When a lender sends a homeowner a notice of its intent to foreclose, it is natural for the homeowner to contact the lender for assistance. Unfortunately, I know of many people who relied on the lenders’ promises of assistance only to be disappointed when their home was later sold at foreclosure. Many years ago I had a client who was advised by his lender that they were going to work out a repayment arrangement for his mortgage arrears. Instead of getting a repayment plan, he got a notice from the court that his property was sold at foreclosure. I was able to get the sale revoked as the lender had committed fraud by stating in writing that it was going to work out a repayment plan with him, but instead sold the house at a foreclosure sale. Today, all lenders state in their offers to consider repayment plans or loan modifications that while they are considering these options, they are still proceeding with foreclosure. Accordingly, when facing a foreclosure, you should not solely rely on the mortgage lender’s indication that it will “work with you.”
Recently, I had a case where a couple got a notification in the mail from their lender’s attorneys that their home was going to be sold at a foreclosure sale the following week. The next day, they got a letter from the lender that they were going to be approved for a loan modification. They came to my office to find out what to do. I called the lender’s attorneys to see if the sale had been postponed and was told that the lender still intended to sell the house at foreclosure. My office filed a Chapter 13 bankruptcy case for them which stopped the sale. About two weeks after the filing, my clients got approval for a loan modification. Had they not filed the bankruptcy case, they would have lost the house even though another department of the lender was considering them for loan modification.
After talking to the lender when you get behind on your mortgage payments, the next telephone call should be to a bankruptcy attorney. The bankruptcy attorney will explore several options with you, including filing a Chapter 13 or Chapter 7 bankruptcy case. It is best to make this telephone call when you are just a few months behind on the mortgage payments. Once you are more than a year behind in payments, it may be very difficult to catch up, even in a Chapter 13 case where you get to pay the mortgage arrears over a period of 5 years.
For more information on bankruptcy, please visit our site, www.law-margulies.com. Laura Margulies is the president of the law firm of Laura Margulies & Associates, LLC which has offices in Rockville, Greenbelt and Hagerstown.