What's Less Costly: Foreclosure or Short Sale?

Question: I have a mortgage with one bank and an equity line of credit with another bank. If I let my home go into foreclosure, can the bank sue me for the equity amount? How does this work? My mortgage balance is slightly lower than the value of my house. With the real estate prices down, if I put my home on the market for its market value, with all the additional fees and closing costs, I would have to make an investment into having it sold via a foreclosure.

Response: You are better off doing a short sale than letting it go into foreclosure. Foreclosure should always be the last alternative as it will most adversely affect your credit. Based on your description, both loans are secured by equity in your home, i.e., if the house sells for its market value or even less, both lenders will be able to obtain what is due and owing to them. However, if you are concerned about putting money out-of-pocket, then consider a short sale since the bank will pay for all sale-related expenses and even offer you money to do a short sale, if the house is your primary residence. However, to answer your question specifically, the lender that gave you an equity line is unlikely to go after you because based on the description you provided, they will likely get their money (ex: if the house sells for its market value, the first lender will get what is owed to them, the balance will go to the second lender, and if anything is remaining, you can even claim the rest).

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 © 2016 Law Office of Svetlana Kaplun, P.C.

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Negotiating Time with a Bank to Move from Foreclosed Property

Question: My house is supposed to be authorized for foreclosure by the court tomorrow. How much time do I have to get my things out? I have tried HARP in the past and failed as I was unemployed for some time.

Response: After foreclosure takes place, the bank or whoever purchases the property will become the new owner and you will become a holdover tenant if you remain on the property. Oftentimes, the bank will offer money to a holdover tenant to leave or will have to bring an eviction proceeding in the landlord/tenant court to get you out. It is likely that you would be able to negotiate with the bank that you need a certain amount of time to leave and they will let you to avoid additional legal expenses.

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 © 2016 Law Office of Svetlana Kaplun, P.C.

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Stopping Foreclosure by Reinstating the Mortgage

Question: We were served with foreclosure papers last week, is there any way to stop the foreclosure? We have a way to obtain the past due amount. We thought the payments were getting automatically withdrawn and did not receive the notifications due to the wrong email address the bank had for us. We tried to call the mortgage company, but instead were told to contact the attorney that filed the papers.

Response: Request the reinstatement amount from the bank's attorneys, reinstate the loan, and they will discontinue the foreclosure action. Foreclosure is a lengthy process and before the bank can even proceed with a residential foreclosure, you will attend a mandatory settlement conference, where you too will have an opportunity to try to work out an option to save your home, i.e., loan modification, reinstatement, short sale, etc.

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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Considering Foreclosure for my Underwater Home

Question: I am considering letting my underwater house go into foreclosure after not being able to reach an agreement with my mortgage holder. How long do I have before I have to leave my house and will they be able to put a lien on another home I just purchased? I have tried contacting the bank that originally underwrote my mortgage, but they refused to help me and sold my mortgage to another bank. I tried to unsuccessfully refinance my mortgage with that bank. My current bank says it will modify my loan, but never calls me back with the information.

Response: If your objective was to get a loan modification, try to modify it first. The banks are so overwhelmed with all the borrowers who defaulted on their mortgage payments, their response time can be quite slow. Be as aggressive as you can in reaching the bank at your own initiative if that is what you are interested in or hire a professional attorney who can help you with preparing the documents. Do not let the house go into foreclosure as it will affect you negatively in many different ways, from affecting your credit to a deficiency judgment. It is much better for borrowers and the bank alike if you do a short sale. With a properly negotiated short sale, you will not be responsible for the difference in the amount of debt owed to the bank and the short sale price (although there may be consequences with the IRS).

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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Mortgage on my Foreclosed Home Remained Active in Error

Question: My investment property was foreclosed on ten years ago. The house had a first and second mortgages on it. The house was foreclosed on and sold, but the lender for the second mortgage was never notified that I no longer have the house and up to now, they were still reporting me with an active loan. The second mortgage company has now been informed and they are now reporting my loan as a charge off. How did the law office foreclose and sell my home with an active loan on it and not inform the second mortgage company? Do I have any recourse to go after the law firm that foreclosed on my investment property?

Response: A charge off is when the bank writes off a loan and usually ends up selling it to a collection agency. Loans generally get charged off when you haven't paid in a while and there is no more equity in the home for the bank to go after. You can look at your foreclosure papers to notice if the 2nd mortgage holder was put on notice by checking if their address is mentioned there. If a mistake indeed occurred, then the first mortgagee would need to conduct a strict foreclosure, i.e., commencing another foreclosure action and serving only the unnamed defendant. Otherwise, the 1st bank does not have clear title to the property and would not be able to conduct a foreclosure sale. You should definitely write a letter to the three major credit bureaus, reporting a dispute of the reported information and sending them the supporting evidence.

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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Can a Mortgage Become an Unsecured Instrument after a Bankruptcy Filing?

Question: I filed for bankruptcy a couple of years ago. Prior to that I asked for financial assistance on my home from my lender, who did not respond. When the bankruptcy was discharged, I again contacted my lender requesting to relinquish title in lieu of foreclosure. Still I got no response. I quit making payments on the property later that year. About a year later the lender contacted me. I asked again about title in lieu of payment and was told I would need to complete a financial statement. Since my financial health had improved since the bankruptcy, I declined. I have not heard from the lender in over a year except for delinquent payment notices. Can I be held liable for any property other than the secured property when the bank finally gets around to foreclosing?

Response: A mortgaged property is a secured property (mortgage itself is the security instrument). When you file for bankruptcy, a mortgage does not become unsecured unless there is not enough equity to preserve the bank's interest. In that case, only that portion can become unsecured (ex: mortgage $300,000; fair market value=$240,000; unsecured amount=$60,000). By signing a mortgage document, you give the bank a right to go after your home if you default on your payments. When the property is unsecured, the creditor can still go after that amount but they cannot go after your property. So, if foreclosure takes place, the bank can essentially go after you for a deficiency judgment. Consider filling out that financial statement to do a deed-in-lieu of foreclosure or a short sale. What the bank looks for is affordability of mortgage payments. Just because your financial situation improved does not mean you can pay all of your arrears back and stay current on your payments. If the property is clear of any tenants, there is a chance that the bank would accept a deed-in-lieu of 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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Mortgages Not Discharged by a Bankruptcy

Question: I have a question about bankruptcy. After filing for bankruptcy a few years ago, I thought my mortgages were discharged. I never heard from the bank except when they would inform me about how much I owe in order to catch up with my payments, but now I am in a desperate need to understand if and when the bank is going to proceed with a foreclosure. How long does it take for foreclosure to take affect?

Response: You should contact a bankruptcy attorney so he/she could answer your questions about whether your mortgages were or were not indeed discharged. If they were discharged, then the trustee will be the one to sell the properties to satisfy the mortgages (whether partially or fully). If they were not discharged, then you are responsible for the mortgage payments. Foreclosure these days takes a lot longer than it did in the past and can be a matter of months or years, depending on when you stopped making your mortgage payments, who the servicer is, as well as your intentions for the home. If you do not intend to keep the property and will not resist foreclosure, then it takes a shorter amount of time. However, waiting for foreclosure to take place is never advisable. If discharge of your mortgages did not take place, please consider looking into a short sale or a deed in lieu of 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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Filing a "Pro Se" Motion to Have a Foreclosure Case Dismissed

Question: A foreclosure suit was filed against me in 2010. The home was sold through a short sale, with the involvement of the bank in late 2011. The price was within 90% of the mortgage amount and the bank waived any right to collect "shortages" in the suit they filed. When I checked with the court recently the suit is still active. Although there is nothing pending, no judge assigned, etc. What language would I use in a "pro se" motion to have the case dismissed?

Response: From your description, it appears that short sale took place approximately a year ago. At this point, the case is sitting in court without any activity. Because of the backlog of foreclosure cases, sometimes, it takes banks longer than generally anticipated to proceed with their action, or as is the case here, with the discontinuance. Once the property sells and the bank receives its proceeds (short sale cannot take place unless agreed by the bank), the foreclosure action must be discontinued and the bank will get to it sooner or later. If you wanted to bring a motion at your own initiative, you would have to be the one to file for the Request for Judicial Intervention (RJI), thus assigning a judge and then you could bring a motion. Alternatively, you could bring an Order to Show Cause to have the judge hear you out. Essentially, it would be a lot of time and effort on your part when the case is already closed.

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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Can Loan Modification or Refinancing be Offered to the Estate of the Deceased?

Question: My husband is listed on the mortgage of our home only, he passed away a few years ago, the bank will not refinance or let me assume the responsibility for the mortgage. I am on the title, if I let the home go to foreclosure will I be responsible for any tax issues. My home is under water by a substantial amount. I tried refinancing with my current bank and other lenders, but was denied several times as the lenders said that I am not the original borrower on the loan.

Response: Situations like these are very tricky. Your deceased husband signed the contract (note and mortgage) with the bank, therefore, he was the one in privity of contract with the bank. You are not in privity of contract with the bank and you have no rights to sign a new agreement, whether it would be a refinancing or a loan modification. Only the borrower can sign the new contract. So far, I have only witnessed one bank offer a loan modification to the Estate of the Deceased. Generally, that is not the case. Some banks will consider an assumption where you take over the original terms of the loan but you have to show qualifying financials. This does not work if you have no income, i.e., your income has to support the mortgage and any arrears, if applicable. If you want to stay in the house, the best option is to continue making payments as before until the loan is paid off unless you are already in default and can no longer reinstate the mortgage. Finally, if the bank forecloses on the home, you, personally, would not be responsible for the deficiency. However, the bank may go after the estate and in a case like yours, it could affect you similarly. As of recently, many banks have stopped pursuing deficiency judgments because it is very hard to collect that money from people who don't have much to begin with and lost their last assets. Whether they choose to pursue it or not, they do not waive that right.

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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Should I still be Responsible for a Surrendered Property through Bankruptcy?

Question: I filed for bankruptcy over a year ago in New York State; all of my debts were discharged. I opted to surrender my home. I have not heard from my bank since before the bankruptcy filing. I was unaware that I still owned the property until earlier this year when I was cited by the city for code violations. I fixed the problems, but do not have the means to continue to care for this property. It is currently unlivable. I recently received a notice of tax sale from my county. Can I sell this property? Will the county take it at a later date and sell it for taxes owed? I have doubts that my bank will ever get around to taking claim of the house. I tried to do a short sale and received many offers which were all turned down by my bank. They repeatedly lost paperwork and misdirected my calls. Once the bankruptcy went through last year I stopped trying.

Response: If you surrendered the property through a bankruptcy, then maintenance is no longer your responsibility. Trustee is the one who disperses the assets and maybe there is a delay, but considering that you willingly surrendered the property, it should no longer be your concern.

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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Stopping Foreclosure When Time is of the Essence

Question: My house has been foreclosed upon. At no point during the proceeding did the bank produce, in spite of legal demands made upon the bank, an original copy of the promissory note and Deed of Trust. It is my understanding, under New York law, that a foreclosure cannot go forward without the original instrument. Nevertheless, in my case, foreclosure was allowed to proceed. I now have to vacate the property within two weeks. Please let me know any winning strategies to stop the foreclosure.

Response: Time is of the essence in a case like this. If there are faults with the procedural aspects of the foreclosure process, you need to consult with a professional attorney who would be willing to bring a Motion to Vacate Judgment of Foreclosure and Sale. Of course, you need winning arguments to actually get the motion granted. It is very important to do this as soon as possible because the more time goes by, the more prejudicial the outcome becomes to the bank and the chances of a favorable resolution become less likely. Good luck!

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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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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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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