Holding Off a Foreclosure.

Despite the fact that the media has indicated there is a temporary moratorium on short sales by various lenders, this message is misleading. Foreclosure sales are not being scheduled, however, these same banks are continuing to pursue these cases and are posturing themselves to pull the trigger whenever the freeze is lifted.

Many individuals are under the false impression (and perhaps hope) that if they have a pending short sale contract there is no need to avoid or defend a foreclosure action. Unfortunately, a short sale in progress as a general rule, does not slow down the foreclosure process. If you have a contract for sale on your home or are are behind in payments, below are a few suggestions to avoid or prolong the foreclosure process to enable one to wait until they have a very serious offer to submit to the bank as a short sale.

1. Make random payments. If you cannot make payments try confusing the bank. If you are two payments behind, submit a payment the third month if possible. Thereafter, skip a month and make payments every other month. Inform the bank you are trying to make good on your mortgage. This simple tactic will generally buy a borrower/seller a great deal of time before a foreclosure action is commenced. Banks do not know how to process this behavior. Typically, if payments are 120 days late after the fourth payment is missed, the bank will accelerate the loan and may commence a foreclosure action.

2. Fight the foreclosure. Ironically, studies have shown approximately 85% of all foreclosures in the State of Florida go uncontested. If no action is taken uncontested foreclosures only take 120 to 150 days from start to finish. Engage an attorney (which typically is less than the cost of a mortgage payment) to raise defenses and request the bank to prove their case and entitlement. By fighting a foreclosure typically it will take a lender a minimum of a year and hopefully longer to prevail. By buying this time, sellers can patiently wait until the right offer comes along to present to the bank as a short sale.

3. Participate or request mediation. As of July 15, 2010 all foreclosures of homestead properties located in Collier, Lee and Charlotte Counties are required to be referred to Residential Mandatory Mediation. Previously, mediation was available however, it typically took a knowledgeable attorney to file a motion with the court for mediation to occur. The purpose of mediation is for the parties to communicate to see if foreclosure can be avoided through a mortgage workout or modification. The lender is responsible for the cost of the mediator and mediation must be scheduled no less than 60 days and no more than 120 days from the date the foreclosure action is filed. Although only mandatory in cases of homestead, a request for mediation is typically looked upon favorably for all properties which may be in foreclosure.

At the end of the day, from a Seller’s perspective, foreclosures should be avoided whenever and wherever possible. The key is to become proactive in seeking to avoid it before it begins with staggered payments or become reactive with seeking to defend the action once the process is commenced. Unfortunately, many people wait until the 11th hour to respond and in those cases the genie is already out of the bottle.

Law Offices of Ronald S. Webster
985 N. Collier Blvd
Marco Island, FL 34145
239-394-8999 Phone
239-394-3511 Fax