclosure action may not be able to prove its standing to sue (by not being the owner of the note) but that can only be disputed if it is timely brought up to the court. Unfortunately, most of these loans where one bank is the servicing company but another bank is the investor, the options for a loan modification are limited. In many similar cases, the investor bank granted the servicing bank very limited rights as to what can be done in terms of loan modification (that information is provided in the Pooling and Servicing Agreement that you would not necessarily know about). Sometimes, when you speak to a servicing bank representative over the phone, you can ask them for the type of limitations that the investor bank has provided in terms of loan modification. The investor bank, for example, may allow for an interest reduction but may not allow term extension, which is another major component of achieving affordable monthly mortgage payment. Also, very often, the problem of being denied a loan modification is improperly filled out paperwork. If you are not properly documenting your income, it is very likely that you can be denied for having insufficient income or you may be denied on the grounds of already having an affordable monthly payment (i.e. current payment is lower than 31% of your gross monthly income). In any case, your hope is not lost. If you just ended up in foreclosure after 3 years, then your process is just beginning. First, you will have to go through the court mandatory foreclosure settlement conference part, where the bank must negotiate with you in good faith. You have a lot higher chances of obtaining loan modification while in court than on your own. So, your battle is just beginning and good luck winning it! Brooklyn, New York
April 7, 2012 April 5, 2012 Does a default on a construction loan entitle the bank to the land as well as the home?

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We have been told by the foreclosure court that our foreclosure sale date will be in 90 days. We owned the property prior to obtaining a construction loan in 2005, to build our home. Now that we are in foreclosure for the mortgage from 2005, is the bank also entitled to the property which we had owned prior to the construction of our home? We were also told that filing Chapter 13 bankruptcy will prolong the sale date of our home, is this true? We got the construction loan solely to build our home that is now foreclosed on. If you signed a mortgage, then more likely than not, that you secured the debt with collateral, i.e., property. Banks will generally not give out a home loan without having its interest backed up by collateral. That's what gives them the legal remedy to foreclose and to recover, if not the full amount owed, then at least the fair market value of the property. It is unclear what other property you own. If you own one property and you refinanced several times, your debt to the bank is determined by the amount borrowed at the last closing. It would be irrelevant if you bought your house a lot cheaper a long time ago and then you refinanced and took out a greater loan for whatever reason. You owe whatever you last borrowed. You can try to modify your mortgage so you could reduce your monthly mortgage payments as one way to avoid foreclosure. However, you can also do a short sale, which would allow you to sell the home for the fair market value rather than for what you owe. You can also do a deed-in-lieu of foreclosure. Many banks today offer financial incentives for you to do a short sale or a deed-in-lieu. Finally, filing for bankruptcy will stay the sale and a lot of people do file for bankruptcy as the last resort to avoid foreclosure. However, if you cannot work out a plan through the Bankruptcy Court on how to resume to make mortgage payments, the relief from the Bankruptcy court will be temporary. While the sale will be stopped, the stay will only last so long until the bank makes a motion to lift the stay, which would essentially take you back to square one (i.e. bank will continue the foreclosure process). Weigh your options carefully as to what exactly are you trying to accomplish... Brooklyn, New York
April 2, 2012 Mar. 31, 2012 Does having the deed and the mortgage note in two different names delay the foreclosure process?

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What happens in foreclosure when the deed and the note are in the names of two different people? Quitclaim deed was done, the loan was never refinanced and the lender was never notified. The person owing the debt on the mortgage had since passed away. Will this delay the foreclosure process and for how long? What should the person on the deed do? Unfortunately, I cannot keep the home due to financial hardship. If you are on the deed but you are not the one who took out the loan by signing the note, you have no financial obligation, nor do you have any rights as far as loan modification is concerned or any other type of negotiations with the lender. If you are behind on the mortgage, then you would have to assume the loan (if you qualify), which would then create the right for you to negotiate with the bank. If the mortgage is still current, then you can continue to make payments to avoid foreclosure. However, there is no way around avoiding foreclosure if you do not make payments and you do not assume the loan...it's only a matter of time. As far as the foreclosure process is concerned, it could be quite lengthy as the bank must follow proper legal procedural steps in order to effectuate a foreclosure sale, which could last anywhere from a few months to a few years, depending on the county in which the property is located. Brooklyn, New York
Mar. 29, 2012 Mar. 27, 2012 Stopping foreclosure sale by reinstating the mortgage loan

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Is it possible to stop a foreclosure sale if I am able to make the account current, despite the fact that since the commencement of foreclosure action the legal fees imposed on me have exceeded my budget? You can definitely reinstate the mortgage loan to stop the foreclosure sale. You can request the breakdown of the legal fees with the bank's attorney's firm if you believe there is something to dispute. Brooklyn, New York
Mar. 25, 2012 Mar. 23, 2012 Refinancing a mortgage on a property saved from foreclosure via bankruptcy

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What steps need to be taken to refinance a mortgage on a property saved from foreclosure via bankruptcy? With bad credit history as a result of an earlier bankruptcy filing, you may not be able to refinance. You can apply for a loan modification, if you need to save your home from foreclosure once again. You may end up with more affordable payments that you will be able to make in the future, but you need sufficient income to qualify. Consult with a professional to help you determine if you are eligible. Brooklyn, New York
Mar. 19, 2012 Mar. 17, 2012 Unaffordable mortgage payments: loan modification, short sale or deed-in-lieu of foreclosure

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My property is under water by about $150k and my monthly mortgage payments right now only include: interest, taxes and an association fee. My interest only mortgage expires later this year, which means I will have to pay principal and interest. I can barely afford my monthly payments right now. I am considering either listing the house up for short sale and then submitting the highest offer for bank's acceptance, or walking away from it. I wanted to know what my options would be if the bank did not accept the short sale offer? If I walk away from the property, can the bank hold me financially responsible? This loan is a result of refinancing several years ago, when my financial situation was more stable. Since then, the bank has denied all of my loan modification requests. Banks generally approve short sales where the purchase price is roughly equivalent to the fair market value of the property. If you believe you can get a short sale offer that would roughly match the fair market value of your property, then that's the amount that should be accepted by the bank. If this is your primary residence, then you will not suffer any financial consequences. You can also try to do a deed-in-lieu of foreclosure if you have bad luck selling your home. If you would like to get a loan modification, then you should consult with a professional who could determine if you are eligible for a loan modification based on your financials. For example, if you are unemployed and your only source of income is unemployment, then that would explain the denial. The bank, essentially, looks at your financials to determine whether you could pay off your loan at a lower interest rate and at a longer term (i.e. 2% interest rate over 40 years). It is possible that your paperwork was not properly filled out. If your priority is to save your home, you can always reapply for loan modification if you had a change in income (even if your paperwork was not properly filled out before and now it would be filled out correctly, that would be a change in income from the bank's perspective).

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Mar. 15, 2012 Mar. 13, 2012 Saving your home through Chapter 13 bankruptcy

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I am self-employed and due to medical reasons, I have recently had a loss of income and therefore I am now in a foreclosure process. I might be able to borrow funds from family to get current on my mortgage. However, I am wondering whether bankruptcy might be a better option. If I consider debt reconsolidation bankruptcy, would the house be included in the re-consolidation? If you are referring to Chapter 13 bankruptcy, then you could reorganize and consolidate the debts, such as a debt for a home. You would have to create a payment plan that would enable you to pay off the delinquent amount in 3-5 years. The best decision for you would have to be based on the overall state of your financial affairs. If you have delinquent credit card or medical bills, then most likely Chapter 13 is the way to go, as it helps eliminate some or all unsecured debts while being able to save your most valuable assets, like a home and a car. Brooklyn, New York
Mar. 12, 2012 Mar. 10, 2012 Surrendering an under water property to the bank

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What's the procedure to hand over an under water real estate mortgaged property to the bank?  I have an interest only mortgage that is up-to-date. Contact the bank and tell them you are interested in doing a deed-in-lieu of foreclosure.  Let the bank know that you are having a difficult time paying your mortgage and that you would like to surrender your property to the bank. It is most likely that the bank will first ask you to list it for sale and see if you could receive a short sale offer. If you are unable to sell it, then the bank is likely to accept the deed-in-lieu, as long as there are no tenants living on the premises that the bank would then have to evict. Brooklyn, New York
Mar. 8, 2012 Mar. 6, 2012 Short payoff offer on the property vs. short sale

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I have three mortgages on my current home: 1) first two are with the same bank and I am about 1 year and 6 months behind on them respectively, 2) the third is with a credit union and is currently up-to-date. I stopped making mortgage payments because I ran into financial difficulties. The fair market value of the property is currently as much as the principal on my 1st mortgage alone, plus I owe back payments, interest, penalties and taxes in addition to principal. The bank is not willing to discuss a loan modification but is willing to entertain a short sale, the problem is I want to keep the property. Is there any precedence for approaching the bank that owns the 1st and 2nd notes and offer to purchase or payoff the notes using the money from my savings? I only want to pay fair market value or some compromise. Do you think the bank that owns the 1st and 2nd mortgages would entertain a cash offer without me having to disclose my finances? Most banks will agree to do a short sale but refuse to do a short payoff. They do not want the borrower to benefit twice by extinguishing part of the debt and allowing the same borrower to remain in the home, whereas the bank will agree to do a short sale for the fair market value of the home with a 3rd party. Unless you are willing to pay the entire debt owed to the bank, the bank is not likely to entertain your offer. Some banks might agree to 80% of the full amount but you have to send them an offer in writing and you must stay on top of this, as banks often neglect to respond to such offers. Also, it is important to note that banks, upon realization that you have the ability to reinstate the loan, will refuse to entertain any short payoffs or loan modification offers. The bank might not necessarily know of all your finances but they will likely have to verify your funds to be sure you show affordability. This may, however, begin a cycle of questions that may be problematic and take you back to square one.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Mar. 5, 2012 Mar. 3, 2012 Responding to summons and complaint, and subsequent steps in foreclosure cases

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My bank is suing me because I have not paid my mortgage for about a year. These are the reasons I am not paying my mortgage: 1) I applied for loan modification, but the bank never approved it, 2) for personal reasons, I fell into financial hardship. The summons and complaint letter I got from the court states that I have 20 days to respond. What should I state in my response? In other words how do I proceed? My main concern is that following this foreclosure process I might end up with a larger debt than I had originally. When you personally get served with the summons and complaint, you get 20 days to answer unless you call the Plaintiff's firm and ask for an extension to file an answer. Generally, such requests get granted if you don't wait too long. In your answer, you must answer to every allegation in the complaint, either by admitting, denying, or stating that you don't know the answer. If any paragraph of the complaint remains unanswered, it will be considered true and admitted. Once you answer the complaint, foreclosure action cannot take place because of your default. You will be put on notice of every legal proceeding in your case. You will have an opportunity to oppose Plaintiff's motions, as well. In New York you will be placed in the mandatory settlement conference part, where you and the lender will have to negotiate in good faith to try to settle the case, i.e., modifying the loan (if you qualify). Essentially, you have to figure out what's most important to you--saving the home or getting rid of the debt as quickly as possible. If your priority is to save your home, then you will have an opportunity to do so in court settlement conference part. If your goal is to get rid of the debt (and the house) as soon as possible, then you can either do a short sale or a deed-in-lieu of foreclosure. Regardless of what you decide to do, you should still put in an answer to the complaint. Consult with a professional attorney, who could advise you of your legal rights. Brooklyn, New York
Mar. 2, 2012 Feb. 29, 2012 Extension on foreclosure sale in New York

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After the court has issued a foreclosure sale date, is it possible to get an extension in New York? The bank dragged out my short sale until the last day and then declined the offer. I was also told by the court that I would be able to get an extension but when I attempted to get one a few days later, the court told me there was no sale date on the calendar and once it was entered then I could file for an extension to complete a deed-in-lieu. Now my goal is to try to get a deed-in-lieu and keep this foreclosure off my credit report. If you initiate the deed-in-lieu process with the bank, they are likely to hold off on the foreclosure sale for now. In New York, there are many procedural steps that the bank must take in order to actually have the sale go through. If you have a foreclosure sale scheduled and need to stop it on an emergency basis, then filing for bankruptcy is the way to stop the sale. However, if you are afraid of having foreclosure appear on your credit report, then you are not likely to agree to bankruptcy either, but it is a good idea to know your options regardless. Consult with an experienced attorney to determine the best course of action for you at this time. Brooklyn, New York
Feb. 28, 2012 Feb. 26, 2012 Qualifying for Deed In Lieu of Foreclosure

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We walked away from our house as we could no longer afford it.  The interest rate on our mortgage was unreasonably high by today's standards and still our bank was not willing to renegotiate the terms.  Therefore, we have been out of the house for several months now.  At this point we would just like the bank to proceed with foreclosure and take possession of the house, but it's not happening.  We heard about a process called "Deed in lieu of Foreclosure".  How do we go about this or see if we qualify? Foreclosure is a complex, legal process. Just because you stopped making payments and physically walked away from the house does not mean that the bank can just take the house away. The bank must initiate a lawsuit and follow all the proper legal procedural steps before it can get to the actual sale of your home. By executing a deed-in-lieu of foreclosure, you can expedite the process. Essentially, by doing a deed-in-lieu, you are transferring the title of your house to the bank, thus avoiding foreclosure and all the fees and costs that the bank accrues as a result of having to sue you.  However, there may be tax consequences, depending on the value of your home at the time the transfer takes place. Generally, a deed-in-lieu is a better alternative than foreclosure if you have no intentions to save your home. As a side note, please take into consideration that if foreclosure action would take place in New York, there are mandatory settlement conferences in New York, whereby banks are bound to negotiate with the borrower in good faith, and it is oftentimes, easier to negotiate with the bank and have the interest lowered than going through the court process. Furthermore, it is important to note that a deed-in-lieu still places the headache of re-selling the property on the bank.  Therefore, the lender might not agree to a deed-in-lieu unless the homeowner has tried all other loss mitigation options first, such as short sale. Brooklyn, New York
Feb. 24, 2012 Feb. 22, 2012 Lack of legal standing defense in the assignment of mortgage cases

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We have been issued a summons and complaint in a foreclosure process from our mortgage servicer. We have been in the process of loan modification on our mortgage for approximately two years (and paying as requested). The mortgage servicer would periodically update us, letting us know that all is proceeding well and our loan would be modified within weeks, and then restart the whole process from scratch all over again. They have dragged their feet for reasons unknown to us, while telling us that we are doing everything expected of us. When we got the summons and complaint notice, we realized that it is not from the mortgage servicer but from the bank. We have always only dealt directly with mortgage servicer and not the bank. We have factual evidence that proves that we have been defrauded and that the bank has no legal standing in this matter. We have assembled documents in response and are alleging that the bank doesn't legally own the debt or mortgage. Is there a specific process that we need to follow to get the foreclosure dismissed? First things first, you must answer the complaint. In your answer, you should definitely use the defense of lack of standing (along with other defenses if they exist). But you would also have to bring a Motion to Dismiss based on lack of standing and then it would be in the court's discretion to determine whether your case is dismissible or not. It is a common practice for banks to do an assignment of mortgage, which would explain why another lender is suing you. It is a rather sensitive topic for banks today (as a lot of mortgage assignments were defectively executed) and your suing bank would thus have to prove their ownership of the note in order to proceed in their action. Also, whoever is servicing the loan is generally not the owner of the note. It is the servicer's duty to collect the owed debt for the owner of the note. Please do your research accordingly. You may want to contact a knowledgeable attorney who could help you with foreclosure defense. Brooklyn, New York
Feb. 20, 2012 Feb. 18, 2012 Notice of Motion for Summary Judgment (MSJ) and its role within the foreclosure process

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We have just received a notice that states that motion for summary judgment of foreclosure has been scheduled for hearing on a certain date. What does this mean and what is the next step in the foreclosure process? If the foreclosure entry is accepted by the court, what would be the next action taken by the lender? If the lender's solicitor goes to court on that date and the court sets the foreclosure sale, does the solicitor contact us and how long do we have before the foreclosure sale takes effect? If you have received Notice of Motion for Summary Judgment (MSJ), that means that you put an answer to the complaint and now the attorneys for the bank are trying to tell the judge that there are no issues of fact to be decided by the jury, only issues of law to be decided by the judge. Along with the MSJ, banks usually move the court for an Order of Reference, seeking the court to appoint a Referee, who would indeed conduct the sale. If you are fighting to save your home, then it is best to put in opposition papers to MSJ, where you should state why MSJ should be denied. You would need an experienced attorney, who could help you oppose and then possibly argue before the judge. Also, please note, that even if MSJ is granted by the court, the bank must then move the court by filing a Judgment of Foreclosure and Sale (JFS). Foreclosure auction cannot take place until JFS is granted and a sale is scheduled and you are put on notice of the sale (in addition to having notice mailed to you if you were served more than a year ago, notice gets published a number of times in a local newspaper). If you do not have sufficient time to consult an attorney before the next court date, you can always come to court and ask for an adjournment (typically first-time adjournments are easily granted). Brooklyn, New York
Feb. 17, 2012 Feb. 15, 2012 Bankruptcy filing stalling the foreclosure process on my properties

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We filed for bankruptcy in first quarter of 2011 and it was discharged four months later. Two of our residential properties financed by different banks were named in the bankruptcy: 1) this property was financed through a mortgage from the first bank, 2) this property was financed through a mortgage and an equity line of credit from the second bank. Both lenders have not foreclosed on the properties yet. We tried to do a loan modification with the second bank, but ran into a roadblock. Since then we have decided to move on with our lives and let the banks foreclose on the properties. However, the banks keep on stalling the foreclosure process. Is there a "statute of limitations" that prevents the banks from foreclosing on our properties, because both properties were listed in the bankruptcy? At this point we would like the foreclosure process to move forward.  However since both properties were named in the bankruptcy, we are worried that banks will come back to us at some point and let us know that both properties are still our responsibility. Foreclosure can be a very lengthy process that could take a number of years, not just months, especially if you live in states that have experienced a lot of foreclosures in the last few years. In those states, courts are doing everything possible to slow down the foreclosure process to help save as many homes as possible. The date since you filed for bankruptcy is irrelevant here. The bank will foreclose on your home as soon as they can (legally and procedurally).  It will definitely be a quicker process if you do not oppose it. At the same time, you can perhaps try to do a deed-in-lieu of foreclosure, whereby you give up the deed to the house to the bank and that too could significantly expedite the process. Brooklyn, New York
Feb. 11, 2012 Feb. 9, 2012 In the case that I default on mortgage payments on my investment property, can the bank go after my primary residence, which is paid off?

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I own two homes: one is completely paid off and the other has a mortgage on it. Due to certain events in my personal life I am worried that I might default on the mortgage of the second home. In the case that I do default on the mortgage, would the bank be permitted to go after the home that is paid off? I have not pursued any options yet. However, I also have very unstable tenants in the house and will have trouble making the payments if they move. The only way the bank can go after your home that is paid off is if after a foreclosure sale, there is still money owed to the bank (i.e. difference between the mortgage and the sale price). That should only be a concern if your home is "under water." Then again, the bank can't just take your home but can obtain a deficiency judgment resulting from the difference in price and put a lien on your other property (you are unlikely to be forced to sell your primary residence). However, when you do voluntarily sell your home, that is when you would have to satisfy the lien. Nevertheless, if your home has equity, then the bank will be satisfied with the proceeds from the sale and that would not be a concern. Although most banks have a policy in place to try to modify the loan on the primary residence, some banks try to find a workout option even on investment properties. It is possible that if you could get a loan modification or refinancing, your payments could be much lower and more affordable. Brooklyn, New York
Feb. 6, 2012 Feb. 4, 2012 Mortgage payments on my under- water home are no longer affordable due to financial hardship.  What can I do?

 

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I have been paying my mortgage on-time for many years. Now I am late on my payments by one month as I have ended up in financial hardship due to certain events in my personal life. Very soon I will not be able to afford my home. What can I do? I owe approximately $225K and my home is now only worth $200K. In the past, I tried to modify my mortgage and after a year of loan modification process I was denied. Whether you qualify for loan modification depends on various factors, such as gross monthly household income, debt to income ratio, net present value of the home. On the mortgage of $225K, you could likely qualify for HAMP loan modification (if your servicer participates in HAMP) if your gross monthly income is approximately $3K. However, if you are still unable to afford your monthly payments or you have insufficient income, then you should likely consider a short sale.  Consider contacting a knowledgeable attorney, who could advise you on options that would work best for you. Brooklyn, New York
Jan. 29, 2012 Jan. 27, 2012 Does signing over quitclaim deed release me from financial obligation on foreclosed property?

 

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The bank is about to foreclose on my home. Someone had approached me and said that he will settle the debt with the bank if I sign over a quitclaim deed. He also stated that he will immediately take over possession of the house, deal with the bank, the tenant, etc. and I will be able to walk away from the house debt-free. I am very skeptical that this can happen so easily. I am worried that quitclaim deed does not release me from the financial obligation on the property in case the property ends up in foreclosure. How can this person make a deal with the bank? How can I get the bank to release me from my mortgage? You are absolutely right. Whoever is telling you to do a quitclaim deed is trying to scheme you. While this individual will become the new owner of your property, you will continue being financially obligated to the bank. It will be your credit report that will suffer and essentially you will be the one sued (although the new owner will be sued too for the sake of having his interest in the property cut off). The new owner will not be able to modify the loan or negotiate anything with the bank because the new owner is not the borrower and the borrower is the only person that the bank will deal with. If you want to get rid of this mortgage, sell your property to this individual or any other interested buyer and satisfy the mortgage. If the buyer will need to take out a mortgage, then let it be in their name, not yours. If your property is worth less than the mortgage, then do a short sale. This way, you will also be able to get rid of financial obligation to the bank, but do not, under any circumstances, transfer the ownership of the property to someone else while remaining financially responsible for it! If you want to learn more about your rights in this case and the proper transfer process, consider contacting a knowledgeable attorney. Brooklyn, New York
Jan. 25, 2012 Jan. 23, 2012 Has my bank acted negligently by not modifying my loan for many years and now foreclosing on my home?

 

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I have been trying for many years to get a loan modification from my bank. They are now putting me into foreclosure. I exhausted all my savings, retirement funds, credit cards and have had to file bankruptcy all because of them dragging their feet. Can I sue them for their negligence? While your foreclosure case is pending in court, it is much easier for you to show the bank's negligence by explaining the details to the judge or referee. In NY, settlement conferences are mandatory and the judges/referees presiding over these cases have a lot of leeway to obligate the bank to conduct a good faith review of your financials for loan modification. Unfortunately, if you don't qualify for a loan modification, it is not an indication of bad faith. If you believe that the banks have been dragging their feet by constantly requesting additional documents, then unfortunately, it is part of the tedious loan modification process. The bank cannot even review you for a loan modification until it receives a "complete" package. Brooklyn, New York
Jan. 21, 2012 Jan. 19, 2012 Compelling your lender to modify your loan.

 

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How can I compel my mortgage lender to modify my existing loan with terms that will relieve my financial hardship? I have submitted five requests and each time they have responded by proposing to place delinquent payments on the back of the loan, refused to reduce the principle balance and increased the monthly payment. The principal on my loan is currently $100k more than the market value of my house. I am requesting of them that they reduce my principle balance to within 10% of current market value, and reduce the interest rate to reflect a monthly payment at or near $1,5k. A number of other homeowners have informed me they were able to achieve similar terms. My lender has been calculating our debt to income ratio using our gross income which is approximately 1/2 our net income in determining our ability to pay! How can we qualify for the HAMP program, or compel our lender to grant us an in-house modification that will relieve our financial hardship? What are the options that may fit our situation? In order to qualify for HAMP, the bank must look at your gross monthly household income. If you applied 5 times and were offered loan modification terms that have increased your monthly payment, then 31% of your gross monthly income must show affordability of such modified amount . It is also possible that the packages were filled out incorrectly, as is often the case. In order to continuously be reviewed for HAMP, you need to show a change in income. For example, when you last applied, you did not have rental income but now you do, or vice versa. Also, capitalization of all the arrears is the first step to mortgage modification. If you owe more than $100,000.00 in arrears, they must get added to the unpaid principal balance, including foreclosure fees and costs, and that becomes your new principal balance. When you do not have sufficient income, then your lender may elect to forgive some of your principal, or at the very least, it may defer up to 30% by adding a balloon payment to your agreement that would mature in 30-40 years. If your income is enough to show affordability without having to decrease your payments to 2%, extending the term to 40 years, or deferring some of the principal, then you are unlikely to end up with better terms under HAMP. Traditional modification may be another option if your net income outweighs your expenses (expenses include the mortgage payment that you are no longer making). You should consider speaking to a professional in order to determine what option will work best for you. Brooklyn, New York
Jan. 17, 2012 Jan. 15, 2012 Stopping foreclosure while unemployed.

 

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I am unemployed and facing foreclosure on my home that I have owned for over a decade. The court has accepted my request for time extension since I am scheduled for mediation in a couple of weeks. I also have a formal offer from an investor as the home has been up for sale since December. This offer has been submitted to my bank and is in the beginning stages of negotiation. My bank's short sale department tells me I can look at both options and make my decision based on what mediator presents to me and the bank. Do I have a chance of saving my home through mediation if I have no income other than my unemployment benefits? Should I take any job - no matter how low the pay is to be able to negotiate better at mediation? Should I file bankruptcy instead (I have approx $20K in debt, most of which is medical bills). The purpose of mediation is to determine what type of loss mitigation option you are suitable for in order to avoid foreclosure. If you have no income, then loan modification would not be an option. Oftentimes, borrowers do not understand what constitutes income. It is not necessarily a job. It could also be pension, disability, social security, rental income, even contribution from a family member who lives with you, etc. Basically 31% of your gross monthly income should be able to pay off your entire mortgage debt in the next 40 years at 2% interest. The 31% must cover principal, interest, taxes, and insurance. It is very likely that if you get a job, you would be able to afford a modified mortgage payment. If you file for bankruptcy, it may help you get rid of your other debts, but as far as your mortgage loan is concerned, the bank will file a Motion for Relief from Stay, which if granted, will allow the bank to proceed with foreclosure. The only true way you can modify your loan is by showing affordability. Brooklyn, New York
Jan. 13, 2012 Jan. 11, 2012 Pursuing short sale on a property owned by a spouse

 

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My husband purchased a home under his name some time before we got married and everything on this property is registered under his name. The mortgage principal on this property is currently $20k less than the original purchase price, while the short sale asking price is $60k less. We didn't want to pay $40k just to sell the home, and thus a real estate agent suggested that we do a short sale, which we have been pursuing since September and thus haven't been making mortgage payments in hopes the house would be sold by now. We do have money saved up, but it is all under my name in my bank accounts. Are we doing the right thing by not making payments or should we start paying our mortgage? The bank is constantly sending us letters saying they will begin the foreclosure process on our home and our real estate agent tells us this is normal. Will this situation affect my credit score or just his? Will this matter the next time I purchase a home since we are married now? Can the bank come after us to collect? When you stop making your mortgage payments for over 90 days, the bank can begin a foreclosure action against your husband (since he is the borrower under the loan so long as the bank abides by proper procedural rules). Whether you can now resume making mortgage payments depends on whether the bank has legally commenced a foreclosure proceeding (i.e. you had to be served with summons and complaint). Short sale is an option that is pursued when you want to sell your home but your home is worth less than the mortgage. Short sale is considered an alternative to foreclosure, the benefit of which is that the bank cannot obtain a deficiency judgment against you and then try to enforce it (if you have joint assets, then the bank could try to enforce such judgment against your assets). What you have to keep in mind though is that the difference between what you owe to the bank and what the bank actually recovers at sale will be used as income when you file your tax returns, i.e., if the property sells for the asking price of your short sale, you might end up paying taxes to the IRS on the $40k that was forgiven by your lender. So, to cut more to the chase: (1) only your husband's credit score will be negatively impacted as he is the only borrower under the note (his score is already adversely affected because he is no longer making payments); (2) you will be able to purchase another home in the future...if you intend to purchase another home with your husband before his credit recovers, then you may be better off taking out a mortgage in your name (your husband can still be a co-owner of the new property but you could be the sole borrower); and (3) the bank can go after you to collect only once the lengthy foreclosure process is actually completed (remember: it does not apply if you conduct a short sale other than the money you would owe to the IRS at the end of the year).

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Jan. 9, 2012 Jan. 6, 2012 Miscalculated escrow payments by the bank

 

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The bank that holds my mortgage miscalculated my escrow payments for last year and I now have a substantial shortage. They claim they were misinformed by the mortgage holder they purchased the loan from. Should I be held responsible for this discrepancy? You can request a payment history from the bank and see how the funds were applied. You should know what your escrow payments are, as you get the statements from the bank and from the city/county. Therefore, if you notice a mistake, you can argue with the bank over the wrong information. Please note that taxes typically go up every year or so, and that your taxes could have gone up a while back and you might not have noticed, while the bank has rendered the difference. Typically, if there was a mistake made on the part of the bank and you can prove that mistake, the banks will credit your account for the mistake made on their part. Brooklyn, New York
Jan. 3, 2012 Jan. 1, 2012 Restarting the loan modification process after the first loan modification window has expired

 

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The bank I have a mortgage with has offered me a loan modification in September. However, due to minor changes in my records a couple of years ago, a notary public has refused to notarize my loan modification papers. I contacted my bank on the same day and subsequently in later days to come. Only now (three months later), my bank has accepted my amended records, but then said that my window for loan modification has expired two days prior to that. What can I do now? Unfortunately, the only place you can go from here is restarting the process from scratch. You will have to resubmit your paperwork and hopefully if the income is similar to what it has been at the time of previous submission, you will be approved with similar terms. The banks' timeframe for accepting paperwork late is usually stretched out until the end of the month approval was granted (i.e. the entire month of September). Unless the bank issues a new loan modification agreement with a new deadline for return, the original offer for a modification agreement is no longer on the table. The good news is that since the agreement from September has not been properly enforced, the bank can still issue a new modification agreement (although it is in the bank's discretion). You should try to speak to the same negotiator who issues the original modification agreement, supplement the bank with updated pay stubs and bank statements, probably re-date a few forms, and if the bank is working in good faith, it might re-issue the modification agreement with similar terms. Brooklyn, New York
Dec. 30, 2011 Dec. 28, 2011 Walking away from under water property

 

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One of my properties is under water and I would like to walk away from it. The bank knows my financial situation and I am not in hardship. What is a proper legal procedure I can follow to walk away from my house? In a somewhat rare situation like yours, it is best to negotiate a deed-in-lieu of foreclosure with the bank. If you simply walk away from your house now, the bank will follow its typical foreclosure routine and obtain a deficiency judgment against you. What makes your situation rare is that you actually have assets to satisfy deficiency judgment, as opposed to most other cases where the bank would not be able to enforce such deficiency. Therefore, in your situation, it is best to do the deed-in-lieu to the bank as long as it has been agreed that you walk away with a clean slate, i.e., no deficiency. Please note that the bank will usually consider a deed-in-lieu as the last resort. They would want you to try to do a short sale first. With short sales, there may be tax consequences and again, in your case, it would have to be properly negotiated with the bank to avoid that. Also, please note that in order to do a deed-in-lieu, the property must not be occupied by tenants. Brooklyn, New York
Dec. 25, 2011 Dec. 23, 2011 Speeding up the  foreclosure process

 

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My home is in foreclosure and I don't know yet when the mortgage company will take over my home. My homeowners insurance will term next month and the mortgage company should start covering the house through the forced coverage. Given that my family is currently in financial distress, I would like get this home off our backs as soon as possible, since otherwise we could end up with a large financial obligation that we cannot afford. I am looking for suggestions on how to speed up this process. If your mortgage is under water (i.e. mortgage is greater than the appraised value of your home) and you are not renting any of the space to tenants, then consider contacting the bank to do a deed-in-lieu of foreclosure. Basically, you transfer the deed of the property to the bank and you walk away debt-free. It is then the bank's responsibility to sell the property. Generally, the bank may require you to try to do a short-sale first (that is if the mortgage is under water). If you still have equity in your home, then you can always just try selling your home and paying off the debt to the bank. Otherwise, foreclosure process is very lengthy and will take a couple of years to be completed, especially in NY, and then the bank may obtain a deficiency judgment against you for the remaining balance (the difference of what is owed to the bank and what is recovered at foreclosure sale). Call an experienced attorney today to discuss your options. Brooklyn, New York
Dec. 21, 2011 Dec. 19, 2011 Unaffordable mortgage payments coming off the interest only loan

 

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The term on my interest only loan will end soon and my home is under water. At the end, I will end up owing $100,000 more than what my home appraises to with 20 years left to pay off. Given the above, I do not qualify for refinancing nor any government programs. Also, my new mortgage payments will be more than double of what I have been paying so far, and I will not be able to afford them when they start to kick in. What can I do? The first step for you is to find out if your lender participates in the government's Making Home Affordable program (most major banks do). If you have sufficient income and have not yet defaulted on your mortgage, you may be able to refinance through Home Affordable Refinance Program (HARP). Another option is loan modification but beware that even though it is not required by law, most banks require that you default on your payments before you are considered for loan modification. Start off with calling your bank and inquiring as to what programs does the bank participate in. If they tell you to default on your mortgage payment, then a whole new can of worms opens up (i.e. ruined credit; potential foreclosure if the modification is not resolved) and I would recommend looking into other options first. The bottom line is--the bank does not want your home, and even more so if your mortgage is no longer secured by equity in your home. Brooklyn, New York
Dec. 16, 2011 Dec. 14, 2011 Unaffordable loan modification terms

 

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I have been applying for a loan modification for over a year. Finally, I got approved but my modified mortgage payment is only $50 less than my original payment. I still cannot afford this new monthly payment. If I do not sign this agreement will the bank continue to work with me in trying to modify my mortgage under better terms or will the bank automatically foreclose on my home? This is a tricky area. There are many factors that come into play in a situation like this, such as: monthly household income, the value of the home in comparison to your debt, how many payments were missed, whether your escrow has gone up, whether the loan is FHA (FHA loans generally end up in slightly higher monthly payments because different rules apply), etc . For instance, if you were qualified under HAMP and 31% of your gross monthly income is only $50 less than the original monthly mortgage payment, then the new amount is accurate, as it based entirely on your gross monthly income. Had 31% of your gross monthly payment exceeded the original monthly payment by any amount, you would have been denied altogether, citing that the original mortgage payment was affordable. This is precisely why it is hard to answer a question like this without knowing all the details of the situation. However, generally, once a loan modification agreement is issued, the bank will not conduct another review unless there is a material change in circumstances (for example, if your household income has increased since last submission of documents). Most banks conduct a review for HAMP and traditional modification. It is sometimes possible that a new review will result more favorably. It is always a good idea to consult with a professional who could accurately depict the picture of your available options before you choose an option that may later be regrettable. In any case, failure to accept proposed loan modification will not result in immediate foreclosure in NY. It is still a long and complex legal process that must run its course. Brooklyn, New York
Dec. 12, 2011 Dec. 10, 2011 The option of deed-in-lieu for those rejected for a loan modification

 

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I have been rejected for a loan modification. Should I do a deed-in-lieu? If I take that option, can I continue to live in my home? The idea behind doing the deed-in-lieu of foreclosure is that the borrower transfers the ownership of the home to the bank, thus, wiping out the entire mortgage debt. Some banks even provide a financial incentive for the borrower to do so. The reasoning behind it is that the non-paying owner leaves, allowing the bank to try to re-sell the property, and this way, earn some, if not, all of its money back. As such, you cannot continue to live in the premises unless specifically agreed so with the lender. Brooklyn, New York
Dec. 8, 2011 Dec. 6, 2011 Foreclosure auction and eviction

 

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If my home does not sell at a foreclosure auction, will I be able to stay in my home? Generally, if there are no bidders at a foreclosure auction, the bank that owns the loan usually bids a nominal amount to take possession of the property. This way, the bank can at least have some security that if it resells the property at a later time, it will recover some, if not all, of the money that was originally borrowed but not paid back. It is further important to note that unless no one is living at the property at the time of sale, the bank will have to institute an eviction proceeding to get the old owner or tenants out of the house. Essentially, the eviction process takes time. Eventually, unless you bring an Order to Show Cause to the Court to prove otherwise, the bank will prevail at its eviction proceeding and at that point, you will no longer be able to stay at your old home. Since it is in the bank's best interest that you leave as soon as possible, oftentimes, the banks will offer different financial incentives to help speed up that process and avoid an eviction proceeding (some banks will pay for your move and offer extra money to start over, but that is not a rule of thumb). Brooklyn, New York
Dec. 4, 2011 Dec. 2, 2011 Does 'trial' modification lead to 'permanent' loan modification?

 

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We have been working with the bank for the past two years to get a loan modification and now we are losing our house to foreclosure. Originally, we were put on a payment plan and have been paying less than what the actual mortgage payments were for the past two years. The bank has just contacted us with a decision that we were denied a loan modification stating that our debt to income ratio is not between 10-55%. What can we do? You most likely were given a "trial" loan modification in late 2009 or early 2010. Sadly, even as early as 2010, banks offered "trial" modifications over the phone without verifying financials, which is the essential component for banks now to offer a "trial" modification, and yet alone, permanent modification. I just successfully resolved almost an identical case, where the borrower was on a "trial" modification, paying a reduced sum for a duration of 18 months. After 18 months, he was denied a permanent modification. Generally, if foreclosure action has already been commenced, the court will regard this kind of a denial as bad faith and may even sanction the bank, but in this case, the bank did not commence a foreclosure proceeding and continued to accept payments from him and applied them as partial payments towards his original monthly mortgage payment (once foreclosure is commenced, the bank can no longer accept any payments from borrower other than to fully pay off the loan). Accordingly, upon denial, we resubmitted all the financial paper work to the bank and the financials showed affordability to the bank and my client was offered another modification plan (traditional, as opposed to HAMP). He was in a "trial" for 3 months, paying even less than he paid for those 18 months and after 2nd payment, he received a permanent modification agreement, offering very similar terms to HAMP (starting with 2.175% and eventually rising to 4.375% fixed). The bottom line is you still have options and can have a favorable outcome. You just have to reach out to an experienced attorney, who could help you and not mislead you. Brooklyn, New York
Nov. 30, 2011 Nov. 28, 2011 Short Sale vs. Foreclosure: Holding the mortgagor responsible for the difference between mortgage principal and short sale offer

 

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We are selling our house via a short sale and have received an offer of 25% less than the mortgage principal we owe on the house. The bank has accepted the short sale offer but asked that we pay an additional $15,000 to the offer. The bank stated that if we pay the $15,000, we will be released from the remaining debt on our loan. What is the law regarding holding a mortgagor responsible for the difference between the mortgage principal and the short sale offer? Should we pay the $15,000 requested by the bank (we made a counter offer of 25% of what the bank requested), or should we let the house go into foreclosure? The foreclosure date has been scheduled within two months from now. Generally, conducting a short sale has tax consequences for the borrower in terms of the difference between the sale price and the mortgage amount. In today's economy, where the banks benefit a lot more from a short sale rather than waiting for many years to conduct a foreclosure sale, they are willing to negotiate with the borrower by releasing some or all of the additional debt. It is always a good idea to negotiate with the bank and you did the right thing by giving a counter offer. However, what is not clear to me is whether the bank has asked for additional $15,000 specifically to discharge additional debt or because they think the short sale offer is too low, i.e., they think they could receive $15,000.00 more if the bank conducted the sale itself (usually the banks look at today's fair market value when deciding what amount to settle for). As far as letting the home go into foreclosure, that too, may have severe financial consequences. The bank may obtain a deficiency judgment against you and go after your other personal assets to try to recover some of its money that were previously lent to you. Both short sale and foreclosure will adversely affect your credit but more so with foreclosure than the short sale. If the bank is willing to accept a deed-in-lieu of foreclosure, that could be more advantageous to you, as you could avoid a deficiency judgment and it would be less harmful to your credit. However, the banks are not generally willing to entertain the idea of a deed-in-lieu when a short sale is still a possibility. Between two evils you are currently faced with, I would definitely say that a short sale is a lesser evil than foreclosure. As a side note, if you need more time to go through with the short sale and your foreclosure sale date is approaching, bring an Order to Show Cause to court to stop the foreclosure sale on an emergency basis. For example, short sale will take place soon and you need more time.

As a New York State Licensed Real Estate Broker, Attorney Svetlana Kaplun has the expertise to assist interested homeowners in all steps of the short sale process including: bank negotiation and short sale approval, property listing and sale.

Brooklyn, New York
Nov. 26, 2011 Nov. 24, 2011 Refinancing vs. Loan Modification

 

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I am thinking of stopping to make mortgage payments so I could modify my loan.  What's better: refinancing or loan modification? A lot of mortgage broker companies, as well as other types of real estate companies, that try to earn a living since the real estate market collapsed, will try to solicit you to get your loan modified with them. They might call or send you notices telling to that you are already approved to modify your loan at 2%. The actual process, however, is much more complicated before you have defaulted, i.e., stopped making your mortgage payments, your credit score may be good, if not excellent, to refinance your mortgage under today's fair market rate, which could often be similar, if not the same rate that is being offered once the loan is modified. If you go with the option of refinancing your loan, then your credit history stays untouched and you win twice. People who default on their mortgage payment should only be those who truly face some financial hardship (which is essentially a prerequisite to getting your loan modified). If you are experiencing financial distress and you defaulted or plan to default on your mortgage payments, the bank cannot commence a foreclosure action immediately as they must first give you 90 days to accelerate the entire remaining balance due under the note and mortgage agreements. Please beware that your credit score will start to drop immediately after you missed one payment and will progressively get worse, thus refinancing will no longer be an option. Modification then may be your only option to save your home and potentially lower your monthly payments (with FHA loans, it is very hard to lower monthly mortgage payments), however, you will not know if your loan will be modified until it is actually modified. Even after it is modified, it will take years for your credit history to recover. Before you default, you are in superior position--you have the time and resources to weigh all your options... Brooklyn, New York
Nov. 22, 2011 Nov. 20, 2011 Should I stop making home mortgage payments to get a loan modification?

 

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I keep on getting phone calls from mortgage brokers trying to convince me to stop making mortgage payments on my property in order to modify my loan at 2%. Should I actually stop making payments in order to get a loan modification? A lot of mortgage broker companies, as well as other types of real estate companies, that try to earn a living since the real estate market collapsed, will try to solicit you to get your loan modified with them. They might call or send you notices telling that you are already approved to modify your loan at 2%. Unfortunately, it is often true that banks themselves will also advise you to stop making mortgage payments in order to qualify for a loan modification. What they don't tell you is that you might not qualify. Most people do not realize that once you stop making monthly payments, a foreclosure action may be commenced after 3 months, and from that point on, a long, tedious process begins to save your home. Your unique circumstances will play a big role as to whether your loan will be modified. If you have not yet defaulted, first call your bank and see if they will even entertain an idea of working on a loan modification for you prior to default. It is always your best bet to consult with an experienced attorney and allow the attorney to negotiate with the bank on your behalf. Loan modification may save you up to 40% in your monthly mortgage payments but the process can also cause you a lot of stress and uncertainty (i.e. foreclosure). Weigh your options carefully before you voluntarily choose to default or believe someone that you are already approved for a loan modification! Brooklyn, New York
Nov. 18, 2011 Nov. 16, 2011 Can the bank go after my assets if my home is foreclosed upon?

 

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I own a second property that is under water. If the house is foreclosed on can the bank pursue any other assets that I have? If the house is foreclosed upon, the bank can get a deficiency judgment (the difference between what the bank recovered at a sale and what was owed) against you from the court and then try to go after your assets to try to satisfy such a deficiency. If you know in advance that you will not be resisting the foreclosure action taken by the bank, you might want to consider doing a deed-in-lieu of foreclosure, whereby you voluntarily transfer the deed of the property to the bank and they release you from any financial obligation to them. The bank will usually agree to a deed-in-lieu after you have tried other types of loss mitigation options, like a short sale. In a short sale, you would sell the property to a 3rd party at a fair market value but for less than is owed to the lender. Please note that unless a short sale is properly negotiated with the lender, there may be tax consequences to you as a result of a short sale. The banks typically prefer a short sale over a deed-in-lieu because they do not want be the ones then responsible for selling your home. If you can show to the bank that you tried to do a short sale but failed, they will consider a deed-in-lieu. Brooklyn, New York
Nov. 13, 2011 Nov. 11, 2011 Can second bank foreclose when first loan is already modified?

 

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I have two mortgages on my home. The first was recently modified under HAMP. The 2nd lien holder sent me a letter stating that they do not participate in the government program and I was denied for a modification for 2nd. My house appraises to $300,000.00. My first mortgage is $330,000.00 after modification. I cannot afford to make my second mortgage monthly payments and am now 2 1/2 months behind. The 2nd bank is threatening to foreclose on my property even though I am paying my first mortgage. What can I do? The 2nd mortgagee (2nd lender) is an unsecured creditor because there is no equity left in your home to preserve the 2nd mortgagee's interest. If they were to commence a foreclosure proceeding right now, they will incur fees and costs for foreclosure that they would not be able to recover. If the sale took place right now, the 1st lender would get around $300,000.00 that the home appraises to and would end up losing the other $30,000.00. The second lender would get nothing at all because everything would go to the first. Therefore, the second lender is in the worse situation. Some banks choose to extinguish these debts altogether or they might try to settle with you by agreeing to a haircut on the debt you owe them. Alternatively, just because the bank does not participate in the government program does not mean they cannot offer you their own traditional loan modification. After all, it is in their best interest to do so. It is in your best interest to conduct proper negotiations with the financial institution that owns your debt. Brooklyn, New York
Nov. 10, 2011 Nov. 9, 2011 Does bank review automatically put foreclosure on hold?

 

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Our bank said that our mortgage qualifies for a review. There are no motions that were granted by the judge yet. Actually, our court process is just in the beginning stages. I was wondering if a judge could make a decision while we are waiting for a review to be done? Can foreclosure be put on hold while we are in review? The review process that you are referring to is the bank's review of your financial documents for a loan modification. Foreclosure process, today, from start to finish, takes a quite long time. In NY, before a judge could render any decision (Judgment, Order of Reference, or Motion for Summary Judgment), you are first required to attend a mandatory court settlement conference. While you are in the settlement conference part, your foreclosure action is stayed, or put on hold. That means the bank cannot move forward with its foreclosure process, the judge cannot render any decisions, and definitely, no sale at an auction can be scheduled.  However, even if you are past the settlement conference stage and are approaching a Judgment stage, the bank can still review and approve you for a loan modification, which would essentially end the entire foreclosure proceeding.  Just remember: it is in the bank's best interest to try to modify your loan rather than to foreclose. Brooklyn, New York

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