Thursday, November 15, 2012

Bringing Order to Show Cause with Temporary Restraining Order (TRO) vs. "Produce the Note" Suit to Postpone Foreclosure Sale

Question: My home has a pending foreclosure for next week. My lender is willing to modify my loan for a significant down payment, the full amount of which I will only have in two weeks. They are unwilling to extend my deadline for that long. Can I file a "Produce the Note" suit to buy me the extra time needed to complete the loan modification?

Response: Generally, when a foreclosure sale date is scheduled, the banks are unwilling to do a loan modification unless you can request to postpone the public foreclosure sale date. Whether they will consent or not is in the bank's discretion but they will generally agree to it if your loan modification process is active and likely to happen. Also, if the bank is unwilling to do that, you can bring an Order to Show Cause with a Temporary Restraining Order (TRO) through the court and have the judge make a determination on an emergency basis. Most likely, judges will grant these petitions, especially if you can show them good faith on your part in trying to save your 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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Sunday, November 11, 2012

Negotiating with a Bank to Avoid a Deficiency Judgment

Question: What can I expect from a real estate short-sale as far as deficiency judgments? I am in the process of attempting a short sale, but am worried the bank will allow the short sale, but a judgment will remain that can come back and haunt me years later. I've been told that it may come down to me needing to just let it foreclose and go to auction for a better chance of eliminating a deficiency judgment.

Response: When you do a short sale, you can negotiate with the bank to avoid a deficiency judgment. In this economy, most banks agree. However, at the end of the year, you will receive notice from the IRS regarding the debt cancelled. The amount forgiven by the bank (difference between what you owed and what you sold the house for) will be regarded as income and you would have to pay capital gains taxes on that. Speak to your accountant about rules governing the cancelled debt. In 2012, that requirement was waived. I am not sure if it will be extended through 2013 and so on. However, if you do not short sell your home and the bank forecloses, then the bank can come back after you for the deficiency judgment in this case as well. Short sale is more favorable 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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