With the end of the national moratorium on mortgage foreclosures, millions of U.S. homeowners are at risk of receiving a letter from their lender advising them that, unless they update their mortgage payments, the lender will file a foreclosure complaint in court. And so begins a difficult process for the owner.
Although the moratorium has expired, some federal programs are still in place to help borrowers facing foreclosure. But there are limits to how much help these programs can provide.
For example, the US Consumer Financial Protection Bureau issued a new rule requiring lenders to contact a borrower in person or by phone within 36 days of the borrower’s first missed payment. Another rule requires them to send a written notice to the borrower within 45 days of a missed payment, encouraging the borrower to contact the lender and discuss options for the practice plans.
The problem with this and other federal programs is that they don’t require lenders to provide relief to a borrower, they only require lenders to contact the borrower and discuss options. Borrowers should definitely discuss workout plans with their lenders, but it’s important to have a back-up strategy in case you fail to come to a deal. At this point, your lender will almost certainly begin the foreclosure process. Let’s see what happens then.
It starts with the lender sending the borrower a notice that they are in default. In Florida, this is called a letter of violation. It tells you how much you owe the bank, asks you to pay that amount to discount your loan, and informs you that unless you pay them that amount, they will speed up the loan (forcing you to pay the full balance of the loan). mortgage) and seize your property.
If you do not pay the lender as stated in the breach letter, they will file a foreclosure complaint. If you don’t file a response to the complaint with the court within 20 days, the lender will get a default judgment and your house will be sold.
If you file a response, you will give yourself time to reach a settlement with your lender. Time is your friend.
Speaking of time, think about the impact of the COVID-19 pandemic on the justice system. As a result of the closings, the Florida court system has a backlog of nearly one million cases. Court administrators predict that it will take three years to clear the backlog.
What does this mean for a borrower facing foreclosure? With such a huge backlog, the court will focus first and foremost on resolving cases by any means possible. Florida law provides for an expedited process to quickly grant foreclosed lenders a default judgment. If you have been served with a foreclosure complaint, it is important that you act quickly to defend yourself. Lenders will not hesitate to seek a default judgment, and the courts will not hesitate to grant it.
On the other hand, if you actively defend foreclosure, lenders, faced with the possibility that their foreclosure cases take years to resolve, will be much more likely to settle with the borrower. And, given the sheer volume of cases lenders have to handle, these settlements are likely to be more favorable than they normally would be.
Foreclosure defense lawyers can advise you on your options.
Tom Algeo, [email protected], is licensed to practice law in Florida and Georgia. He is a lawyer specializing in defense in real estate law. Its Florida Foreclosure Guide is free to download from www.algeo.com.