While seemingly powerless and constrained, in actuality, foreclosure defendants may have available to them many legal alternatives. These alternatives may be rights that are recognized by federal and state law, or may be options made available by the banks or mortgage servicers. Our experienced foreclosure attorneys are here to explain what borrowers are entitled to and the legal actions that need to take place in order to exercise these rights and options.
Loss Mitigation Rights
Federal law mandates that a foreclosure servicer, the company taking care of the mortgage account, must contact the debtor no later than 36 days after a missed mortgage payment. Forty-five days after a missed payment, the servicer is also required to send a written warning outlining loss mitigation options available. Additionally, a foreclosure rights professional can be appointed to explain the foreclosure avoidance alternatives available. The foreclosure process cannot officially proceed until 120 days have passed after a missed payment. With help from our South Florida foreclosure attorneys, defendants can use this time period to begin to organize paperwork and to submit a loss mitigation application to the servicer.
There are certain exceptions to this law, such as if a foreclosure defendant has previously asked for a servicer to not contact them under the Fair Debt Collection Practices Act. In order to stay up to date with such exceptions, consulting an experienced foreclosure lawyer is suggested.
Right to Breach Letter
Typically, within a mortgage or deed of trust, there is a provision that requires the lender to send a notice to the debtor, called a breach or default letter. This notice states that the loan is in default, which must be declared before attempting to collect the complete balance due and proceeding with the foreclosure process. The breach letter includes the default, the action required to cure the default, the date by which the default must be cured, and the repercussions that will ensue if the default is not cured—typically the commission of a foreclosure action and ultimately the sale of the property.
Notice of Foreclosure
In Florida, the lender must file a lawsuit in the state court and submit a document which declares the foreclosure process has started. Within this notice, there will be a timeframe given in which the response to the suit needs to be made; in Florida it is 20 days. There is also the right to a notice about pending nonjudicial foreclosures. Here, there might be a notice of default sent in the mail, giving debtors a limited time period to get caught up on their mortgage payments and put a halt on the foreclosure suit.
Right to Challenge the Foreclosure
If there is any doubt that the lender has violated the law or the borrowers feel inclined to dispute any portion of the foreclosure case, there is the right to challenge in court. Since Florida requires foreclosure cases to be disputed in state court, any objections will need to be presented in front of a judge. When choosing to challenge a case, an official answer must be submitted within the time frame that is specified in the Notice of Foreclosure.
Right to Reinstate
Some states allow foreclosure defendants to reinstate the mortgage before a foreclosure sale through paying all missed payments, fees, and expenses. Most mortgage and deeds of trust give deadlines for the right to reinstate, such as five days until the foreclosure sale in a nonjudicial foreclosure or up until judgment in a judicial foreclosure. Keep in mind, reinstating is not the same thing as redeeming the property. Unfortunately, Florida does not allow borrowers the right to reinstate. However, there is the chance that the mortgage allows for a certain amount of time to reinstate the loan or there is the possibility that the foreclosing lenders would allow reinstatement—even when it is not apart of the mortgage clause. If the lender does not accept this request, consulting an experienced foreclosure attorney can be helpful in putting together a professional and effective court defense to petition for reinstatement.
Right to Redeem
There is entitlement to redeem the property before the sale. In Florida, a borrower can redeem their property before the court clerk files the certificate of sale. Additionally, they are entitled to redeem it before the time specified in the foreclosure judgment, according to Fla. Stat. § 45.0315. One would redeem the property by paying the full amount, as well as fees and other expenses, to the bank or by paying back the to the entity who purchased the property during the foreclosure sale, if the price paid was more than the judgment amount.
Right for Foreclosure Mediation
In Florida, borrowers may have the right to a pre-foreclosure mediation where the bank will need to provide a representative with the authority to negotiate a settlement during the mediation. Here, there is a chance for parties to work out a loss mitigation option such as a loan modification. These mediations can be challenging without the presence of an experienced foreclosure attorney to help navigate the complex paperwork and lengthy legal proceedings.
Right to a Surplus
Ultimately, the foreclosure sale may still happen, and borrowers must still be aware of their rights in the aftermath of a foreclosure sale. If the sale price more than covers the amount that is needed to repay the loan, the debtor has the right to the “surplus” or excess proceeds. Alternatively, if the purchase price does not cover the debt, there is the option for a deficiency judgment, which is a personal judgment against the borrower to be responsible for the difference between the amount owed and the sale price.
Borrowers rights in foreclosure cases are not easily defined, depending on which state and in which court the foreclosure cases is proceeding. To obtain more information about personal foreclosure rights, contact any of our seasoned foreclosure attorneys at Kelley, Fulton, & Kaplan today.