Foreclosure FAQ

FORECLOSURE FREQUENTLY ASKED QUESTIONS (FAQ)

Q: Should I open and respond to all mail from my lender or lender's attorney?

A: The first notices you receive will advise you of a default under your mortgage and the acceleration of your mortgage. Later mail may include important notice of pending legal action and important dates. Your failure to open the mail will not be an excuse in foreclosure court, and ignoring these notices will only make the situation worse. Before responding, contact us immediately for a free consultation. Your lender will have an attorney working for them, so should you.

Q: I have just been served with a summons and foreclosure complaint. What do I do?

A: YOU MUST RESPOND IN WRITING AND/OR SERVE AND FILE A RESPONSE WITHIN 20 DAYS OF BEING SERVED WITH THE COMPLAINT. IF YOU DO NOT ANSWER, YOU WILL BE IN DEFAUL OF THE COURT. THIS RESULTS IN A LOSS OF YOUR DEFENSES AND RIGHTS. Any delay may make the situation you are in worse, and if a borrower or homeowner fails to do anything at all, the situation may become the worst case scenario possible. Contact us immediately for a free consultation.

Florida's mortgage foreclosure process will absolutely have serious, long lasting ramifications that you may have to deal with in the future, so it absolutely in your best interest to participate now while it is occurring. Your decision to participate now may preserve, protect and safeguard valuable legal rights affecting your future income, credit worthiness and income tax consequences. Contact us immediately for a free consultation.

Q: If I do nothing, what will happen?

A: A default and default judgment will be entered, and the clerk of the court will auction your property, usually within 25 to 30 days from entry of a final judgment and you could be subject to a money judgment which is good for twenty years.

Q: Should I use a foreclosure prevention company?

A: The lender will have an attorney and you should secure an attorney to do battle for you. You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead or pay for an attorney. Watch out for foreclosure recovery scams! If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home. Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney.

Q: Will the foreclosure process affect my credit score?

A: A foreclosure will have an adverse effect on your credit report. It is hard to say exactly how many points your credit score will drop due to a foreclosure. There are numerous factors that affect your credit score. It does appear though, that loss mitigation options that do not result in the completion of the foreclosure are better for your credit score depending on which credit bureau you are looking at.

The impact on credit scores diminishes over time though. Loss mitigation efforts and foreclosure are definitely better than a bankruptcy, as the filing of a bankruptcy is viewed by the credit reporting industry as an attack against all trade lines across the board, whereas a mortgage foreclosure is only an attack against a single trade line, your mortgage lender. Some foreclosure settlements can include credit restoration or the deletion of adverse credit information.

Q: What if I file bankruptcy?

A: In addition to defending your foreclosure, a bankruptcy will stop the foreclosure. A chapter 13 bankruptcy may allow you to make up the arrearages and reinstate your mortgage, over a period of time, usually 5 years. It means you make a regular payment and part payment each month until you get caught up. In a chapter 7, you will have to pay back the arrearages much quicker than 5 years, the foreclosure will continue. The general rule is bankruptcy negatively affects your credit score for 10 years, but sometimes the creditors on a chapter 13 will voluntarily remove it after 7 years to encourage people to file a 13 rather than a 7.

Q: Are their income tax consequences as a result of a foreclosure?

A: If the property is your primary residence, the law will not tax any capital gain you receive in connection with the lender discharging parts of your loan. If the property is a second residence, this does not apply. Also, it depends on whether or not your home or property has equity and what type of loan it is. If there is no equity, it is likely that the property or home will be sold for less than the mortgage amount owed. The Internal Revenue Service will consider debt forgiveness by the lender as income, and the borrower may also have income in the form of capital gains from the sell or transfer as well. However, there are several ways to offset this gain or income such as off setting income and capital gains with losses, being insolvent at the time of the transfer and bankruptcy. CONSULT WITH AN ATTORNEY AND ACCOUNTANT. These rules are complicated and you are advised to make a thorough examination of your personal financial situation with an experienced tax professional.

Q: After the property is auctioned by the court clerk, do I have to get out?

A: Yes. The sheriff's office will physically evict you and remove you and your personal effects from the property, usually in as little as 10-15 days.

Q: What can an experienced and knowledgeable lawyer do?

A: File a response (motion to dismiss, motion to strike, answer and affirmative defenses). File a counterclaim against the lender for predatory lending, mortgage fraud, and mortgage underwriting violations. In the answer, is a denial of the lender's complaint all I need to do? Usually not. You must state all affirmative defenses, otherwise they may be waived or may be may not be sufficient to stop the foreclosure process.

Q: What are affirmative defenses?

A: They are special defenses which must be specifically alleged, such as truth-in-lending violations, usury, fraud and other specific types of improper conduct by the lender, which may defeat or partially defeat the lender's claims.

Q: Why are affirmative defenses different than just an answer with denials?

A: The lender has a sufficiently more difficult burden to obtain a "fast" or summary judgment of foreclosure when affirmative defenses are filed.

Q: Can an attorney just delay the case without justification?

A: Having an attorney will generally delay the process as opposed to not having an attorney. While an attorney cannot cause delay solely for that purpose and attorney can use all of the discovery methods provided under law to fully investigate the facts of your case and make the lender prove their case fully. The full exercise of your legal rights will result in delay as a by-product of a proper defense, often caused by the plaintiff not properly and promptly responding to your attorney's rightful demands.

Q: If I get a lawyer, does he automatically get more time to file an answer?

A: No, the 20 days continues to run. If a default is taken against you, it will pose, at a minimum, difficulties in getting the default set aside and allowing your attorney to use the defensive arsenal otherwise available on your behalf.

Q: If my property is sold by the court clerk, what price will it bring?

A: Usually much lower than fair market value. Most of the time it is sold for the total amount of the mortgage, or less. And the foreclosure sale does not discharge your obligation under the note. So you could loose your house and have a money judgment against you for up to twenty years.

Q: Will I get any of the sales proceeds?

A: Only if there is a surplus (if the property is sold for more that what is owed in total to the plaintiff and all other mortgages and liens on the property). However, this is very unlikely.

Q: If the property is sold for less than the total owed, can the lender collect the difference?

A: Yes, this is where the Lender obtains a deficiency judgment.

Q: I have lots of other questions, can I call the judge or the court for advice?

A: No. Judges, judicial assistants (judge's assistant), court clerks and sheriff's department employees cannot practice law or give you legal advice. They can only point out the existence of certain procedures, but cannot tell you how to follow them or how effective they will be.

Q: Do I have the right to reinstate? (bring the mortgage current)

A: Not always, unless your mortgage or mortgage note specifically gives you this right. However, many mortgage lenders often voluntarily consent to reinstatement.

Q: What exactly does a Quit Claim Deed mean?

A: A Quit Claim Deed only transfers the impaired title to property you own. It does not warrant fee simple ownership, rather it only gives what you have.