Before a Foreclosure is filed in the County Court, the Lender must satisfy certain mandates provided by Federal Law. The Federal Mortgage Servicing Laws provide that the Loan Servicer must contact or attempt to contact, by phone, the Borrower within 36 days after the first missed payment, and thereafter, thirty-six days after each additional missed payment. The Lender is obligated to discuss with the Borrower various loss mitigation options, including opportunities for a Loan Modification, Forbearance or Payment Plan.
In addition, thirty (30) to ninety (90) days before filing a Foreclosure Complaint, the Lender must deliver to the Borrower a Default or Breach Letter, notifying the Borrower that the Mortgage Loan is in Default, that the Borrower can Cure or pay such Default, and if such Cure is not provided, that the Loan can be accelerated. Such letter must also inform the Borrower of additional protections which may be available if the Borrower is actively serving in the military.
These notice requirements are mandatory with certain exceptions, such as if the Borrower files Bankruptcy or the Borrower requests that the Loan Servicer cease contact.
Federal Law also provides that the Borrower must generally be at least one hundred twenty (120) days delinquent before the Lender may commence Foreclosure proceedings [12 CFR 1024.41].
During this stage before Foreclosure, the Servicing Company may charge additional fees relating to collection, including late fees and inspection fees.
The first step in the Foreclosure process is the filing in the County Court a Lis Pendens and a Complaint. A Lis Pendens is a notification that there is a pending Lawsuit or Foreclosure against the Borrower and the property or Home of the Borrower. A Complaint describes the nature and basis for the Foreclosure, generally, that the Borrower is in default under the terms of the Mortgage or Loan.
The Clerk of the Court will issue a Summons, and a process server, or in some Counties, a Sheriff, will serve the Complaint and Summons upon the Borrower. The Complaint and Summons is usually served within one to two weeks after the Summons is issued.
Once the Complaint is served, the Borrower has twenty (20) calendar days to file a Response or Answer to the Complaint. In the absence of the filing of a Bankruptcy, which usually will immediately stop Foreclosure Proceedings, the Borrower is advised to file a Response. If a Response or Answer is not filed, the Lender may seek a Default, and more quickly seek the Sale of the subject property at a Foreclosure Sale.
The Response does not necessarily need to be in the more formal style drafting by an experienced Attorney. Relevant case law and other legal citations are not required. The most important provision of the Response or Answer is that it be submitted to the Clerk of Court within the prescribed period of twenty (20) days and in good faith, meaning the Answer or Response be true and correct to the best of the knowledge, information, and belief of the party submitting the document. The Answer may simply respond to the various allegations in the Complaint with one of the three replies. If the Respondent agrees with an allegation, he or she may simply reply, “Affirm”, if disagree, “Deny”, and if unknown, then “Unknown”.
When filing the Answer, it is important that the Answer be submitted to the Clerk of Court for the County in which the Foreclosure was filed. Make at least two (2) additional copies. One copy for yourself, which should be stamped by the Clerk, and a copy which should be mailed to the Attorney bringing the Foreclosure action.
If there are significant Defenses that the Respondent or Defendant may have in response to the Complaint, then a Motion to Dismiss the Complaint may be appropriate. The Motion to Dismiss seeks to Dismiss the Foreclosure Action. However, one should be careful in filing a Motion to Dismiss as again, such filing must be in good faith. A finding by a County Court Judge that such filing was in bad faith could lead to Sanctions and other penalties levied against the party that submitted such pleadings.
After the Answer is filed, there may be a period of Discovery, which can span anywhere from forty-five (45) to ninety (90) days. Discovery is a process where both parties can request certain information and documents relating to the Foreclosure.
The Lender will generally then file a Motion for Summary Judgment. In a Motion for Summary Judgment, the movant, or the party bringing the Motion, attests that there is no significant differences in the facts or law present between the parties, and that the County Judge should then decide the case based upon the existing law. The time between the filing of the Motion for Summary Judgement and its granting by the County Judge is generally sixty (60) to ninety (90) days.
Upon the granting of the Motion for Summary Judgment by the County Judge, the Judge will then set a sale date for the property to be sold at public auction. The property will generally be set for sale approximately thirty-five (35) to one hundred twenty (120) days after the entry of the Order for Summary Judgment. However, in most cases, the sale date is thirty-five (35) days or one month after the Summary Judgment Order [see Florida Statute 45.031].
If the Defendant or Borrower did not respond to the Complaint or Service was not made after a reasonable attempt by the Process Server, and such Service was returned undeliverable, the Lender may not be required to furnish the Borrower with any actual notice of the Foreclosure Sale. The Lender may give notice of such Sale only through a Publication of the Notice of Sale. The Lender must publish notice of the Sale in a newspaper or acceptable legal periodical once a week for at least two (2) consecutive weeks, with a second publication at least five (5) days before the Sale [see Florida Statute 45.031].
At the Foreclosure Sale, the property is offered for sale to the highest bidder. At most Foreclosure Sales, the Lender is the highest bidder, which means the Lender must find a buyer on the open market for such property. The property taken by the Lender is referred to as Real Estate Owned (REO).
At the public auction, if the property is sold for less than the amount owed the primary Lender or any subsequent Lenders or Lienholders, such party or parties may seek a Deficiency Judgment. To collect on a Deficiency Judgment, the Creditor must bring an action on the deficiency within one (1) year after the Clerk of Court issues the Certificate of Title.
If a third party at the public auction places a bid exceeding the balance owing on the Mortgage, then the Borrower is entitled to the excess proceeds. It is very uncommon for a Borrower to receive excess proceeds or surplus proceeds.
After the public auction is completed, the Clerk will issue a Certificate of Title within approximately three (3) to ten (10) days. After the Certificate of Title is issued, the Lender or third-party purchaser of the property will file a Motion for a Writ of Possession. The Clerk of Court will then issue the Writ of Possession and the Sheriff will execute the Writ. When the Sheriff appears at the property, if the Borrower or any other inhabitants of the property, are still present, the Sheriff may forcibly remove such persons.
It must be noted that the process of Foreclosure discussed above is a lengthy form of Foreclosure process. Florida Law provides an alternative process of Foreclosure, called an Expedited Foreclosure, in which the Lender may achieve the sale of the property in considerably less time [see Florida Statute 702.10].
SOLUTIONS AND REMEDIES FOR PERSONS FACING FORECLOSURE
In the State of Florida, there are numerous remedies or solutions available to a person or entity facing Foreclosure proceedings.
REINSTATEMENT OF THE LOAN
The Florida Statutes grant no right for a Borrower to reinstate his or her mortgage. However, many mortgages do contain a clause granting that right, and allowing the Borrower to reinstate the Loan or Mortgage by paying all arrearages in full. In such an instance, the Borrower would pay not only all arrearages, but in addition, any interest, and other costs relating to the delinquency on the Loan or Mortgage. Even if such clause does not grant the remedy of reinstatement, the Lender may nevertheless consent to such reinstatement.
A Redemption is where the Borrower pays the full balance owing on the Loan or Mortgage. Florida Law provides that the Redemption must occur before the Clerk files the Certificate of Sale or the time determined by the County Judge in the Foreclosure Order, or Judgment, whichever is later [see Florida Statute 45.0315].
In some instances, a Lender may agree to a Loan Modification. A Loan Modification is an agreement between the Borrower and the Lender in which the Lender will typically place any arrearages upon the end of the Mortgage or Loan. However, it is less likely a Loan Modification will be agreed upon by the Lender if Foreclosure Proceedings have commenced. Furthermore, if the Borrower received either a Forbearance or a Loan Modification within the prior year, and the Borrower defaulted upon the terms of the Loan Modification, it is highly unlikely that the Lender will agree to a subsequent Modification.
CHAPTER 13 BANKRUPTCY OR DEBT REORGANIZATION
The filing of a Chapter 13 Bankruptcy or Debt Reorganization will generally always stop a Foreclosure. The filing of the Chapter 13 enacts a protection called the Automatic Stay, which means that all Creditors, including the Mortgage Lender, must stop all collection efforts.
Chapter 13 permits the Borrower or Debtor to pay any arrearages owing on the Mortgage over a period of thirty-six (36) to sixty (60) months. While in a Chapter 13, the Borrower can also seek a Loan Modification with the Lender, absent any worry that his or her Home will be seized in Foreclosure.
In addition, the filer of the Chapter 13 may seek additional benefits. In some cases, the Debtor may significantly lower his or her Automobile Loan payments by monies owed on such automobile or automobiles, by paying only the true value of such property. In Bankruptcy Law, this is referred to as a Valuation or a Cramdown. Provided the Debtor owns the Automobile for a requisite period of time, the Lender has no recourse against such effort. The Debtor will only pay the true value of the automobile through the Chapter 13 Plan. This is why this process is referred to as a Cramdown.
In other instances, the Debtor can essentially refinance the Automobile or Vehicle through the Chapter 13, and lower the Interest Rate significantly from that necessitated according to the terms of the original Automobile or Vehicle Loan. This may also significantly lower the monthly payment and interest rate from that required in the original loan.
Upon the filing of the Chapter 13, any missed payments on one’s automobile are forgiven.
If the person filing Chapter 13 has any Unsecured Debts, such as Credit Cards, Personal Loans, Medical Debts, Payday Loans, and certain Income Tax Debt, such Debt may be either dramatically reduced or even completely forgiven in the Chapter 13.
Significantly reducing such Debts, provides more disposable income that can be contributed towards the payment of the Mortgage and its obligations.
Any Judgments or Judgment Liens upon the Debtor can generally be avoided or removed through the process of Chapter 13.
For many persons who seek the protection of Chapter 13, the process may also have a beneficial effect on their credit and credit score. By significantly reducing one’s debt obligations, one improves one’s Debt To Income Ratio. Debt To Income Ratio is the amount of Debt one carries in relation to one’s Income. The Debt To Income Ratio constitutes approximately 33% of an individual’s Credit Score, and is the single largest factor in determining such Score.
It should be noted that the longer the Foreclosure process endures before the filing of the Chapter 13, the likelihood of the Chapter 13 as a mechanism for the Borrower seeking to retain his or her Home or property diminishes. As the Foreclosure process continues, the arrearages, interest charges, and attorney fees incurred by the Lender will continue to escalate and therefore the payment in the Chapter 13 will be commensurately higher, as expressed over the term of thirty-six (36) to sixty (60) months.
Nevertheless, Chapter 13 is a powerful tool, and certainly should be considered in the case of a Foreclosure.
My name is Matthew Weller and I have assisted many persons in the Greater Tampa Bay region over the past thirty (30) years in matters relating to Foreclosure. There are many solutions and remedies you may choose if faced with a Foreclosure.
I invite you to call my office and speak with me personally. I will examine the specific issues confronting you and will generally be able to craft a solution that is most suitable to your own special circumstances. Weller Legal Group has four (4) offices throughout the Tampa Bay Area, including Offices in Hillsborough, Pinellas, Pasco, and Polk Counties. The Attorneys, Paralegals, and Staff at Weller Legal Group are dedicated only to the task of helping persons confronted with Foreclosures and other Debt Issues.
The first consultation is without charge or fee, and places you under no obligation. A full analysis of your case will be provided.
You may contact me directly by calling in Pinellas County at 727-539-7701, in Pasco County at 727-375-9378, in Hillsborough at 813-229-3328, or in Polk County at 863-802-5505. I may also be reached Toll Free at 1-800-407-3328. In addition, you are invited to submit a Contact Form through our website, here, at www.jayweller.com