Regardless of the reason a homeowner slides into foreclosure, the lender is taking the property in a process that can leave the homeowner unrepresented by an attorney without leverage. Foreclosure can take place non-judicially without the courts or judicially using the courts. Whether it’s non-judicial or judicial, if you’re under foreclosure, you might require the services of a lawyer, depending on your particular circumstance.
Consulting an Attorney
It’s always wise to seek legal advice if your lender is foreclosing your property, even if you’re not contesting the foreclosure. Consulting with an attorney about your foreclosure will give you valuable insight into it and any potential post-foreclosure debt issues. However, speaking to an attorney and getting general legal advice about your foreclosure isn’t the same as actively engaging one to deal with it. Generally, your need for an attorney to deal with a foreclosure comes down to deciding if you’re going to contest it.
Types of Foreclosure
The type of foreclosure you’re experiencing along with any decision to contest it usually determines your need for a lawyer. In states such as Utah, the majority of foreclosures are carried out non-judicially and don’t even involve the courts. If you want to fight your non-judicial foreclosure, you’ll first need to file a lawsuit just to bring it into a court having jurisdiction. A skilled attorney can also definitely help in contesting or even just delaying your judicial foreclosure.
Pro Se Representation
If you’ve decided to fight your foreclosure, you are of course, free to represent yourself in court. Going to court without the aid of an attorney is common in the American legal system and is known as “pro se” representation. Many homeowners contesting their foreclosures have represented themselves pro se, especially when they’re financially strapped. If you don’t have significant time or energy to devote to fighting your foreclosure, though, it’s usually best to retain an attorney.
Delaying a Foreclosure
An entire industry specializing in helping homeowners delay their foreclosures, sometimes for years, has sprung up since the 2007 housing market crash. Most foreclosure delay services use some form of attorney or legal aid to help clients delay their foreclosures.
Foreclosure and Bankruptcy
You may not need an attorney to deal with your foreclosure if you’re filing for Chapter 7 liquidation bankruptcy. For one, the automatic stay issued when you file for Chapter 7 or Chapter 13 reorganization bankruptcy temporarily delays foreclosure. Typically, foreclosure is delayed by one to two months during a bankruptcy unless the court lifts the stay. Also, if you’re using an attorney to file for bankruptcy, you can obtain any needed foreclosure advice from that attorney.
Statutory Redemption Mean
Statutory redemption is a law that permits the original owner of a foreclosed property to regain ownership of that property after it has been foreclosed upon. Such laws provide homeowners an opportunity to redeem their property if they are able to pay the amount that the property was sold for at the foreclosure sale and can do so before the time limit expires (usually up to one year). However, statutory redemption laws are only recognized in a handful of states. The majority of states usually follow the equitable right to redemption guidelines, which allows it before the foreclosure sale occurs. Thus, both the original owner of a foreclosed property as well as a prospective buyer should review these laws before moving forward with any legal processes and may also want to retain legal counsel to ensure that they understand the consequences. Foreclosed properties are typically sold “as is.” This means that a buyer of a foreclosed property will typically have little to no legal means of recourse if they discover that the property will need more work than they originally imagined. In which case, it is not entirely necessary for a buyer to obtain a lawyer before purchasing a foreclosed property. However, if the purchase occurred during the pre-foreclosure stage and the seller made material misrepresentations about the property, then there is a possibility that the buyer will have a chance to recover any losses they might have suffered due to the seller’s misrepresentations. For instance, if the seller did not have a right to sell the property and engaged in serious efforts to prevent the buyer from discovering that fact. Thus, if you should find yourself in such a situation, then it may be in your best interest to consider hiring a local foreclosure lawyer for further assistance. In such a scenario, an experienced foreclosure lawyer will be able to help you build a case against the seller as well as inform you of the types of remedies you may be able to recover.
When You Should Hire a Foreclosure Attorney
Below are some situations where you should consider hiring, or at least consulting with, an attorney.
You Have a Defense and Want to Keep Your Home
If you think you have a defense to the foreclosure, and you want to keep your home, you’ll likely need a skilled attorney to help. Some defenses that probably require the aid of an attorney include the following:
• The servicer didn’t follow proper foreclosure procedures.
• The foreclosing party can’t prove it owns your loan (that it has “standing” to foreclose).
• The servicer made a serious error with your account.
Each foreclosure defense is different, and every situation has complicated nuances that can ultimately make or break the case. And, you’ll have to raise your defense in court. You’ll need to file your own lawsuit if the foreclosure is non-judicial or respond to the foreclosure lawsuit in a judicial foreclosure. Either way, the process involves making a legal argument, filing documents with the court, following rules of evidence, and more.
A foreclosure lawyer can help you formulate your arguments, navigate the rules of the court, and submit the appropriate paperwork. It’s unlikely that a homeowner could mount a successful defense to foreclosure without an attorney.
You’re in the Military
Active military service members have special protections against foreclosure, as well as certain rights, under the Service members Civil Relief Act (SCRA). The SCRA is extensive and complex. If you’re a military service member, an attorney can inform you about all of your rights under the SCRA and help ensure that the servicer complies with this law.
The Servicer Is Dual Tracking
If you’ve applied for loss mitigation and the servicer is dual tracking (foreclosing while an application for a foreclosure alternative is pending), you’ll want to deal with this legal violation immediately before a sale happens. It’s very difficult to get your home back after a foreclosure. Having an attorney on your side gives you a better chance of getting results before a sale takes place. It’s a good idea to learn each step in the foreclosure process in your state. That way, you won’t be caught off guard at any point. If you’ve done your homework on the topic but still have questions, an attorney is an excellent resource.
While you can apply for a modification on your own, in some instances say you need help understanding your legal rights or the servicer violates the law; hiring an attorney just might make the difference between getting your mortgage modified and losing your home to foreclosure.
When You Probably Don’t Need to Hire a Foreclosure Lawyer
You probably don’t need to hire an attorney if your goal is simply to live in the property throughout the foreclosure process. You legally own your home up until the new owner who buys it at the foreclosure sale gets title to the property. You usually can remain in the home until this time. If your state’s laws provide a post-sale right of redemption, you might be able to stay in the property through the redemption period or until some other action, such as ratification of the sale, occurs.
You Want to Get Some Extra Time to Live in the Home
If your primary goal is to get a little more time to live in the home before the foreclosure is final, you can submit a loss mitigation application to the servicer. Federal law (and some state laws) prohibits dual tracking.
So, you can live in the home for a while longer while the servicer reviews your application. In most cases, you’ll also get some time to appeal the decision. You might even get a loan modification that makes your monthly payment more affordable or another alternative to foreclosure. But be aware that if the servicer already evaluated a loss mitigation application from you, you can’t submit another application just to stall the foreclosure. However, under federal law, if you’ve brought your loan current at any time since submitting a complete loss mitigation application, and the servicer reviewed that application, the servicer has to perform another review if you apply again. Most people don’t need a lawyer’s help in preparing a loss mitigation application. To get free assistance, contact a HUD-approved housing counselor. If you don’t have a valid defense to the foreclosure; say you stopped making your payments, have no intention of resuming them, and think the servicer has treated you fairly then there’s probably no reason to hire or consult with an attorney.
You Can’t Afford Your Home and You Don’t Want to Keep It
Likewise, if you can’t afford your house payments and don’t want to keep your home, it might be a waste of time, effort, and money to hire an attorney to fight or try to delay the foreclosure. Instead, you can put that money towards finding somewhere else to live.
If You Decide to Hire a Lawyer
If you decide to hire an attorney to represent you, it’s a good idea to speak to several different lawyers to get more than one perspective and learn about all available options. If you can’t afford to hire a lawyer to represent you throughout the entire process, consider scheduling a consultation with one to help you decide what to do, as well as to explain your legal rights and responsibilities. If you can’t afford even one consultation with an attorney, a legal aid office might be able to help you for free if you meet certain criteria.
Stages of Foreclosure
The exact foreclosure process is different in each state, but generally, you can expect it to look something like this:
• Default and notice of default
• Foreclosure filing and trial
• Notice of sale and sale of property
Default and Notice of Default
The first thing that happens in the foreclosure process is that you enter into default. “Default” essentially means you’re late on your mortgage payments; what most lenders refer to as being delinquent. The law dictates that a lender must reach out to a borrower once he or she is 36 days behind on mortgage payments. By 45 days, the lender must provide written notice of the default, including details about any loss mitigation or repayment options the borrower may be able to use. A borrower has to be at least 120 days behind on his or her mortgage for the lender to start the foreclosure process legally.
Foreclosure Filing and Trial
If you’re in a judicial foreclosure state, the next step is the foreclosure filing. The lender will file a foreclosure lawsuit against the borrower, also called a “complaint.” In some states, lenders need to prove that they offered the borrower loss-mitigation options before filing suit. The foreclosure suit will go before the court, and borrowers have a right to contest their foreclosure and raise their defenses. If the court rules in favor of the lender, the property can be scheduled for sale.
Notice of Foreclosure
In non-judicial foreclosure states, there is no trial. Lenders simply issue a “notice of intent to foreclose,” alerting the borrower that the foreclosure process has begun. They will also need to advertise the sale usually in a newspaper, for at least a few weeks before the scheduled sale date. The property’s actual selling is done via auction, and usually by the local sheriff’s department. In many cases, banks and lenders are forced to purchase the properties back due to a lack of buyer interest. These are then dubbed “bank-owned properties” or “real estate-owned properties” (REOs), and the lender then makes efforts to sell those directly to a buyer. Many banks and larger financial institutions list their REO properties somewhere on their website.
Once a foreclosed property has been sold, the former homeowner must vacate the premises. If he or she doesn’t, the new buyer legally can have them evicted from the home. The exact process for getting someone evicted varies by state.
Parties Involved in a Home Loan
The key parties involved in most home loan transactions and foreclosures are:
• The borrower: The borrower is the individual (the homeowner) who borrows money and pledges the home as security to the lender for the loan. The borrower is sometimes called the “mortgagor.”
• The lender: The lender originates the loan. Sometimes the lender is called the “mortgagee.”
• The investor: An investor buys loans from lenders.
• The servicer: The servicer, which is the company you make your monthly payment to, handles the loan account. Often the servicer is a third party that manages the account on behalf of the lender or an investor for a fee. A servicer’s duties include collecting and processing loan payments, as well as initiating and monitoring a foreclosure when a borrower stops making payments.
Judicial Foreclosures Go Through Court
In a judicial foreclosure, an attorney files a lawsuit on behalf of the lender or investor in court to foreclose the home. You’ll receive a copy of the complaint, sometimes called a petition, which starts the foreclosure. You then get a certain number of days, like 30, to respond to the lawsuit. If you don’t file an answer in court (or if you file a response, but the court decides the foreclosure should go ahead), the court will grant a judgment of foreclosure in favor of the foreclosing party and set a sale date. The foreclosure sale is typically an auction where the public, as well as the foreclosing party, may bid on the property. The highest bidder becomes the new owner of the home.
Non-judicial Foreclosures Generally Don’t Involve Any Court Action
All states allow judicial foreclosures, but about half also permit non-judicial or “power of sale” foreclosures. In a non-judicial foreclosure, an attorney or trustee (again, on behalf of the lender or investor) completes certain out-of-court steps. Typically, a non-judicial foreclosure involves one or more of the following steps, depending on state law:
• mailing the borrower a notice of default that tells how much time the borrower has to reinstate
• recording the notice of default in the local land records office, and
• mailing the borrower a notice of sale that states when the property will be sold. Like in a judicial foreclosure, the property is usually sold at a public auction.
Depending on state laws, a borrower might get a combined notice of default and sale, just a notice of sale, or notice by publication in a newspaper and posting on the property or in a public place.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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