This past April, property mortgage lenders served defaults on more than 103,000 American households. To date, one in 387 homes have received a foreclosure notice so far in 2010, according to ForeclosureDataBank.com.
Florida is being billed as one of the most troubled states – along with California, Michigan Illinois and Nevada. Together, these five states accounted for 52 percent of foreclosure actions nationwide in April of 2010. Locally, there have been more than 12,500 foreclosures filed in Orange County this year alone.
Foreclosure notices are affecting homeowners across Orange County with more than 12,500 already filed this year alone, but for those affected, there are options.
If foreclosure has become a legitimate threat for you, what should you do? What’s the first step? According to foreclosure case expert Jennifer Englert, partner at The Law Offices of Beechner & Englert in Avalon Park, the first thing you should do is include an accountant or attorney specializing in foreclosures into their inner circle.
“Depending on how many homes are at issue and what other debt they may have, there might be considerations about loan modifications, short sales or bankruptcy,” she says. “There is a lot of incorrect advice floating around so it’s better for the homeowner to include a professional who handles these matters everyday from the beginning rather than down the road to plan the best course of action before the homeowner is out of options.”
When a homeowner wants to save their house, the first option to try is a loan modification in most cases. “Many people have been frustrated with this process but banks are getting better with it and a lot of the games they were playing in the past year have stopped,” says Englert. “If modification cannot work, there are options for a short sale or deed in lieu of foreclosure.”
She cautions, however, that the rules are continually changing for both modifications and short sales and, the end result is often an easier process for the homeowner.
As for just walking away from a home – an option rising in popularity due to the notion of essentially living mortgage free for a finite amount of time – Englert cautions against the move. “There really is no walking away,” she says. “The mortgage company will get what’s called a ‘deficiency judgment’ which they have years to collect on.”
In fact, lenders have up to five years to seek the initial judgment and 20 years to collect on it.
Granted, some going through the foreclosure process can live free and clear for more than a year before being evicted, and many of these borrowers are even willing to accept that their credit history will be damaged because of the decision. Yet, they rule in favor of it because of the money they will save living mortgage free.
Englert says that although the mortgage company may not go after them for the remainder of the unpaid loan – the deficiency judgment – they have the option and that will hang over the homeowner, in addition to the credit damage, unless they negotiate with the bank to forgive the debt. “There are so many other options available, walking away is the last thing someone should do,” she says.
In Orange County, mediation is now required in all foreclosures, so the bank must sit down and meet with the homeowner in question. “Now it’s a bit easier to speak with someone from the lending institution because they are required to meet with you,” says Englert. “This is the opportunity to gather all your financial records and show the bank you will not be able to pay the debt anytime soon – this is the time to negotiate that they will not come after you for the money.”
Still, the bank may look at other financial assets the homeowner has, including other homes or vehicles to collect the unpaid debt.
Other options include government programs that help with medications, putting the property up for a short sale and bankruptcy. “As far as short sales go, there are new rules in place to speed up the process as well and to help the debt be forgiven so it’s a good alternative,” she says. “A short sale also has the least impact on your credit report, whereas a foreclosure will usually stay on there for seven years with Chapter 7 bankruptcy coming in at about 10 years.”
For legal help homeowners can contact:
Orange County Legal Aid Society of the O.C.B.A., Inc.
100 East Robinson Street Orlando, FL
32801 407-841-8310.
Article by Corey Gehrold
