If you have been served with a foreclosure action, send the Complaint and Summons to our Fort Lauderdale office immediately if you have not already. If you have the means, please scan and email them to firstname.lastname@example.org. Otherwise, fax or mail them. You have 20 days to respond to this lawsuit calculated from the date you were served with the Summons and Complaint. Note that you have many options. You might severely compromise those options if you or your attorneys do not meet this deadline. However, if you are already too late, do not give up. There are still significant options open to you.
The Bad News
A foreclosure action is like any other civil lawsuit, and requires adherence to the Florida Rules of Civil Procedure. Most likely, the bank is seeking all of the above: 1) to foreclose on your property, take title to it, and sell it to satisfy the amount the bank is owed; 2) a money judgment against you for the difference between the amount owed to the bank, plus 3) a money judgment for the bank’s court filing fees, attorneys’ fees and other litigation expenses. The “WHEREFORE” section(s) of the Complaint should list the remedies the bank is seeking.
The Better News
Our firm has been defending these actions on behalf of our clients for several years now, since prior to the start of the mortgage crisis. The strategies of the banks, strategies of our defense, the economy and the law are constantly changing. Our firm keeps up on these changes, and we are practicing before the Florida courts virtually every day to help property owners save their properties, and avoid long-term financial disaster. We generally have a few blog articles on our website www.500lawcom/blog which address general information and recent developments concerning foreclosure, modification and the mortgage crisis.
Our firm has two general ways of billing clients depending upon their goals. The most common goal of our clients is just to stay in the property as long as possible while they explore modification options directly with their bank. Some believe they will never be able to afford the property, even after a significant modification, so they just need us to buy them time until their financial situation changes, or they can make arrangements to move. Although this is certainly not a guaranty, in the past few years, we have prevented foreclosure sales and prevented the banks from taking our clients’ properties for at least a year, in some cases, two years or more from the date they completely stop paying their mortgage. For this category of clients, we generally charge a flat monthly fee of $500 for every month we keep them in the property, or until they terminate our representation for whatever reason. Since the great majority of these clients are not paying their mortgage, they can usually afford the fee. If there is a second mortgagee or Home Owner’s Association who enters into the lawsuit to also assert a claim against you, add $100 per month to all fees for every additional party who asserts a claim.
The other category of clients have some a counterclaim or unique affirmative defense against the bank to assert such as fraud, or predatory lending practices. Since it is difficult for us to determine the amount of work these cases will entail, we generally charge hourly for these cases against a $1,500 retainer. The firm’s hourly rates range from $80-$275 per hour depending on the specific person performing the task. The initial retainer usually lasts about 3-4 months, and then we request that it be replenished. This category includes clients who want our firm to handle the modification applications and negotiations for them. However, it is often more cost effective for our clients to attempt to seek a modification on their own, directly with their banks. Another option is for our firm to use a modification subcontractor located in our building for the modification work. The work is done under the firm’s supervision. When we do, it costs a flat fee of $1,500 just for the modification work, which is generally a more cost effective option than when our firm’s attorneys’ perform these tasks. The subcontractors usually get results in 3-6 months. In the meantime, we defend the foreclosure action to prevent the bank or anyone else from taking the property. Our defense can be billed hourly or monthly.
There are many possible end results to these foreclosure cases. They include:
1) Final Judgment of Foreclosure Plus Deficiency Judgment – This is generally the result of the litigation when the property owner ignores the lawsuit. A default judgment of foreclosure is entered by the court shortly after the expiration of the initial 20 days. The property is then sold at the courthouse. If the amount for which the property is sold does not match or exceed the full amount the bank is owed, plus penalties, attorneys’ fees and other litigation expenses, then a money judgment called a “deficiency judgment” is entered against the property owner for the difference. The bank then has the right, even after taking the property, to collect the rest of the money it is owed from the property owner. Some of the ways it pursues collection include: 1) wage and bank account garnishment; 2) asserting liens and foreclosing over other property, stock or other assets owned by the property owner.
2) Deed in Lieu of Foreclosure – This option requires the homeowner to surrender the deed to the property to the bank without further legal process or expense (usually in exchange for a waiver of the bank’s right to seek a deficiency judgment against the homeowner, or any further payment of any kind).
3) Consent Judgment of Foreclosure – Similar to a “deed in lieu,” in this scenario, the property owner consents to a judgment of foreclosure being entered against him/her to avoid further legal expense (usually in exchange for a waiver of the bank’s right to seek a deficiency judgment against the homeowner, or any further payment of any kind).
4) Short Sale – The property owner lists the property for sale with a realtor or by some other method. Generally, this is done with notice to and the cooperation of the bank with an agreement or informal understanding, that the bank will give the property owner some time to find a buyer for the property before aggressively prosecuting and finalizing the foreclosure lawsuit and foreclosure sale. A short sale is always done in exchange for a complete or partial waiver of the bank’s right to seek a deficiency judgment against the homeowner, or any further payment of any kind. It is called a “short” sale, because the bank is agreeing to be “shorted.” The banks will customarily reserve the right to reject the short sale agreement, and not waive its right to further payment from the property owner if the offer from the buyer is too low in relation to the amount owed by the bank and the actual current value of the property. This option is attractive to banks because they insure that someone is living in the property and maintaining it while it is being shown to prospective buyers who enable the bank to recoup some of the money it is owed. The property owner’s cooperation is therefore a significant bargaining chip that our firm can use to maximize the benefit for you.
5) Redemption – You have a specific amount of time from when you receive an “acceleration letter” or letter advising you of your right of redemption, to pay all past due amounts to your bank. Such a payment redeems the mortgage and note, cures the default and generally extinguishes the bank from trying to foreclose because of the current default. A property owner can also sometimes negotiate a waiver of any past due amounts, and “start clean” with timely future payments. This is a partial redemption and form of loan modification (explained below), and requires the bank’s prior agreement.
6) Modification – The bank will sometimes consider modifying the terms of your mortgage so the payments are more affordable in the short term, and sometimes more affordable in the long term as well. This can be achieved by an agreed reduction in the interest rate, waiver of late fees, attorneys’ fees and other past due amounts. Sometimes this is achieved by extending the term of the loan. For example, if you originally had a 30 year mortgage, and you paid for 10 years, you have 20 years left to pay the balance on a monthly basis. By taking the current amount due, and extending the time for you to pay that amount back out to 30 years, your required monthly payments will be reduced. Another option is for the bank to agree to waive their right to immediately collect the past due amount, add the past due amount to the principal of the loan, and re-calculate the monthly payments going forward. It is possible to obtain more favorable terms when the property owner has an additional lump sum payment to make to the bank to give the bank an incentive to agree to a significant modification. Many modifications are the equivalent of a re-writing of the loan terms, as if it were a completely new loan, mortgage and closing. The incentive money is analogous to a down payment make when originally purchasing the property. Not all modifications require such a payment. However, it is a good idea to save money to increase your options and likelihood of reaching as agreement with your bank, or some other lender. Look on your bank’s website for modification options. Some are government sponsored plans, some are not.
7) Refinance – You always have the right to negotiation with your bank, any other bank, or even a private individual or company to refinance your property. Conceivably, under this scenario, the property owner seeks a better interest rate, better repayment terms, a longer repayment term or other terms which are more favorable than the current loan and mortgage. Look on your bank’s website for refinance options. Some are government sponsored plans, some are not.
Before a bank agrees to any of the above options (other than Option #1), it will almost always require some form of financial disclosure. At this point in the mortgage crisis, most banks already have a “modification package” or a “workout package,” which consists of an application and questions seeking to discover various forms of financial information to determine whether you fit within any government-sponsored modification or refinance program, or a program offered by your specific bank. Often our clients seek our firm’s assistance in completing these forms and applications. Note that when you give this information to your bank, you are disclosing the existence of current assets you own. If the bank does not reach an agreement with you, and proceeds with the foreclosure and obtains a deficiency judgment, the bank will have much of the information it needs to collect on the deficiency judgment from you. Therefore, be careful when giving your financial information to anyone, even your own bank. Usually, there is no perfect solution. Often the decision as to whether to make this disclosure requires a weighing of the possible risks and benefits of attempting to reach an agreement with your bank.
Note that some of the results above are generally not available for commercial property, and the firm cannot guaranty any result for commercial or residential properties. Which results our clients obtain often depend on: 1) client objectives; 2) value of the property as compared to the amount of the balance owed on the mortgage; 3) financial condition of the client; 5) length of time we defend the foreclosure; 6) volume of foreclosed properties currently held by your bank; and 7) willingness of the bank to cooperate. Generally, the banks are more willing to cooperate and compromise when we have been successful in preventing a judgment of foreclosure and sale for a significant period of time.
Remember, unless you currently have significant equity in your property, because of the nationwide decrease in property values, the bank most likely does not want to take, and become responsible for your property. They would prefer an amicable solution which saves them litigation costs, and which gets them paid something in the short term.
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