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FORECLOSURE DEFENSE OPTIONS TO SAVE YOUR HOME

 

Just because you fall behind on your payments does not mean that foreclosure is inevitable.
There are options. You need to discuss these options with your lender (the company to which
you make your mortgage payments) to determine the best solution for your situation. Remember: the earlier you contact your lender, the more options you will have to avoid foreclosure.

Below is a discussion of options to keep you in your home. Remember, you can pursue these
options even if you have received foreclosure papers. Foreclosure defense attorney Jeffrey S. Walters defends foreclosure actions.  Do not confuse foreclosure defense with bankruptcy. Foreclosure defense is a true defense to a bank’s attempt to foreclose on your mortgage. A foreclosure is a legal proceeding where your mortgage lender files a Complaint in the Superior Court in order to force your house to be sold in a sheriff’s sale. If you are served with a Summons and Complaint for Foreclosure, we can help. Call attorney Jeffrey S. Walters, Esq. to discuss your options for defending the foreclosure. Call 856.552.1045.
 

Options to Save Your Home From Foreclosure

 

Your lender will work with you to determine if you are eligible for any of the following workout
options. Keep in mind that your lender wants to help you. They do not really want your home.

1. Refinance (Traditional and HARP)
2. Forbearance
3. Reinstatement
4. Repayment Plan
5. Loan Modifications (Traditional and HAMP)
6. Defending the Foreclosure
7. Bankruptcy
 

1. Refinance

 

Traditional Refinance

 

If you have an adjustable-rate mortgage that is adjusting or want to secure a lower interest rate
than your current mortgage, refinancing may be able to reduce your monthly payments to a more sustainable level. If you have not missed any mortgage payments, refinancing can completely replace your current mortgage loan and provide you with new terms and a new monthly payment. Refinancing may make sense if you:
 

  • Have enough equity in your home to qualify for a new loan.

  • Are current on your mortgage payments.

  • Have acceptable credit.

  • Want to secure a lower rate, longer term or a different type of loan.

 

Home Affordable Refinance Program (HARP)

 

Nowadays, many people cannot refinance because they do not have enough equity in their home due to loss in property value. If you are unable to qualify for a traditional refinance, you may be able to refinance through the Home Affordable Refinance Program (HARP), part of the federal Making Home Affordable Program. HARP may make sense if you:
 

  • Have a loan that is owned by Freddie Mac or Fannie Mae

  • Have little or no equity in the home

  • Have the financial ability to afford the new payments.

 

2. Forbearance

​

If you are facing a short-term financial hardship and need temporary assistance with your
mortgage, your lender may offer you a “forbearance.” With this option, your lender is
temporarily reducing or suspending your mortgage payments while you get back on your feet.
Forbearance may make sense if you:
 

  • Are facing a short-term financial hardship.

  • Think you may fall behind on your mortgage payments, or have already missed one or two payments.


Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed
or reduced mortgage payments when your financial situation has stabilized.
 

3. Reinstatement

 

With a reinstatement, you may be able to make your loan current and avoid foreclosure if you
have the funds to repay the missed payments on your mortgage and any associated fees and late
charges (typically a lump sum payment on a specific date). A reinstatement may make sense if
you:
 

  • Are recovering from a short-term financial hardship.

  • Are behind on your mortgage and have received a notice of default.

  • Can demonstrate to your lender that you can repay your debts and afford your monthly
    mortgage payment.


Be aware that there may be late fees and other costs associated with a reinstatement plan.
Reinstatement is often combined with forbearance when you can show that funds from a bonus,
tax refund, new employment or other source will become available at a specific time in the
future.

Also, it is very important to remember that even if your lender has started foreclosure
proceedings, you still have the right to tender the past due payments and have the
foreclosure dismissed. This right is given to you by the New Jersey Fair Foreclosure Act. You
do not need your lender’s permission. However, in addition to the amount you owe in past due
payments, you will need to pay the lender’s costs if they have already started foreclosure
proceedings. Also, you will need to make the cure payment all at once, in a lump sum.
 

4. Repayment Plan

 

If you are a few months behind on your mortgage due to a short-term financial setback, but
are now financially secure, you may be eligible for a repayment plan. This option will enable
you to make up your missed payments, and late fees, over a fixed amount of time by
combining a portion of what is past due with your regular monthly payment. By the end of the
repayment period you will have paid back the amount of your mortgage that was delinquent. A repayment plan may make sense if you:
 

  • Have recovered from a short-term financial hardship that caused you to miss a few

  • mortgage payments and receive a notice of default.

  • Can demonstrate to your lender that you have the funds to repay past-due amounts (along with any associated fees and late charges) and can afford your mortgage payments


Repayment plans are often combined with forbearance when you can show that funds from a bonus, tax refund, new employment or other source will become available at a specific time in
the future.

​

5. Loan Modification

 

Traditional Modification

 

For homeowners who are several months behind on their mortgage, or expect to fall behind soon, a traditional modification of the mortgage terms may provide a solution. With a traditional
modification, you and your mortgage company will have a written agreement that changes one or more of the original terms of your note (such as the interest rate or duration of loan) to make your payments more affordable and sustainable. A modification may make sense if you:
 

  • Are not current on your mortgage.

  • Do not qualify for the federal Home Affordable Modification Program (HAMP)

  • Do not qualify for the federal Home Affordable Refinance Program (HARP).

  • Can afford the modified mortgage payments.

 

Home Affordable Modification Program (HAMP)

 

If you are behind in your mortgage payments, in the foreclosure process, or current on your
payments but are about to default due to a recently experienced hardship, you may be able to
modify your loan to a lower rate through the Home Affordable Modification Program (HAMP) ,
part of the federal Making Home Affordable Program. HAMP can help reduce your monthly
mortgage payment to 31% of your gross (pre-tax) monthly household income by reducing your
interest rate, and if necessary, extending your loan term from 30 years to up to 40 years. With
HAMP it also may be possible to defer a portion of the principal amount you owe. HAMP may
make sense if you:
 

  • Have a loan that is owned by Freddie Mac, Fannie Mae or a participating investor. If your

  • mortgage is not owned by Freddie Mac or Fannie Mae, you may be eligible for HAMP if your

  • lender has agreed to participate in the program.

  • Took out your mortgage on or before January 1, 2009.

  • Currently live in the property as your primary residence.

  • Do not qualify for the federal Home Affordable Refinance Program (HARP).

  • Are behind on your mortgage, or you are current but will be unable to afford your mortgage payments because of a documentable financial hardship.

  • Spend more than 31 percent of your pre-tax income on your mortgage payment (including principal, interest, taxes, insurance and homeowner's association dues).


Depending on your individual loan terms, the payment on your HAMP modification may adjust
after the first 5 years, so be prepared.

If you are eligible for HAMP, your lender will require you to make payments during a trial period
before you’re eligible for a permanently modified mortgage payment. To complete the trial
period, you’ll need to make your monthly trial period payments on time. If you successfully
complete the trial period, your lender will permanently modify your mortgage.

Be aware that all workout options affect your credit rating and some affect it more than others.
You should discuss all potential impacts with your lender.

Don’t Give Up!

It is important you understand what foreclosure means and why it is so critical to get help early to avoid it. The impacts of foreclosure are significant, including potential loss of equity in your
home and the negative hit to your credit score. The emotional impacts are considerable as well,
both for you and your family. For these reasons and more, be sure that you and your lender
explore all options to foreclosure and don’t give up.
 

6. Defending the Foreclosure

 

Again, you can pursue these options even if you have received foreclosure papers. But if you
have received foreclosure papers, we can defend the foreclosure action even while you explore the above options. Do not confuse foreclosure defense with bankruptcy. Foreclosure defense is a true defense to a bank’s attempt to foreclose on your mortgage. A foreclosure is a legal proceeding where your mortgage lender files a Complaint in the Superior Court in order to force your house to be sold in a sheriff’s sale. If you are served with a Summons and Complaint for Foreclosure, we can help. Call foreclosure defense attorney Jeffrey S. Walters, Esq. to discuss your options for defending the foreclosure.
 

7. Bankruptcy

​

If you cannot obtain a loan modification, a bankruptcy filing may be considered. A bankruptcy
will stop the foreclosure and force your lender to allow you to cure the arrears over 3 to 5 years.
During this time you will make normal mortgage payments. A bankruptcy may make sense if:
 

  • You can afford your normal monthly mortgage payment but just need more time (up to 5 years) to cure the arrearage that has accrued on your loan.
     

  • You cannot afford the normal monthly mortgage payment, but you need to stop a sheriff’s sale in order to buy more time to explore a loan modification or sell your home privately.
     

  • You were denied a loan modification, are facing an imminent sheriff’s sale, and need time to try again for a loan modification. For example, if you were denied a loan modification but you or your spouse now have a new job, you may wish to apply again for the loan modification but your lender may not agree to stop the sheriff’s sale because it is too close. A bankruptcy will stop the  sheriff’s sale to give you time to apply again for the modification and get an answer.
     

Call attorney Jeffrey S. Walters, Esq. to discuss your options.

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