The Bank is Enforcing a Deficiency Judgment Against Me, What Can I Do?

Question: I just went through a foreclosure and now the mortgage insurance company wants the difference of tens of thousands of dollars from me as this was the difference between what I owed and what my home was sold for at foreclosure auction. Can they access my bank account? I do not have a job right now and am attending school.

Response: Yes, but first the bank has to sue you to get a judgment against you and then try to either garnish your wages or your bank account or your tax refund or put a lien on your property if you own another home to satisfy that deficiency. If you know you are anticipating being sued, it is best to appear in court and try to work it out and maybe settle for a lesser sum than to wait until a default judgment is granted against you and the bank will look for a way to seize your account.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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Attempting a Short Sale After the Motion for Default Has Been Filed

Question: If a foreclosure process is in progress and owner has failed to file a pleading within the time required by law and a motion for default has been filed by the bank for the purpose of accelerating the foreclosure process, can the property owner attempt a short sale?

Response: Generally, until the foreclosure sale is scheduled or the property has already been sold, the borrower under the loan can attempt loss mitigation options to avoid foreclosure sale, including the short sale option. However, from the question, it is not clear at what stage the foreclosure process is in. If the borrower did not file an answer and the bank is proceeding with the borrower being in default, it may be possible for the borrower to file a motion for late answer. If you show a reasonable excuse for lateness, the court may grant it (ex: you were not properly served with summons and complaint, hence you did not know about answering the complaint). If it is too late for that, it is best to contact the bank's attorneys' office to inquire if short sale option is still available. Since everyone benefits more from short sale than foreclosure, they will oftentimes work with you to do the short sale and not schedule the foreclosure sale.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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HAMP 2.0 for Homeowners, Who Defaulted on Their Loan Modifications

Question: I previously had a loan modification under HAMP. After my spouse lost her job, we could not afford even the modified payment. We are back on our feet now but the bank has refused to work with us again and constantly tells us we are in active foreclosure. Is there any way we can try to save our home? We don't have the money to reinstate the loan.

Response: In June of 2012, HAMP 2.0 came out, a new federal program designated to help people like yourself who previously had a HAMP loan modification but then defaulted or people who defaulted during the 3-months trial period. If you have not submitted the documents after June 1, you should try to resubmit your paperwork now. The bank actually uses 25% of your gross monthly income (as opposed to 31% under HAMP) to determine if you are eligible for a loan modification.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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Undecided between Foreclosure and Short Sale

Question: I am facing foreclosure on my home. My spouse passed away a few years ago, my home has not sold and I have not been able to pay my mortgage for a number of years now. My mortgage company refused to allow me to do deed-in-lieu of foreclosure, and my realtor knows that I am trying to do a short sale. I know I can’t save my home, and I am wondering what I can do to make the foreclosure process any easier on myself. Do I need to hire a lawyer to get me through the foreclosure process?

Response: It depends on what you are trying to accomplish. If you want the bank to take away your home as soon as possible, then don't fight foreclosure and the bank, in due time, will be allowed to foreclose on your home by the court. Alternatively, if you want to stay in your home as long as possible, then you should get an attorney who will attempt to fight foreclosure and thus prolong the process and maybe give you the necessary time to do a short sale.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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Foreclosure, Short Sale or Deed-in-Lieu on a Vacant Property

Question: My home was put up for sale multiple times in the last few years with no success. I have refinanced my mortgage in the past and I am current on my payments, however I have not lived in that home for many years because of work. I am paying a mortgage on a house I don't live in. I need to know the best course of action to get out of this situation, so that I can buy a house closer to work. I am at the point of walking away from it, however I have a great credit history and I don't want to take that big of a hit on my credit score. What is the best option for me: foreclosure, short sale or deed-in-lieu of foreclosure?

Response: Foreclosure is always the last alternative. You can either try to do a short sale or a deed-in-lieu of foreclosure if the property is vacant. Otherwise, under HAMP 2.0, you can try to get a loan modification on the mortgage, to make payments more affordable, rent it out and essentially use the rent money to pay for the mortgage. However, all these methods will negatively affect your credit score but not nearly as badly as foreclosure. Also, while you have good credit, it is better to purchase a new home now while you still can but you need to be able to show affordability for two mortgages in order to get another mortgage. You can show the listing agreement for this property in question so the bank at least knows that it is a matter of time until you sell this home.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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HAMP 2.0 Allows Loan Modifications on Up to Three Properties

Question: I own two properties, one that I use as my primary residence and another that I use as a rental property. I cannot afford to pay the mortgage on either, but would like to avoid foreclosure, keep both homes and modify each loan. Is that possible?

Response: Prior to June 1, 2012, only mortgages on primary residences could be modified. However, with HAMP 2.0 that became effective on June 1, 2012, you have an opportunity to modify loans and avoid foreclosure on up to three properties. With that in mind, you must be able to show affordability as the bank will count all your mortgages as expenses and add them to your debt. If you have two loans with the same bank, then you would have to submit two packages with different loan numbers in order for each property to be separately reviewed for a loan modification.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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Duration of Lis Pendens Filing

Question: How long is a lis pendens filing valid? Does the lender only have a certain amount of time to actually follow through with foreclosure in New York? If a lender initiates lis pendens, how long do they have to follow through - if the borrower is trying to work something out (i.e. get a loan modification) for example, and let's just say it's over a year since the original papers were filed with the court, can the lender still foreclose or is there an "expiration" to these documents?

Response: Lis pendens is valid for three years and after three years if foreclosure did not take place, the bank, through its attorneys, files for a renewal. In New York, there are mandatory settlement conferences, where you can try to resolve your case (i.e. by attempting loan modification, short sale, reinstatement, payoff, etc). Unless a foreclosure sale date has been scheduled, there is still a good chance you can try to work your case out. In New York, after over a year of foreclosure filing, the case is still in its preliminary stages.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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Funds Owed to the Bank on a Foreclosed "Under Water" Property

Question: Do I owe money to the bank after my home is foreclosed on when I have no equity in the property? I haven't tried anything yet, but I am ready to give up the property. Following a divorce and without spousal support I can no longer afford this home and there is no equity in it.

Response: If foreclosure takes place, the bank might sue you for a deficiency judgment, which is determined based on the sale price minus your debt owed to the bank. Whatever the difference is the amount you will owe to the bank, which the bank must find a way to recover. Short sale or a deed-in-lieu of foreclosure are better options than foreclosure.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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When Does the Bank Stop Accepting Short Sale Offers?

Question: In State of New York: if a home is sent to foreclosure attorney by the lender, can the lender accept an offer of a short sale from a creditable buyer, if the short sale is offered within a day or two of the monthly deadline for the mortgage payment? For example: December 31 is the deadline for mortgage payment. If not made, lender says property automatically goes to the foreclosure attorney and they cannot accept short sale offer, and the foreclosure attorney proceeds with foreclosure. Also, when does homeowner receive foreclosure notice from lender's foreclosure attorney?

Response: The actual legal commencement of foreclosure can take anywhere from a few months to a few years, depending on the lender and the laws of the state. Short sale is one of the ways to avoid foreclosure. Once a foreclosure sale is scheduled, it is hard to go another route and do a short sale but until the sale is scheduled, you can list your property for sale and send the package to the bank for approval. The bank will always choose a short sale over foreclosure.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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Short Sale Always Better Than Foreclosure

Question: I have a modified loan and a second loan with the same bank in New York City, which are now current. I recently lost my job and am unable to continue making mortgage payments. I also have no possibility of sale as the combined mortgage principles and the home value may be the same at the present time. If I decided to go for a short sale or go into foreclosure, does the lender here in New York City have the right to go after me with a deficiency judgment, and if they do how long the foreclosure procedure will take before eviction?

Response: It is always better to do a short sale than to go into foreclosure. As a result of foreclosure, the bank can try to obtain a deficiency judgment against you but of course getting it satisfied is a matter of having assets. Short sale, on the other hand, if properly negotiated, does not result in a deficiency judgment but rather debt forgiveness, as it gets reported to the IRS. This year, you don't have to pay taxes back on the amount of debt that gets forgiven and you basically walk away without liability. As a matter of fact, most banks will offer you money to do a short sale. Please note that foreclosure in New York City can take several years if you are trying to wait it out and see if you can get back on your feet and then reinstate your mortgage.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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How Soon is Foreclosure Process Started in New York?

Question: I walked away from my home several years ago, which was due to illness and financial distress. I mailed the keys to my home to my mortgage company and have not made any payments since. My home has not gone into foreclosure, and now there is a collection company calling me. How soon is the New York foreclosure process normally started?

Response: Foreclosure in New York can be quite a lengthy process. Many cases depend on the quality of the paper work that the bank has to process with foreclosure. If you are not resisting foreclosure and are in default, then generally, it should be quicker but a multi-year time span is not surprising. However, the fact that a collection agency is harassing you for payments most likely indicates that you are not in foreclosure. What probably happened is that bank could not move standing of your mortgage to foreclosure or the loan was so minimal that it was not economically beneficial for the bank to pursue foreclosure and charged your debt off, selling it to a collection agency for pennies. You should do some investigative work as to the status of your case because it is possible that you could have been living mortgage free all these years.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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Procedure to Initiate Foreclosure

Question: I have first mortgage which is current, not past due, all payments made on time. I have a HELOC, which is delinquent by several months and the bank sent a foreclosure letter. Even though they are secondary can they foreclose?

Response: Procedurally, to begin foreclosure, the bank must first send a 90-Day Letter, giving you 90 days to get current on the loan. If foreclosure process is initiated sooner, it can be dismissed on the grounds of failing to send the 90-Day Letter. Having said that, most banks are so backed up that just because you have received that letter does not mean that foreclosure will begin exactly 90 days later. In some cases, it is months later, and in other cases, it may take a couple of years. It is trickier with the second mortgages. The bank must evaluate if it is economically feasible for them to pursue foreclosure, i.e., if the first mortgage takes up all the equity of the home and there is nothing left for the second, then, many times, the second position will charge off the loan. It is more likely to witness foreclosure of the second mortgage if there is equity left in the home once the first mortgage is subtracted (ex: fair market value=$300,000; 1st mortgage=$200,000; 2nd mortgage=$100,000--there is enough equity for both lenders to recover the amount of the debt). So, it is definitely possible for the second mortgagee to foreclose, hence you sign the mortgage at closing as security instrument for the lender, allowing the bank to take away your property if you default on payment.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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Negotiating a Settlement with a Bank to Extinguish Mortgage Debt

Question: We were facing foreclosure and we filed for Chapter 7 Bankruptcy, which was discharged earlier this year. At that time, we owed about half of our total mortgage debt on the first mortgage and half on the second and both mortgages were with the same bank. The value of the home at that time was listed in the bankruptcy at about as much as our first mortgage was worth and most of the second mortgage was unsecured. Presently we owe slightly more on our first mortgage than at the time of bankruptcy (we are current with our payments but with interest it has gone up since the bankruptcy) and have not been able to pay the second mortgage for three years now. I got a personal injury lawsuit settlement recently and we would like to approach the bank that holds the second mortgage with a settlement lump sum amount. I believe we had to reaffirm the first but if we approach the second and they do not go for a lump sum, will they be able to come after us for the payments like they did before the bankruptcy? Will we have to reaffirm the second and what exactly does that mean? How do we best go about approaching the bank?

Response: You should contact the attorney who filed bankruptcy for you and find out if bankruptcy already wiped out the second mortgage, or at least the unsecured portion of it. In any case, lenders in second position entertain settlement offers with much more enthusiasm than one would think since the main concern is to receive something than be wiped out completely. In your case, if you are still obligated under the second, you should definitely negotiate into a lump sum payment and there is a high probability that the bank will accept a lump sum (usually in proportion to the fair market value of the home minus first mortgage is what's left for second to recover). Otherwise, find out if there is a possibility of a loan modification--that could be another way out or you will be back at square one where you were before you filed for bankruptcy.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
Copyright © 2015 Law Office of Svetlana Kaplun, P.C.

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