Why Have 3 Major Lenders Suspended Foreclosures And What Does That Mean To You?
Here is the short story why. It seems that banks were in such a rush for foreclosure that they forgot to follow the rules. With all the work that goes into taking over all those houses, who would know if they cut a few corners along the way? Well, they found out, and it turns out that many of the foreclosures that they have already done or were about to do, may not have a legal basis because they did not follow the rules.
Here’s what this means for homeowners.
If any of these banks including Bank of America, Chase and GMAC have taken a home from you, contact an attorney immediately as you may have a lawsuit on your hands with damages as large or greater than the amount of your mortgage. – with the possibility of termination! What is termination? They may have to completely forgive your mortgage balance and return your home to you. Make sure the attorney you contact knows the mortgage notes better than the lenders who issued them.
If you have a pending foreclosure, or if you have received a notice of sale and have a foreclosure auction date, the first thing to do is call the sheriff or attorney who sent you that letter. Don’t assume anything.
Ask them if their sale is off. Just because you have a Bank of America loan does not mean that YOUR sale is canceled unless the attorney or sheriff has received notice that YOUR sale has been canceled. In other words, they could be doing it fast. We just called about a Bank of America sale for next week and as of today, it is not canceled.
In other words, you may want to have a “Plan B” in place. That could be having the preliminary papers so you can file for Chapter 13 bankruptcy and stop your sale on the spot. Have everything ready to go to court in case they are still in the process of sale. In fact, you can prepare these documents yourself without a lawyer. It’s pretty cheap insurance (a couple of hours and the cost of some instructions).
If the foreclosure attorney has not received a notice of cancellation of your foreclosure sale, call your lender. Don’t trust them to just “tell” you. They probably won’t confirm anything. The only way to get confirmation is to establish an open channel with the foreclosure attorney who sent you the letter. Let them know that you spoke to your lender who said the sale was canceled, and they can confirm. Then get something in writing from them. Remember that the foreclosure attorney has no authority to act on your own. They can only do what the lender has told them to do.
There is nothing to stop your lender from going back one mortgage at a time and doing whatever it takes to correct your mistakes and compliance deficiencies. In that case, they may be able to resume foreclosure confident that they are complying.
Therefore, you may have less time than you thought.
And finally, make the most of the time you’ve just given. Now you may have time to start or reapply for that loan modification. In a sentence, a loan modification changes your loan with lower payments, so you can pay for your own home. This takes months, even when things are going well. So DO NOT TURN THIS OFF! The more you know, the less chance you have of doing this wrong and wasting months of valuable time. Get informed and get started!