The more frustrating interview question I have with potential clients is them telling me if they are in foreclosure because of non-payment of their mortgage.  I have two questions: Are you in foreclosure?; and Have you been served?  Too often I get a NO to the first question and YES to the second question.  The problem with that is if you answer y YES to the second question, the first question has to be YES too.  But probably half of the answers of YES to the second question are accompanied by a NO to the first question!  Real estate agents must also understand this misunderstanding as it can adversely affect your ability to sell a listing.

Today the headline of our local West Palm Beach Paper said that the foreclosure lull was over and Florida was now #4 on the national foreclosure list.  No surprise to me – whereas through the spring and summer we spoke with very few new foreclosure clients, since mid-October we have had several calls each day from those that just got served with a summons.  As a result, it is time to get this issue of when you are “In Foreclosure” dealt with.

The acts leading up to the filing of a foreclosure complaint (in judicial foreclosure states) consist generally of the following (in order):

1.      default on the mortgage by the borrower for non-payment of the monthly promissory note payment in full, including late fees, along with mortgage obligations of escrows for insurance and/or real estate taxes or the event of some technical default.

2.      written notice to the borrower by the bank that the mortgage loan is in default, specifying the default and providing a demand that it be cured within a specific (usually 30 days) time period or the mortgage loan will be placed with an attorney for foreclosure to commence.

3.      the filing of a mortgage foreclosure complaint with the clerk of the court in which the property is located (not where live if it is a different county). In addition to the foreclosure complaint, a lis pendens is also recorded in the public records of that county which purpose is to advise the world that the bank has a litigation matter involving that property.

4.      the issuance of a summons by the clerk.  There will be a summons for the husband, wife, tenants known or unknown, junior lienors (the 2^nd mortgage for example). 

5.      the “service” (sometimes called “service of process”) of the summons, along with the lis pendens and the foreclosure complaint. “Service” can mean delivered, posted, or published in a local newspaper (if the court determines you were “avoiding service”.

So let’s look back at the two questions.

You are in foreclosure if a foreclosure complaint has been filed in the courthouse with the clerk of court, regardless of whether you have been served the summons along with the complaint and lis pendens.

You have been served with the summons, foreclosure complaint and lis pendens if you have received the package by personal delivery by the process server (often a deputy Sheriff), or sometimes alternatively if the package has been left at your door, thrown on your porch, or notice of the suit published in a local newspaper where the property is located.

Be careful about service of the foreclosure complaint – you have a limited number of days to respond to the suit before you will have a default entered against you.

The best advice is to contact an attorney familiar with foreclosures as soon as you are late with your payments – find out how the events are going to unfold (under the state laws where the property is located) and create a strategy for the solution to the problem. The end result of doing nothing is that you will lose the property - but it is not just giving the property to the bank!  There are long range negative effects of a foreclosure! (see the articles below). The key to remember however, is that foreclosure is not a solution to your problem - it is a solution to the lender's problem.  You need to develop a strategy for your best solution with your legal advisor.

The following articles may be helpful in better understanding the effect of a foreclosure, both short and long term:

WHY IS THE BANK FORECLOSING IF I AM DOING A SHORT SALE (OR LOAN MODIFICATION)?

PAY YOUR ASSOCIATION EVEN IF YOU DON'T PAY YOUR MORTGAGE

FRIVOLOUS DEFENSE TO FORECLOSURE CAN COST BORROWER $$$

SHORT SALE RESCUE FRAUD ON DESPERATE HOMEOWNERS

MORTGAGE IS NOT AN OBLIGATION TO PAY - COMMON MISTAKEN ADVICE BY AGENTS

ITS NOT THE JUDGE'S JOB TO BE THE DEFENDANT'S ATTORNEY

BANKS BEGIN TO GO AFTER DEFICIENCY JUDGMENTS - FANNIE MAE POINTS THE WAY

SHORT SALE PRIMER - LAWYER DISCUSSION OF THE SHORT SALE EVOLUTION

LOAN AUDITS - FORECLOSURE DEFENSE FALLACY?

FORECLOSURE DEFICIENCY JUDGMENT or SHORT SALE PROMISSORY NOTE or BANKRUPTCY - REVISITED

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Copyright 2011 Richard P. Zaretsky, Esq.
Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader. Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com       Website www.Florida-Counsel.com.

 

See our easy to understand articles at:
TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES