For homeowners facing foreclosure, understanding the process of foreclosure and the options they have to stop missed payments from leading to foreclosure is important. If a homeowner can get together with his or her mortgage lender early on, and the mortgage lender is willing to work with the homeowner, the lender may offer the homeowner mortgage deferment. This can buy the homeowner some much needed time to get his or her finances together, especially after an emergency.

A deferment for mortgage purposes is a period of time during which the homeowner does not make payments on the mortgage loan. A deferment is similar to mortgage forbearance, although some forbearance terms include lowering the payment due instead of suspending it entirely. During the period that payments are suspended, the homeowner may be able to recover financially and continue making payments when the regular payments resume.

Deferment is generally not to be used by homeowners who are dealing with long term financial shortfalls. This is because deferment only temporarily stops payments; the missed payments are still owed by the homeowner. Deferment does not forgive any part of the homeowner’s financial obligations, it just postpones them. When the deferment period ends, the homeowner may be required to make a lump sum payment to cover the missed payments, or the past payments may be added onto the future mortgage payments. The homeowner may work out a deal with the mortgage lender to get a break on the interest during that time, and have the interest added onto the principal.

Whether a homeowner qualifies for deferment depends on the mortgage lender. The lender may limit deferment to homeowners who are in their primary residences and not paying a mortgage on a second home. In addition, the homeowner may be subject to restrictions on selling the home or moving out during the deferment period. This does not mean that the homeowner cannot use this time to make plans to move out or sell the home after the deferment period if his or her financial outlook does not improve.

Homeowners should also be aware that they can seek deferment for property taxes. Missed property tax payments can lead to foreclosure, and if a homeowner is experiencing a temporary difficulty, he or she can apply for property tax deferment. Homeowners have to meet eligibility requirements that include income limits. Generally, if a homeowner who is granted a deferment makes payments according to the deferment timeline, the deferment does not come with additional costs. However, if the homeowner misses payments, there may be additional costs for interest and fees.  

When negotiating with a mortgage lender for deferment and other loss mitigation programs, it is best to work with an experienced attorney in order to ensure that you are agreeing to the best terms for you and not setting yourself up for future problems.

Contact an Experienced Attorney

If you are facing foreclosure and want to find out more information on deferment, forbearance, and valid defense to foreclosure on your home, call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan. Our experienced attorneys can guide you through possible foreclosure defenses and different alternatives to avoid foreclosure.

(image courtesy of Age Barros)

The television advertisements offering older Americans an opportunity to get a reverse mortgage are well known. They describe offers and terms for homeowners, age 62 years or older, to convert the equity in their homes into money that they can use for their own needs and expenses. Not all reverse mortgages are a bad idea, but in some cases, homeowners who sign up for these mortgages may end up losing their homes.

A reverse mortgage is a kind of loan in which a homeowner uses his or her home equity as collateral to receive money for various uses. The home used for a reverse mortgage is generally the primary home of the person seeking to get the loan, and once the loan is in place, the homeowner is restricted from moving or selling the home without paying off the loan.

The money the homeowner receives can be distributed over a short period of time or in monthly payments. The homeowner does not make payments to the lender as with a traditional mortgage, but the homeowner is still responsible for making insurance payments and property taxes on the home.

The amount of money a person can receive in a reverse mortgage depends on a variety of factors. The age of the homeowner and any other co-owners of the home may be one factor. Once the last borrower of a reverse mortgage loan moves out of the home or passes away, the mortgage becomes due, and has to be repaid. This may mean an heir will have to pay the balance in order to keep the house, or alternatively, sell the house in order to pay the balance of the loan.

Reverse mortgages are non-recourse loans, which means that the lender can only get back an amount in repayment that is equal to the value of the home. Homeowners and their heirs cannot be sued for what would ordinarily be known as a deficiency in a regular mortgage foreclosure.

Homeowners who fail to make the necessary payments for insurance and property taxes can get into trouble and lose their homes in a tax sale. Homeowners may get confused and fail to make these payments because they assume that the lender will be making these payments on their behalf.

Homeowners have three days after signing up for a reverse mortgage to cancel the agreement without suffering adverse consequences. This is called a period of rescission. Before taking on a reverse mortgage, homeowners should always make sure they consult with an experienced financial advisor or attorney to ensure that the terms of their reverse mortgage are not adverse to their interests.

Contact an Experienced Attorney

If you want to pass on your home to your children, a reverse mortgage may be a risky move. If you are using the money from the reverse mortgage to pay down debts, there may be other ways available to you without resorting to the reverse mortgage. Before you sign up for a reverse mortgage, call us to speak to our experienced estate planning attorneys, at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan for a consultation.

(image courtesy of Rowan Heuvel)

When a homeowner is facing foreclosure because of financial problems, and also has other significant debts that are unmanageable, bankruptcy may be the best way forward. However, when a mortgage debt is discharged in a

Reaffirmation of a debt in Chapter 7 bankruptcy means that the person filing for bankruptcy excludes the debt from the debts discharged through the bankruptcy process. The creditor and the debtor agree to waive the debt’s discharge in bankruptcy.

Generally, when a person files for Chapter 7 bankruptcy, there is a period of time known as a stay period, during which creditors are required to stop all collection attempts. If a foreclosure has been started, it has to be put on hold during this stay period. However, the foreclosure action will not be held off indefinitely, and the homeowner has to either reaffirm the mortgage loan or lose the home. In reaffirming the mortgage loan, the homeowner agrees to make on-time payments on the loan and abide by whatever other terms are included in the reaffirmation agreement.

Reaffirmation has to be done before the bankruptcy is discharged, and the mortgage lender has to agree to the reaffirmation. Some lenders may not agree to the reaffirmation because the homeowner has been late on payments or missed payments in the past. If the mortgage lender agrees to the reaffirmation, it could require that the homeowner first make up any missed payments.

Even with a reaffirmation agreement, after the bankruptcy, if the homeowner misses payments on the mortgage or otherwise breaches the reaffirmation agreement, the lender can begin foreclosure proceedings again. If this happens, the homeowner can remain on the hook for any balance after the home is sold. This would be a major disadvantage over dismissing the entire mortgage loan in the bankruptcy.

Before deciding whether to reaffirm a mortgage loan, it is important to discuss this issue with an experienced attorney. While the decision to keep your home after a bankruptcy can be an emotional one, it needs to be approached rationally. If reaffirming the debt will only lead to more missed payments and eventually a foreclosure proceeding, it may not be in the homeowner’s best interest to reaffirm the loan.

It is important to also have an attorney review any reaffirmation agreement to ensure that the homeowner’s interests are well represented, and that the terms are not too difficult for the homeowner to keep up with.

Contact an Experienced Attorney

If you are experiencing financial troubles and foreclosure seems like a possibility, you need to speak with an experienced attorney from a firm that handles both foreclosures and bankruptcy. Our experienced attorneys can discuss the legal issues that will arise with either a foreclosure or a bankruptcy and how they will affect you. Call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan.

(image courtesy of Eric Parks)

The breach of contract claim was denied after U.S. District Judge Freda Wolfson found the elements of breach of contract were fulfilled by the plaintiff’s successful completion of the trial modification agreement and the defendants’ subsequent refusal to modify terms of the mortgage.

The Nov. 1, 2016 ruling in Block v. Seneca Mortgage Servicing, which was designated for publication, could put the lid on a common practice in the mortgage industry, according to plaintiff’s attorney Joshua Denbeaux: a homeowner complies with the requirements of a trial modification agreement, also known as a trial payment plan, only to see the mortgage company refuse to modify the mortgage terms.

The facts of the case, according to The New Jersey Law Journal, include that the homeowner, who defaulted on a $580,000 loan, was named in a foreclosure action in January 2013. In May 2014, she reached an agreement with Seneca Mortgage Servicing that would lower her monthly payment if she made a deposit and six monthly payments on time.

By all accounts, the homeowner completed her obligations under the agreement by November 2014, but the next month her loan was sold and the servicing of the loan was transferred to another mortgage servicer, Ocwen Loan Servicing.

Ocwen initially refused to provide a modification but said it would reconsider if the homeowner provided proof of compliance with the previous mortgage servicer’s trial modification agreement. However, according to the homeowner, Ocwen failed to credit $32,543 in trial modification payments loan balance, she claims.

Ocwen never followed through and in March 2015 a third servicer took over managing the mortgage. That company, Fay Servicing, refused the homeowner’s request for a loan modification, but provided a new trial modification agreement requiring a down payment and six monthly payments.

Block filed suit against all three servicers as well as the mortgage holder, ARLP Securitization Trust, Series 2015-1 in January of this year. She raised breach of contract claims and also raised claims under the Fair Debt Collection Practices Act, Real Estate Settlement Procedures Act and a New Jersey state law protecting consumers against fraud. The defendants moved to dismiss all four counts.

The motion to dismiss FDCPA claims against Ocwen were granted in part and denied in part, according to court documents: Motions to dismiss RESPA and FDCPA claims against Fay were granted, but the judge denied the motion to dismiss the Consumer Fraud Act claim against Seneca.

In refusing to dismiss the breach of contract claims, the judge found the plaintiff properly alleged a contract between the parties, a breach of the contract, damages flowing from the breach and that the party stating the claim performed its own contractual obligations. She rejected the defendants’ argument that the Seneca trial modification agreement is a valid contract due to lack of proper consideration by the plaintiff.

“There are tens of thousands of people in this situation. The district courts throughout the country have gone in different directions on this issue,” attorneys for the plaintiff told The New Jersey Law Journal. “We laid out all the facts and [Wolfson] had a full record in front of her for the first time anywhere in the country as to what happens with this trial modification nonsense.”