Should You Consider a Deed In Lieu of Foreclosure?

When a homeowner has defaulted on their mortgage, it is common that they are seeking any way possible to avoid foreclosure of their property. One method of avoiding foreclosure that is commonly discussed is called a “deed in lieu of foreclosure.” While there can be benefits to using this method of foreclosure avoidance, it may not always be the best possible option for a homeowner. All options should be carefully weighed based on benefits and costs and considering the specific situation and needs of an individual homeowner.

What is a deed in lieu of foreclosure?

A deed in lieu of foreclosure is a legal instrument in which a mortgage borrower voluntarily conveys ownership interest to the lender. Once the homeowner turns over ownership rights, they are released from their mortgage debt. A deed in lieu of foreclosure can have certain benefits for homeowners as the transfer is voluntary, the defaulted debt is forgiven, and the lengthy and stressful foreclosure process can be avoided. However, the homeowner still loses their property and their credit score will be significantly affected as the mortgage was settled for less than the originally agreed-upon amount.

In addition, the mortgage balance often exceeds the value of the home, and a lender may not agree to a deed in lieu of foreclosure. If a lender does agree to a deed in lieu, it is in spite of the discrepancy between the balance and the property value and is often because it allows them to take ownership of the property without pursuing a foreclosure action in court. However, in this situation, the prior homeowner will risk a substantial taxation by the IRS due to forgiveness of the balance of the debt.

The deed in lieu agreement is hard to get, especially when the buyer demands a price too far below fair market value and when the bank believes that there may be other liens on the property. It is important to remember that simply exploring the option of a deed in lieu of foreclosure does not create an obligation to convey ownership. Instead, both the lender and the borrower have the right to withdraw from the negotiations prior to the signing of a final agreement. If a deed in lieu agreement cannot be arranged, there are other options to pursue to potentially avoid foreclosure.

New York's Home Equity Theft Prevention Act

In 2006, the New York legislature passed the Home Equity Theft Prevention Act (HETPA)¹ to protect the interests of homeowners in the sale of their homes when they are in default or foreclosure. When facing possible foreclosure, property owners are often in a vulnerable position and buyers may easily take advantage of them and acquire ownership of the distressed property through abusive or fraudulent means. For this reason, HETPA sets out strict requirements for contracts in this situation. If the requirements are not met, the seller could have up to two years to rescind the contract and reacquire ownership interests in the property in question.

For several years following the enactment of HETPA, many mortgage lenders were not clear on whether the contract requirements and the possible two-year rescission period applied to deeds in lieu of foreclosure, as there was no explicit exclusion. For this reason, many lenders were hesitant to accept this type of deed instead of proceeding with a foreclosure. In 2011, the banking section of the New York Department of Financial Services published a letter² indicating they did not interpret HETPA as applying to deeds in lieu of foreclosure. Despite this letter, many New York mortgage lenders may still be reluctant to accept this alternative to foreclosure.

Contact an experienced New York foreclosure attorney

Even if a deed in lieu of foreclosure is not the right option for you, there are other alternatives to avoiding foreclosure, such as a loan modification or a short sale. Experienced Long Island foreclosure lawyer Ronald D. Weiss has nearly three decades of experience assisting homeowners with foreclosure solutions, so please call today at 631-296-0912 if you need assistance.

References:

¹http://www.dfs.ny.gov/consumer/hetpa.htm

²http://www.dfs.ny.gov/legal/industry/il110510.htm

Challenging a NY Foreclosure When a Lender Fails To Provide Notice

In New York, the Real Property Actions and Proceedings Laws (RPAPL) §1304¹ set out stringent requirements for a mortgage lender to properly notify a lender in default of an impending foreclosure action. When the law was first passed, it only applied to mortgages considered to be “subprime,” “high cost,” or otherwise “non-traditional.” However, the state legislature amended the statute in 2010 to clarify that the notice requirement was applicable to all foreclosure actions.

Some of the requirements for pre-commencement notice to homeowners include the following:

·         The notice must be sent at least 90 days prior to the filing of the foreclosure action.

·         The notice must be sent by both first-class mail and by either certified or registered mail.

·         The notice must provide the following statement in at least 14-point font: “YOU COULD LOSE YOUR HOME. PLEASE READ THE FOLLOWING NOTICE CAREFULLY.”

·         The notice must inform the owner of how many days they are in default and how much will cure the default.

·         The notice must advise homeowners who are struggling financially that there are alternative options to foreclosure and must include a list of housing counseling agencies approved by the New York government.

·         The lender must notify the New York Superintendent of Banks within three days after sending the notice to the homeowner in the mail.

Despite the clear legal requirements set out for providing foreclosure notice, many mortgage lenders fail to meet this notice requirement. In some cases, a lender will claim compliance with notice requirements in the foreclosure complaint but will fail to provide any proof that notice was provided or filed with the Superintendent of Banks.

Cases regarding failure to notify

New York courts have been strictly enforcing RPAPL §1304 as demonstrated in several cases. For example, in Aurora Loan Services LLC v. Weisblum, 85 A.D.3d 95, 103 [2 Dept. 2011], the court held that proper notice was a “condition precedent” and that failure to provide proof of compliance with the law required dismissal of the foreclosure case. In its decision, the court made clear that simply alleging compliance was not enough to satisfy the requirement, but that a lender would have to submit an affidavit of service in order to fully comply with the law. New York courts have reaffirmed this decision, holding that an affidavit of service was required in both Deutsche Bank v. Spanos, 102 A.D.3d 909, 961 N.Y.S.2d 200 (2d Dept. 2013)³ and in Wells Fargo Bank v. Burke, 125 A.D.3d 765,-- N.Y.S.2d--(2d Dept. 2015). Courts have required such strict compliance that even producing a copy of a notice letter days more than 90 days before the filing because there was no apparent date of mailing or postmark on the notice. In that case,⁴ the court denied a motion for summary judgment and dismissed the case.

A qualified New York foreclosure lawyer can identify noncompliance with the law

If you are facing foreclosure action, it is critical to have an experienced Long Island foreclosure attorney handling your case who can identify when a mortgage lender has not fully complied with the law. An attorney can use such procedural defects to have the case dismissed and motions for summary judgment denied. Though the mortgage lender may be able to refile the case, they must provide at least 90 days of notice before filing again, which gives you more time to figure out an alternative solution to the foreclosure. Please do not delay in calling NY foreclosure attorney Ronald D. Weiss at 631-296-0912 for assistance today.

http://www.ny-bankruptcy.com/services/foreclosure-solutions/

References:

¹http://codes.lp.findlaw.com/nycode/RPA/13/1304
²http://www.courts.state.ny.us/courts/ad2/calendar/webcal/decisions/2011/D31087.pdf
³http://www.courts.state.ny.us/courts/ad2/calendar/webcal/decisions/2013/D37147.pdf
⁴http://www.nycourts.gov/reporter/3dseries/2014/2014_07047.htm

Timeline of a New York Foreclosure

A report published by the state Department of Financial Services¹ indicates that New York has one of the longest foreclosure timelines in the United States at an average of 934 days. This means that many homeowners must live in fear and uncertainty regarding their home ownership status for nearly three years before their case is resolved. During this time, homeowners face many confusing and complex stages of the foreclosure case and may not realize all of their rights and possible legal defenses applicable in their case.

The following is a brief overview of the foreclosure process in New York. For more specific information, do not hesitate to consult with an experienced foreclosure attorney today.

^·          Notice of breach of the mortgage contract – This notice must inform the property owner of options on how they can cure the default and avoid foreclosure, as well as housing counseling agencies in the area. If the owner occupies the property, this notice must be sent at least 90 days prior to a foreclosure action is filed.

^·          Filing of a foreclosure action with the court – This can happen as soon as 90 days after issuing you notice, however, many mortgage lenders delay the filing for a variety of reasons. The lender cannot delay indefinitely, as they only have six years to do so in accordance with the New York statute of limitations.

^·          Filing of Service of Process – You may be served with notice of the foreclosure action in person, by mail, or by another method. Depending on the method of service, you will only have 20 or 30 days to respond with a legal answer to the foreclosure so time is of the essence.

^·          First Mandatory Settlement Conference² – New York requires that the first settlement conference take place within 60 days of filing. However, if you cannot reach an agreement, the evidence-gathering and negotiations stage may take a long period of time. Additionally, because of the significant backlog of foreclosure cases in New York courts, cases may be continued numerous times before they reach trial or any other type of resolution is reached.

^·          Motion for Reference OR Motion for Summary Judgment – If the defendant has not answered the summons and complaint, the plaintiff would file a motion for an order of reference, where the plaintiff just tries to show the Court that the bank is on a technical basis entitled to relief; if the defendant has answered the summons and complaint, the plaintiff would file a motion for summary judgment where it tries to persuade the Court to decide any contested issues in favor of the bank. Either motion is made after the foreclosure conferences are discontinued and effectively are made in most cases a year or more after the foreclosure action had started. The effect of an Order being granted for either motion is that the Court would appoint a referee to compute the amount owed to the bank and to conduct any foreclosure sale.

^·          Judgment of Foreclosure and Sale entered and auction of the property – This is the final stage of the foreclosure case and can happen as long as three years after the initial filing in New York. Until this judgment is entered, you still have legal options to save your home.

Throughout this period of time, you will have many different opportunities to have your attorney negotiate with your mortgage lender to find a possible alternative solution to foreclosure. For example, your lawyer can discuss the possibility of loan modification, short sale, deed in lieu of foreclosure, and more to help you either catch up with your payments or minimize the losses you incur as a result of the foreclosure action. If you come to such an agreement, the foreclosure process may be significantly shortened.

Discuss your case with an experienced foreclosure attorney as soon as possible

The foreclosure process in New York can be long and arduous. However, with the help of a skilled foreclosure lawyer, you can expect the best result possible in your case. An attorney will handle every step of your case so that you do not have to put your life on hold for months or even years. If you have received notice of a foreclosure or are seeking options to catch up with your mortgage payments, call the law office of Ronald D. Weiss, P.C. at 631-296-0912 for assistance.

http://www.ny-bankruptcy.com/services/foreclosure-solutions/foreclosure-defense/

Reference:

¹http://www.dfs.ny.gov/reportpub/fore_proc_report_052015.pdf

²https://www.nycourts.gov/litigants/foreclosures_overview.shtml

3 Important Questions To Ask Your New York Loan Modification Lawyer

When a homeowner falls behind on his or her mortgage payments, they may be facing the loss of their home through the legal process known as foreclosure. There are several ways to avoid foreclosure, including pursuing a loan modification with your mortgage lender, which involves modifying the terms of your mortgage contract in a way that makes it easier to make your payments and allows you to keep your home. Importantly, modifying a contract can require significant negotiation, so it is highly advisable for anyone seeking a loan modification to talk to an experienced lawyer.

When you first meet with an attorney, there are some questions that you should ask. Some of the most important are discussed below.

What are my options?

Loan modification is just one of several ways that you may be able to avoid foreclosure. In addition to modifying the terms of your mortgage contract, bankruptcy and foreclosure defense may be able to help. Some basic information about each is discussed below:

• Negotiations – A mortgage modification is one out of several negotiations that a defendant can seek in a foreclosure matter. Other agreements sought are: short sales, forbearance agreements, deed in lieu agreements, short payoff agreements, agreements to allow a voluntary sale etc. However, by far the most sought agreement with the lender is a modification since it would usually allow the borrower to remain at the property and to cure and reorganize the mortgage loan.

·         Bankruptcy – Both Chapter 7 and Chapter 13 bankruptcy can halt foreclosure proceedings due to the protections offered by the automatic stay, which is an injunction that immediately stops any collection activity the moment a bankruptcy is filed. Furthermore, Chapter 13 often allows homeowners to restructure their loan in such a way as to stay in their homes as long as long as they keep up with their court-approved payment plan.

·         Foreclosure defense – There are often several ways in which a homeowner can directly defend against a foreclosure action, including drawing attention to procedural defects in the way the case was brought, inability to establish ownership of the mortgage, or fraudulent mortgage lending practices.

How long will the process take?

Foreclosure is a very time-sensitive issue. In many cases, a lender files a foreclosure action as soon as they are legally able to do so. For this reason, it is important to keep your attorney fully apprised of your situation and determine how much time you may have to pursue a loan modification.

What are the costs associated with loan modification?

Some attorneys operate on a flat-fee basis for loan modification services while others bill their clients hourly. Still others may base their attorney’s fees on obtaining a certain result for their clients. You should determine which way your potential attorney charges legal fees and obtain an estimate for the total cost of loan modification representation.

Contact a Long Island foreclosure lawyer today to discuss your situation

Individuals who are facing foreclosure should talk to an experienced lawyer as soon as possible. In many instances, the help of an attorney can help people keep their homes and modify their loan in a way that makes keeping up with their payments significantly easier. To schedule a free consultation with Long Island foreclosure attorney Ronald D. Weiss, call our office today at 631-296-0912 or send us an email through our online contact form.

http://www.ny-bankruptcy.com/services/foreclosure-solutions/foreclosure-defense/

References:

¹ http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics

² http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics

New York Foreclosure Crisis Continues

Even though overall foreclosure rates across the United States decreased by more than 24 percent from July 2014 to July 2015,¹ New York still has one of the highest rates of foreclosures in the nation—second only to New Jersey. Even the State Comptroller recently issued a report² indicating that the foreclosure crisis in New York was not even close to over and, in areas surrounding New York City, the foreclosure rate seems to be only getting worse. For example, the report shows that pending foreclosure cases in the Long Island area increased by 63 percent from 2013 to 2015 and there were close to 41,000 pending cases.

On top of causing tens of thousands of homeowners to face threat of losing their homes, the New York court system has also been affected by the overwhelming number of foreclosures in the state due to the judicial foreclosure process. Homeowners and lenders reportedly spend an average of 900 days on a single home from the date of the court filing to the date of the final foreclosure sale. With a huge number of cases lingering in the legal system and the number of new foreclosure cases being filed, these mortgage cases make up an estimated 30 percent of the caseload of the civil courts.

In addition to clogging the court system, the length of a foreclosure case makes it more difficult for struggling homeowners, as well. During the case, added interest and fees continue to pile up, making it more and more difficult that they will overcome their debt issues. The thousands of families who are regularly displaced from their houses then often put a strain on the communities and on other taxpayers. Many potential solutions to the New York foreclosure crisis have been suggested, but none have been effectively enacted to begin to solve the problems.

Consult with an experienced foreclosure lawyer as soon as possible

If you are one of the many homeowners facing foreclosure, your first call should be to a skilled foreclosure attorney at the Law Office of Ronald D. Weiss. We strive to protect the rights of homeowners in all situations and help them defend against foreclosure. Please call today at 631-296-0912 for help.

References:

¹http://www.housingwire.com/articles/35001-corelogic-national-foreclosure-inventory-shrinks-28-since-last-year

²http://www.housingwire.com/articles/34785-new-york-comptroller-states-foreclosure-crisis-far-from-over

Why Was I Denied for a Loan Modification?

Modification of your mortgage loan¹ is an important tool for struggling homeowners to avoid foreclosure and stay in their homes. Unfortunately, some homeowners are surprised to learn that their application for a modification was denied. Denials can occur even if homeowners actually meet all of the qualifications for a modification.

Too many property owners believe that they can handle the application process on their own, without the assistance of an experienced foreclosure attorney. However, mistakes during the application process are a primary reason for denial. The following are some errors that homeowners commonly make on modification applications:

·       You fail to meet deadlines for submitting all of your paperwork.

·       You calculate your income incorrectly for debt to income (DTI) and net present value (NPV) calculations. This is a particular risk for self-employed homeowners.

·       You disclosed sources of income that should not be considered for the purposes of a loan modification.

·       You fail to send all of the requested documentation. Lenders request paperwork with updated numbers on a monthly basis and, too often, documents are mysteriously lost and can be requested again. If you have a full-time job (or two), a family, or other important obligations, you may not have the time and energy to devote to these constant requests for documentation.

·       Your letter of hardship² did not contain the right information. Lenders have specific requirements for “hardship” when deciding whether or not to approve a loan modification. Not only do you have to prove hardship in your latter, but also express your willingness and ability to pay your mortgage if the modification is granted. This balance is often difficult to achieve if you are not familiar with lender policies.

Contact an experienced foreclosure attorney for assistance

All of the above errors can be easily avoided if you contact a qualified foreclosure lawyer for help with the modification application process. At the Law Office of Ronald D. Weiss, P.C., we have helped numerous homeowners obtain loan modifications and avoid foreclosure. If you would like more information on how we can help you, call today at 631-296-0912 for a free consultation.

References:

¹http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/nsc/faqlm

²http://www.nytimes.com/2013/01/06/realestate/mortgages-writing-the-hardship-letter.html?_r=0

Can I Stop My Foreclosure by Filing for Chapter 13 Bankruptcy?

An experienced foreclosure attorney can help you pursue numerous options to try to stop a foreclosure action against your property, including loan modification, mediation, short sale, deed in lieu of foreclosure, among others. Many homeowners come into our office wondering: is filing for Chapter 13 bankruptcy a way to halt a foreclosure?

While you cannot prevent foreclosure by discharging your mortgage loan, Chapter 13 bankruptcy is a useful tool to delay foreclosure and help you regain control of your financial situation so that you may become current on your mortgage payments and retain ownership of your home. The following are some ways in which Chapter 13 bankruptcy¹ may help you if you are facing foreclosure.

Stopping the sale of your home

As soon as you file for bankruptcy, an automatic stay² goes into effect that immediately halts all collection efforts and legal actions against you by financial lenders. This includes mortgage lenders and, therefore, an impending foreclosure sale will not be allowed to proceed without special permission from the bankruptcy court. This automatic stay will remain in effect as long as you abide by your Chapter 13 repayment plan, which often lasts up to five years and can provide plenty of time to become current on your mortgage and ultimately prevent foreclosure.

Helping you catch up on payments

Having to continually pay your monthly mortgage while facing significant arrears can be overwhelming and often seems impossible. Fortunately, Chapter 13 lets you reorganize your existing debt payments at the time of your filing, including any mortgage arrears. You will make one monthly payment to a bankruptcy trustee,³ which will be allocated to your mortgage lender and other creditors. This does not mean you are in the clear, however, as you will still have to stay current on your monthly mortgage during your repayment plan. If you again become delinquent or default on your mortgage, your lender may obtain permission from the court to lift the automatic stay and allow a sale to take place.

While Chapter 13 is by no means a quick fix for everyone to avoid foreclosure, it has helped many homeowners catch up on payments to avoid losing their homes in foreclosure. However, Chapter 13 generally works better if you have a small to moderate amount of mortgage arrears and if you file for bankruptcy relatively early in the foreclosure process. If you have several years of high mortgage arrears, mortgage modification is often a superior solution to filing for Chapter 13. Modification can absorb a higher amount of arrears and help you become current on your mortgage even if you have fallen far behind.

If you have any questions regarding whether Chapter 13 or other foreclosure solutions may be right for you, call a Long Island and New York foreclosure attorney at the Law Office of Ronald D. Weiss, P.C. at 631-296-0912 for assistance today.

References:

¹http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics

²https://www.law.cornell.edu/uscode/text/11/362

³http://www.justice.gov/ust/eo/private_trustee/locator/13.htm#NY