The best strategies to deal with a home foreclosure in Western New York
1. Filing an answer to the foreclosure. Most people who receive foreclosure papers never hire a lawyer to defend the foreclosure. Why? I can’t say for sure, but after speaking with thousands of Western New Yorkers facing foreclosure, here are the three most likely reasons: (1) people don’t really understand how the foreclosure process works, (2) they think that hiring a lawyer is too expensive, or (3) they think they can work it out with the bank on their own. However, the truth is that most people can’t stop the foreclosure without the help of a lawyer, and the people who do probably may not be getting the best result possible.
If you are served with foreclosure papers, you should hire a competent attorney to file a formal answer. This will dramatically slow down the foreclosure process, and it will show the bank that you are not going to give up your property without a fight. We have dealt with every major foreclosure law firm in the State, and we even have a full-time attorney on our staff who used to work for the State’s largest foreclosure law firm.
The time periods to respond to the foreclosure lawsuit are very short. In fact, if the papers are hand delivered, your time to respond could expire in 20 days. After that time, it may be too late to raise some defenses that you have. If you want to hire an attorney, you really ought to do it within the first couple of days after the foreclosure is started so that the attorney has enough time to prepare the answer for you.
Even if you do not wish to keep the property in the long run or do not think you can afford to, it often makes sense to delay the foreclosure sale as long as possible in order to give you the time to save up money to make an orderly (rather than a rushed) move from the home. We can generally stall the foreclosure for up to 18-24 months using the mechanics of the foreclosure process to your advantage.
2. Pursuing a formal loan modification. There are a number of modifications that many banks now offer. The most important is the HAMP modification. This is the modification process that made headlines a few years ago when it was introduced by President Obama. It’s a great program if you are eligible because it can dramatically lower your mortgage payment and interest rate. We have clients who have obtained modifications under this program that cut their payments in half and dropped their interest rates to as low as 2%. We can’t promise any specific result for you and we have no special relationship with any bank, but if you meet the criteria for a HAMP modification and your bank participates in the program, your chances of being approved are good.
Update: HAMP expired at the end of 2016. With limited exceptions, banks can no longer be forced to grant loan modifications under any government programs. However, this does not mean that loan modifications are not still possible. They are still being approved, though in a lower percentage of cases.
3. Settlement Conference Representation. You are entitled to a settlement conference with the bank’s lawyers, and this conference is conducted under the supervision of the court handling the foreclosure. This is the best opportunity we will have to strike a deal with the bank on your behalf. Why? Because the bank will have to send a lawyer to the conference who knows the specifics of your case. This is a lot better than dealing with some customer service representative at the Bank who may not fully understand your specific situation and is probably handling thousands of loans. Many clients that we speak with tell us they have gotten nowhere when they tried to deal directly with the Bank.
When we appear for you at the settlement conference, we can physically hand a copy the modification application to the attorney if necessary, and if the application is submitted in good-faith (without a prior rejection or based upon income changes since the prior rejection) the lender will typically have to process the modification request before the Court will allow the foreclosure to proceed. The Court will generally adjourn the settlement conferences for as long as reasonably needed to get an answer to the modification application. Of course, the client must make sure that the Bank has all the necessary information to make a decision on the application, but the Bank will communicate this to us if we are handling the application for you. Even if you aren’t eligible for a formal modification, we can still make a proposal to the Bank for you to get caught up on the mortgage payments. The Court can’t force the Bank to accept any proposal, but it can prevent the foreclosure action from moving forward if the Bank is not handling the case in good faith.
4. Filing a chapter 13 bankruptcy. If you aren’t eligible for a loan modification, chapter 13 is a type of bankruptcy that can help you get caught up on your mortgage payments over a period of up to five years. You do not have to give the Bank any money up front, and you will definitely be able to keep your home if you don’t fall behind on the mortgage payments again and follow the terms of the plan we set up for you. Chapter 13 is also a smart way to deal with other debts that you may have, such as back taxes, delinquent car payments, and credit cards. It is rare that we meet a client who is behind on their mortgage and who doesn’t also have other bills. We will only recommend that you file a bankruptcy case if we believe it’s the best choice for you.