Frequent Foreclosures Questions


We have written here some sample foreclosure questions and there typical answers. Each question or answer may or may not be applicable in your own peculiar situation. Furthermore, these are meant for general education and not for a legal advice. If you need a legal advice please contact a licensed attorney. You can also send your questions to attorney and counselor at law Malik Ahmad at the following email address:
Malik@lasvegaslawgroup.com Only short question will be answered. Unfortunately, no specific answers can be provided due to the nature of the malpractice insurance and privacy issues.

What is a foreclosure process?
This is a legal process where your home is taken away by your lender, usually due to missed mortgage payments. Because foreclosure is a legal process, there are certain foreclosure rules, the bank or mortgage company must follow before they can legally take back your home or property. They cannot force you to leave your home or property without going to court first. Do not let any real estate investor or scam artist tell you differently.

How many different kinds of foreclosure in Nevada?
Basically two kinds:
-Judicial foreclosure
-and Statutory foreclosure with a power of sale and no right of redemption. You can contest the judicial foreclosure and produce all kinds of defense and there is a redemption period to cure the mortgage. However, there is no redemption for a statutory foreclosure.

WHAT SHOULD I DO IF I HAVE RECEIVED LEGAL PAPERS?
In Nevada, the foreclosure process moves very quickly. Once the default notice is served, within 3 months your home is going for auction in a public sale. Nevada is a non judicial and a statutory foreclosure sale.

A successful defense attorney can buy you precious time to:
Stay in your home rent Free
Potentially continue to collect rent on your property
Negotiate a work-out with the bank
Sell your home at a fair price
*  Refinance your home at fair rate

*  Apply for a court ordered repayment plan
*  File Chapter 13 or 7 Bankruptcy
Can I represent myself in any judicial proceedings?

You have the right to represent yourself in any legal or foreclosure proceeding. But if you were being accused of a crime and facing jail time, would you represent yourself, or would you want a competent attorney standing shoulder to shoulder with you in the courtroom? Why settle for less when your home or property is at stake? Having the right foreclosure attorney to advise you in the complex foreclosure process is very important. Many people facing the possibility of losing their homes are confused whether they should hire a foreclosure assistance firm or a foreclosure attorney. We like to tell those people to ask the foreclosure assistance firm if they are going to represent them and fight foreclosure for them in court? We tell them to ask these “foreclosure help or assistance firms” if they can even advise you of your legal rights. The answer is always NO. If they are not attorneys, by Nevada law they cannot fight for you in court or even advise you of your legal rights.

The banks have lawyers. Why wouldn’t you have a lawyer on your side.?

One of the biggest misconceptions is that hiring a foreclosure attorney is not a cost-effective option. First of all, EVERYONE can and should hire a foreclosure attorney to represent them in their foreclosure case. Most people don’t know that once the house foreclosure proceeding has started, the foreclosing bank will not accept any future mortgage payments – doing so may adversely affect their ability to foreclose on your property. Furthermore, the foreclosure bank pays any delinquent real estate taxes and the insurance on the property being foreclosed upon. In fact, once the bank stops accepting mortgage payments and files a foreclosure action, most of the home owner’s expenses are being advanced by the bank.

Is hiring a foreclosure attorney helpful?

First of all, EVERYONE can and should hire an attorney to represent them in their foreclosure case. In fact, once the bank files a foreclosure action, most of the home owner’s expenses are being advanced by the bank. However, as the legal owner of the house with full possession, you have all the rights associated with the house including residing in your home, collecting rents on the property, etc. Imagine the “EQUITY” you can save / build, if you fight foreclosure for a year, two years, or more. The cost of qualified legal representation to fight foreclosure is a drop in the bucket compared to your typical home ownership overhead. Time is money and the real estate and financial markets are likely to turn around. The hiring of the right foreclosure attorney to help fight foreclosure will save you thousands of actual dollars, in addition to thousands in time value of money. Its really a no-brainer.

What is a short sale and how it would work for me?

A short sale is when a mortgage lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are purchasing the property directly from the lender for a discount. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $500,000. You write an offer to the lender for $400,000, which is accepted as full payment for the loan. This is a short sale. Why are they willing to take such a discount? Several reasons. First of all, banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the foreclosed property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all. Your lender will use the proceeds from the sale to pay off the mortgage and the remaining balance will be negotiated or perhaps even forgiven. This avenue is open for homeowners who are willing to part with their property but keep their credit rating with the least amount of negative reports. Negotiating a Short Sale with the lender is can be a lengthy and difficult process, generally because it is very hard to find the bank officer who has the authority to accept a discount. Much like getting your phone bill corrected, you can expect the process to involve a lot of waiting on hold and being bounced around an intricate maze of automated voice mail systems. Once you get in touch with the right person, then the hard work and the negotiating can begin. The mortgage lender may require a written contract between you and the buyer, a HUD-1 or settlement statement of the sale, a buyer assurance letter stating the potential buyer is approved for the new loan, proof that the house has been on the market for a minimum of 90 days with a real estate agent and financial information from you showing that you can’t afford the house. If you are willing to sell your home or currently have your house on the market, some lenders might agree to put your foreclosure on hold while you attempt to sell your home through traditional real estate methods. You may be able to qualify if your mortgage is at least 2 months delinquent, you are able to sell your home within 3-5 months and your new appraisal shows that the value of your home meets HUD program guidelines. You will be able to pay off your mortgage loan to avoid foreclosure and prevent any damage to your credit rating.

Many banks and lenders will refuse to accept any mortgage payment unless it is the entire amount you are behind (including late, collection and legal fees) once you miss just one payment. The difficult part is sending it back to you often causes you to get further behind. Once foreclosure proceedings have started your mortgage lender will ordinarily not accept any payment less than the full amount that is in arrears including foreclosure costs and foreclosure legal fees. If they do accept a late payment, it may also be used against them as a foreclosure defense.

How much is a foreclosure time?

Foreclosure time varies according to State Law. Time is not your ally when you are behind on mortgage payments. You generally have 30 days from the date of the filing of a complaint in a judicial state. You generally have less than 90 days from notice in a non judicial state. Although there are many other factors that an attorney may be able to do after that period, you need to take action as soon as possible. (Please check my separate post under Nevada Foreclosure Laws)

First, you have to deal with the possible foreclosure. Keeping you in your house is the first priority. We may be able to help you with unsecured debt, credit cards and medical bills. In certain instances collection companies, creditors and credit agencies may have acted in a manner that allow you the ability to eliminate or modify the amount of debt and increase your credit score.

What is a foreclosure process?

The Foreclosure Process could be completed in as little as two to three months or several years, depending on your foreclosure defense, foreclosure affirmative defenses, and whether or not you have representation by a qualified foreclosure attorney. The good news is that, while the foreclosure process goes on, you maintain possession of your home and continue to enjoy all the benefits of home ownership.
If the note holder does NOT recover the amount of their mortgage note plus any expenses of collection, they may still sue the borrower for the balance due even after the foreclosure.

We are being bombarded with all kinds of solicitations from foreclosure assistance? How do we know who is genuine?

There are dozens of foreclosure assistance companies that either are “scams” set up to take your money or your home. There are many other companies that claim to have expertise which they do not have. There are websites where anyone can become a “foreclosure consultant” by paying less than $100. On the other hand, there are attorneys who, generally, are more expensive and who do not really understand this very specific area of the law. Most of them will suggest that you file for bankruptcy and/or attempt to spread your mortgage arrearage over time. There are some fine practitioners in this area, but they are few and far between and generally will be quite expensive.

Interestingly, for the most part, only homeowners in the foreclosure process can modify their loans. This almost forces you to stop payments. Although this is changing for some homeowners who qualify under certain federal and state programs to compel lenders to modify mortgage loans before default, the percentage of home owners who qualify is very, very low. These programs are simply not enough.

Who are servicers, and how can we deal with them?

A servicer is an agency which is processing your loan payments. In fact, they are shielding someone who has your mortgage papers, generally an investor or a small bank.

Can you find out who are they?

Absolutely. You have been dealing with the servicer of your loan and they are usually not very helpful. They are set up to handle massive numbers of calls from call centers staffed with very inexperienced employees. We try, in every legal way imaginable to get past them to the holder of the loan or at a higher echelon of the servicer, to negotiate a deal that is good for them and you.

Can we get help only with ARMS kinds of loan?

No. We can help with virtually any type of delinquent loan, including conventional loans, VA, FHA, refinancing and home equity loans.
Depending on the facts that are discovered during our review, our attorneys may be able to negotiate a lower interest rate which means lower payments. Even after exhausting the negotiation and foreclosure process, if you simply cannot afford the mortgage payments, we may be able arrange a Deed-In Lieu of Foreclosure to avoid a deficiency judgment. This can also prevent a foreclosure from showing on your credit.

Would a bankruptcy be helpful to me?

This is a question to be answered directly from your attorney. However, you need understand that, at this time, bankruptcy cannot compel the holder of your mortgage to modify your loan so that you can stay in your home comfortably. Sometimes, in bankruptcy, your attorney can obtain a loan modification but, again, that lawyer must be an expert in negotiating these types of agreements. In most instances, the best that can be achieved is losing the home but not having the problem of a deficiency judgment. Before bankruptcy, in many instances we can negotiate what would seem to be a better solution that will keep you comfortably in your home with payments you can afford.

13 Comments

    • Thanks. This blog is open for all kinds of suggestions and improvements. We browse other blogs as well and sometime incorporate their ideas here. This foreclosure is a national crisis and should be dealt that way. A home is afterall the biggest investment of our lives and it should be protected. This is the American Dream.

  1. HFC won’t accept a deed-in-lieu or a foreclosure. We believe they’re devaluing the appraisals to justify this. They’ve already locked me out of the house, but claim they’re not in possession–I moved because I couldn’t afford house after husband died. I must be guaranteed that I will not pay any taxes on all forgiven debt, so they must complete short sale before end of this 2009 year. How do I do this?

    • Why you want to insist on surrending your deed-in-lieu? Your lenders would not accept if there are other lien holders on your deed. When your lenders accept your deed, it can be treated as a fraudulent transfer under the bankruptcy laws and can be considered a collusion. They are afraid of that. Furthermore, your lender would step in the shoes of junior lien holder, and merge into one. These are the draw backs of surrendering and merging. I would suggest doing a short sale or doing the old fashioned loan modification. If it does not work, nothing can be done. Among all the bad and painful choices, loan modification seems to be better–at least that is what common senses say. Good luck

  2. My lender is in bankruptcy but the loan servicing company has continued to collect payments and now sent us notice-of-default.
    What’s the best way to find out who is the current note holder and is it likely they would be receptive to a loan modification?

  3. Your site is very helpful. Thank you.

    We have a rental house in Las Vegas that we may need to put up for a short sale. Do we need to inform the tenants? If we do inform them, are they still obligated to pay their rent?

    • Under the newly legislated laws, you need to tell your tenant of your mortgage/foreclosure matters. He may be adivsed to keep the rent separate until a legitimate owner of the property comes forward by some attorneys as well. Again, if he does there is no obligation on him to give you this rent. This has happened in cases where the landlrod does receive rent but is behind on his mortgage payments. Also, under the new laws, a tenant is entitiled to continue his tenancy with the current landlord in case of foreclosure on the previous lease agreement. His new landlord (i.e lender) is entitled to receive the rent which was in last tenancy and if the tenants are bonafide tenants and not close relatives or friends. In other words, you cannot rent this property with a current rental of $2000 for $750. You are entitled to short sale, and let your tenant know it because he would be panicked when he see lots of default notices sent to his way. You are also entitled to rental as long as you disclose it. During this time period, since the ownership is in limbo you may be entitled to receive rent but probably cannot enforce it in a court of law because your landlord position is shaky. Again, you need to consult a qualified attorney because this is a specific matter and I can only answer general questions.

  4. I had a condo unit that went through a short sale and finally 2 years later was foreclosed. It was vacant the whole time and I did not pay how dues. The hoa collected Nine months of back dues from lender. Just received bill from hoa’s attorney for 5750.00 of hoa dues not paid. Letter says pay or legal action will be taken. I am unemployed, I can scrape up the monies but it will be a hardship, is this a now win situation for me?

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