When a foreclosure process has been initiated, the homeowner still has options available to them in order to prevent the lender from reclaiming the property. One option that may be attractive to homeowners who are having difficulties making mortgage payments is a loan modification. Mortgage lenders employ loan modifications to help homeowners who may become delinquent or are already behind on their mortgage payments. In a loan modification, the lender edits the original loan agreement terms to help homeowners reduce their monthly mortgage payments to a more reasonable figure.
However, when a foreclosure process has already been initiated, time is of the essence to pursue a loan modification. In Florida, the lender has to file a lawsuit in state court in order to initiate a foreclosure proceeding. Once a homeowner has stopped making payments, the lender files a complaint with the court and has it served to the borrower, along with a summons that provides twenty days for the borrower to file an answer to the complaint. If the borrower does not respond to the complaint within the specified amount of time, then the lender can get a default judgment from the court, which means that the lender automatically wins the case. However, if the borrower files an answer to the complaint with the court, then the lender cannot obtain a default judgment and the lender will either pursue a summary judgment hearing or trial.
During this time, a borrower would be wise to pursue loan modification with the lender. Although a lender may not be initially receptive to a loan modification once the foreclosure has been initiated, a successful loan modification agreement eliminates the hassle to the lender posed by pursuing a full trial, which is a great bargaining point for the borrower. It also means the lender would avoid having to sell the home to recoup their money.
If a judge has already decided a foreclosure case, it is still possible to negotiate with the lender for a loan modification. However, in this scenario, the lender has much more control over the loan modification terms, as they already have a foreclosure judgment to fall back on. In this case, it is highly recommended that the homeowner seek an experienced attorney to assist in understanding and negotiating the loan modification terms.
Keep in mind that loan modifications are considered one of the most difficult things to get approved without an experienced attorney’s assistance in a foreclosure process. If a lender is after your home, be sure to contact an experienced real estate attorney who will be able to examine your case and strategize the best way to save your home – including loan modification.
Stephen K. Hachey, a Florida real estate attorney, can help your wade through this process and determine a positive solution. Contact him at 813-549-0096.
The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.
It can be unnerving when a homeowner is behind on the mortgage and unsure of exactly when the foreclosure process is going to result in the locks being changed and the possession of the house moving to the bank. Timelines and statutes of limitations are different in every state and in every situation. When you have not paid your mortgage for a long time, you need to be prepared so you aren’t tossed out of your house at a moment’s notice. The mortgage lender will probably pursue a steady set of collection activities before they finally have the authorization to foreclosure and take the property away from you.
A loan modification is one way to avoid a foreclosure and get back on track with your house payments. It should not be used as a simple delay tactic, however. There are several very good reasons to begin the modification process, but the process needs to be a cooperative venture between you and your bank if it’s going to be successful. A modification can help you adjust the amount you owe or the amount you pay every month based on your current financial situation and your good faith to catch up with your payments. If you have no intention of paying your mortgage again, a modification is not a good idea.
Another reason this will not work to delay foreclosure is that filling out the modification paperwork will require a lot of personal and financial information. You’ll need to provide detailed documentation on your income, your assets and your liabilities. This is information that your lender can use against you during a foreclosure or while trying to obtain a deficiency judgment against you after a foreclosure.
If you are struggling with your mortgage and you’re not sure how to avoid a foreclosure, talk to an experienced attorney who can help you. Your lawyer can negotiate with the bank and make sure you are protected through the entire process.
Stephen K. Hachey, a Florida real estate attorney, can help your wade through this process and determine a positive solution. Contact him at 813-549-0096.
The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.
This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.
Many lawyers agree that is improper and unethical for a law firm or lawyer to guarantee results in any case and to tell a homeowner that they can and will get a loan modification. If a lawyer is guaranteeing you that they will get you a loan modification, run the other way. If this is the case it is probably a scam. Also, be aware if they are asking for an upfront fee, if they are asking to have the property signed over to a third party, and finally, if they offer to direct the monthly mortgage payments to a third party who will then forward it to the lender or mortgage servicer.
Although a law firm or a lawyer shouldn’t guarantee you that you can and will get a loan modification, it doesn’t mean you can’t hire their services to help you get the loan medication. There are benefits with hiring a lawyer because they know the nooks and crannies of the government homeowner-assistance programs. If you are thinking of a hiring lawyer, be sure to contact their local bar association to make sure they are an “ethical law firm” who does loan modification so you are really getting the help you need instead of losing your money in a sham.
So remember: if a law firm or lawyer is guaranteeing you that they can and will get you a loan modification, don’t listen to them. Instead, go find a reputable lawyer who does loan modifications, double-checked, and then proceed.
Stephen K. Hachey, a Florida real estate attorney can help your wade through this process and determine a positive solution. Contact him at 813-549-0096.
The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.
This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.
Updated: 6/3/23
Understanding Phantom Income
Phantom income, in the context of real estate, refers to income that is deemed to have been received but has not resulted in any actual cash inflow. This often arises in situations involving debt forgiveness. For instance, if a homeowner owes $200,000 on a mortgage, but the lender forgives $50,000 of the debt, that $50,000 could be considered phantom income. While the homeowner hasn’t physically received this money, they’ve benefited from the debt reduction, and this can be seen as a form of income.
The Homestead Exemption
The Homestead exemption is a legal provision that allows homeowners to protect their principal residence from creditors or property taxes. In Florida, the Homestead exemption can protect an unlimited amount of value in a home, as long as the property is not larger than half an acre in a municipality or 160 acres elsewhere. This exemption plays a crucial role in safeguarding homeowners from the financial implications of debt and can provide a significant buffer against the potential impact of phantom income.
Phantom Income and the Homestead Exemption
When it comes to phantom income and the Homestead exemption, the relationship is complex. On one hand, the Homestead exemption can protect homeowners from creditors, potentially reducing the likelihood of debt forgiveness and the resulting phantom income. On the other hand, if debt forgiveness does occur, the phantom income could potentially be taxable, depending on the specifics of the situation. It’s important to note that the Homestead exemption does not automatically exempt homeowners from taxes on phantom income.
The Mortgage Forgiveness and Debt Relief Act
The Mortgage Forgiveness and Debt Relief Act plays a significant role in the taxation of phantom income. According to this Act, forgiven mortgage debt is not considered taxable income under certain circumstances. Specifically, the Act provides tax relief for homeowners who have mortgage debt forgiven as a result of foreclosure, loan modification, or short sale. However, this relief is not unlimited, and there are specific criteria that must be met to qualify.
Navigating Phantom Income Taxation
Dealing with phantom income taxation can be complex, and it’s crucial to seek professional advice. If you’re facing a situation involving potential phantom income, consult with a tax professional or a real estate attorney. They can help you understand the potential tax implications and guide you through the process. Remember, every situation is unique, and what applies to one homeowner may not apply to another. Therefore, personalized advice is essential when navigating phantom income taxation.
The Home Affordable Foreclosure Alternatives (HAFA) Program was enacted as part of the Homeowner Affordability and Stability Plan (HASP) in 2009 as a reaction to the subprime mortgage crisis and subsequent economic slowdown. The HAFA program offers borrowers options of short sales or deeds in lieu to get out from under mortgages they can no longer afford to make payments on. HAFA short sales differ from traditional short sales, in that the borrower does not owe the difference between the original purchase price and the final sale price. This saves the borrower from further hardship and does not affect their credit score as negatively as a foreclosure. Additionally, the program offers other benefits to both lenders and borrowers, such as subsidies to cover administration costs and up to $3,000 in relocation assistance.
Currently, the HAFA program is scheduled to sunset on December 31, 2013. This means that if you wish to participate in the program, you need to submit a Request for Mortgage Assistance (RMA) by the deadline date. To be safe, you should make arrangements that the RMA arrives by the sunset date, and is not simply post-marked on the date. Additionally, the deal must be closed by October 1, 2014. As with all federal programs, HAFA may get extended, but do not count on it. It is important to begin the process as soon as possible.
Participation in the HAFA program is contingent on a number of eligibility requirements and completion of numerous forms. It is highly advised you consult with an experienced real estate attorney to work with your mortgage provider to ensure you obtain favorable terms and the process is followed correctly.
Stephen K. Hachey, a Florida real estate attorney can help your wade through this difficult process and determine a positive solution. Contact him at 813-549-0096.
The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.
This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.
It is an unfortunate reality that many people were severely affected by the economic downturn. We’ve all heard horror stories about underwater mortgages and whole neighborhoods in foreclosure. Some borrowers have resorted to bankruptcy. Chapter 13 bankruptcy does offer the opportunity for loan modification.
The Tampa Division of the Florida Middle District Bankruptcy Court has a program in place that allows filers of Chapter 13 bankruptcy to change the terms of their loan. Borrowers must apply for the modification within six months of filing for Chapter 13 bankruptcy. For a period of 36 to 60 months, depending on income, borrowers will pay 31 percent of their gross income as a protection to the loan provider. This payment will include property taxes and insurance. Obviously, if your current total monthly payment for your mortgage, property tax, and insurance is less than 31% of your gross income, then the modification will not benefit you. However, if you are behind on payments, the modification will allow you to catch up.
Be sure to discuss your options with an experienced attorney before you make any decisions. Stephen K. Hachey, a Florida real estate attorney, can help you navigate this process and make the most of a difficult situation. Contact him at 813-549-0096.
This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.
If you are one of the many Americans who are feeling the pressure in your wallet to choose between which bills to skip this month, you are not alone. Some people choose to skip the mortgage payment. But before you make that final decision, there are several items you should take into account regarding what happens when you do that.
First of all, since your mortgage is a much bigger loan than a credit card, skipping your mortgage payment takes a much higher toll on your credit score. While your score won’t be affected if your payment is under 30 days late, any missed payment after 30 days is disastrous. Your lender will immediately notify the credit bureaus and your late payment will reflect on your credit history.
You may not think too much into this if you aren’t planning on applying for any other loans or opening another credit card, but this hit to your credit score may produce a ripple effect. Because credit companies periodically check into your credit score, they may see your failure of payment as a risk to them. In return, they may increase your interest rate or lower your credit limit.
But your creditors aren’t the only ones who may act. Your mortgage lender may also begin enacting underlying clauses that have been written into the contract that you are not aware of. And while you will incur a late fee and most likely won’t go into foreclosure for one missed payment, your lender may begin foreclosure procedures after the third missed payment.
To prevent any of this, if you feel you are not able to make a payment on time or during the grace period, it is important to contact your lender. In most cases, they will be able to make arrangements with you to keep your mortgage current and on track.
This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.
Whatever financial situation you find yourself in, the most important thing to do when facing foreclosure is focus on how you can stay in your home. There are many alternatives and it’s best to explore them all. However, many require a lengthy process with no shortage of hoops to jump through. One popular alternative is Loan Modification. Let’s learn a little bit more about how you can qualify before you face foreclosure.
1. Describe how you got into trouble in the first place. Provide the lender a “hardship letter” about how you fell behind on payments. Make sure to give as much detail as possible.
2. Express how much you would like to stay in your home and that you’re willing to make modified payment in the future.
3. If you have tried to sell your property, make sure to include records of those attempts.
4. Describe how you are willing and able to make modified payments. Are you back in a stable job or back to work after recovering from an illness or injury?
5. Make a statement about how a loan modification will help you get back on track with payments and improve your financial situation. For example, if you do not qualify for this modification, you will lose your property.
6. List your expenses and prove how a lower mortgage rate will put you and your family in a better financial position to pay back your original loan.
7. Have a copy of your free credit report available for your lender. These numbers can help your lender make a final decision about whether or not you qualify for this new loan.
As always, take it one day and one step at a time. Know that you are taking the right steps in order to avoid foreclosure. Stephen K. Hachey, a Florida real estate attorney, can help you determine what option is right for you. Contact him at 813-549-0096.
This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.
Foreclosure is a scary possibility for many of us. As the economy moves up and down, things like job security and cost of living can be unpredictable. It’s important to do as much as we can to stay in the clear – for our financial sake and for our sanity. Here are some ways you can avoid foreclosure even during the tough times.
Refinance: Try refinancing to a fixed-rate mortgage, especially if it’s at a lower interest rate than an adjustable rate mortgage. In order to refinance, however, you need to be able to afford it and the closing costs. If you find you cannot afford this, there are other options.
Mortgage relief: As soon as you figure out that you cannot make that payment, call your lender and let them know the situation. They could be able to extend the period in which they would normally have to foreclose on the house. This mortgage relief can give you some time and a little relief from your mortgage, but do this quickly.
Forbearance: If you find that you are not able to make the payment, the bank will allow you not to; however, this comes with conditions. They will still charge you an interest rate that you would owe on the mortgage payment, so you are not completely free of payment. They may be able to give you a few months of no payments if you find yourself in a situation such as an injury that doesn’t allow you to work for an extended time.
Loan modification: This is a great option for people who are a month or so behind on payments. Call the bank immediately and find out if they can modify your loan. They may be able to extend your payment time or give you a lower interest rate – whatever you need to be able to stay in your home.
Stephen K. Hachey, a Florida real estate attorney, can help you determine what option is right for you. Contact him at 813-549-0096.
This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.
It can be difficult to think of foreclosure as a reality. When the economy is going through tough times, we feel it, and it can spell disaster and heart break for families that are threatened with foreclosure. However, there are several alternatives to foreclosure that you may want to look into. Here are a few to explore if you find yourself in this situation.
The first is Loan Modification. This is for homeowners who can pay a portion of their loan amount but not the whole thing. In this situation, the individual and the bank agree on a lowered monthly payment that the homeowner will pay in monthly installments. It sounds easy, but it can be a lengthy process, and even though the bank will let the homeowner pay reduced amounts each month, the interest rates may be higher or the length of the loan may be lengthened to make up for the altered plan.
The second is a short sale. This is a situation where the homeowner sells their property for less than the debt they owe on the property and the bank “forgives” the rest of their debt on the property. To prove that you are eligible for a short sale, you will need to prove that you are in severe financial hardship, you don’t have enough money to cover the remainder of your debt, and your home is worth less than the amount you owe to the bank.
The last is a forbearance. This is an alternative to a foreclosure where the bank allows the borrower to pay a lower amount than what they owe for a certain period of time. The conditions are such that you are experiencing a temporary financial hardship and you have not missed any previous mortgage payments.
These are just a few alternatives to consider if you are facing foreclosure. Stephen K. Hachey is a Florida real estate attorney who can help you make the choice that right for you and your family. Contact him at 813-549-0096.
This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.
