WHAT DOES BEING “IN FORECLOSURE” MEAN?

By
Title Insurance with THE ZARETSKY LAW GROUP P.A. - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY
http://actvra.in/mP4

The more frustrating interview question I have with potential clients is them telling me if they are in foreclosure because of non-payment of their mortgage.  I have two questions: Are you in foreclosure?; and Have you been served?  Too often I get a NO to the first question and YES to the second question.  The problem with that is if you answer y YES to the second question, the first question has to be YES too.  But probably half of the answers of YES to the second question are accompanied by a NO to the first question!  Real estate agents must also understand this misunderstanding as it can adversely affect your ability to sell a listing.

Today the headline of our local West Palm Beach Paper said that the foreclosure lull was over and Florida was now #4 on the national foreclosure list.  No surprise to me – whereas through the spring and summer we spoke with very few new foreclosure clients, since mid-October we have had several calls each day from those that just got served with a summons.  As a result, it is time to get this issue of when you are “In Foreclosure” dealt with.

The acts leading up to the filing of a foreclosure complaint (in judicial foreclosure states) consist generally of the following (in order):

1.      default on the mortgage by the borrower for non-payment of the monthly promissory note payment in full, including late fees, along with mortgage obligations of escrows for insurance and/or real estate taxes or the event of some technical default.

2.      written notice to the borrower by the bank that the mortgage loan is in default, specifying the default and providing a demand that it be cured within a specific (usually 30 days) time period or the mortgage loan will be placed with an attorney for foreclosure to commence.

3.      the filing of a mortgage foreclosure complaint with the clerk of the court in which the property is located (not where live if it is a different county). In addition to the foreclosure complaint, a lis pendens is also recorded in the public records of that county which purpose is to advise the world that the bank has a litigation matter involving that property.

4.      the issuance of a summons by the clerk.  There will be a summons for the husband, wife, tenants known or unknown, junior lienors (the 2nd mortgage for example). 

5.      the “service” (sometimes called “service of process”) of the summons, along with the lis pendens and the foreclosure complaint. “Service” can mean delivered, posted, or published in a local newspaper (if the court determines you were “avoiding service”.

So let’s look back at the two questions.

You are in foreclosure if a foreclosure complaint has been filed in the courthouse with the clerk of court, regardless of whether you have been served the summons along with the complaint and lis pendens.

You have been served with the summons, foreclosure complaint and lis pendens if you have received the package by personal delivery by the process server (often a deputy Sheriff), or sometimes alternatively if the package has been left at your door, thrown on your porch, or notice of the suit published in a local newspaper where the property is located.

Be careful about service of the foreclosure complaint – you have a limited number of days to respond to the suit before you will have a default entered against you.

The best advice is to contact an attorney familiar with foreclosures as soon as you are late with your payments – find out how the events are going to unfold (under the state laws where the property is located) and create a strategy for the solution to the problem. The end result of doing nothing is that you will lose the property - but it is not just giving the property to the bank!  There are long range negative effects of a foreclosure! (see the articles below). The key to remember however, is that foreclosure is not a solution to your problem - it is a solution to the lender's problem.  You need to develop a strategy for your best solution with your legal advisor.

The following articles may be helpful in better understanding the effect of a foreclosure, both short and long term:

WHY IS THE BANK FORECLOSING IF I AM DOING A SHORT SALE (OR LOAN MODIFICATION)?

PAY YOUR ASSOCIATION EVEN IF YOU DON'T PAY YOUR MORTGAGE

FRIVOLOUS DEFENSE TO FORECLOSURE CAN COST BORROWER $$$

SHORT SALE RESCUE FRAUD ON DESPERATE HOMEOWNERS

MORTGAGE IS NOT AN OBLIGATION TO PAY - COMMON MISTAKEN ADVICE BY AGENTS

ITS NOT THE JUDGE'S JOB TO BE THE DEFENDANT'S ATTORNEY

BANKS BEGIN TO GO AFTER DEFICIENCY JUDGMENTS - FANNIE MAE POINTS THE WAY

SHORT SALE PRIMER - LAWYER DISCUSSION OF THE SHORT SALE EVOLUTION

LOAN AUDITS - FORECLOSURE DEFENSE FALLACY?

FORECLOSURE DEFICIENCY JUDGMENT or SHORT SALE PROMISSORY NOTE or BANKRUPTCY - REVISITED

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Copyright 2011 Richard P. Zaretsky, Esq.
Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader. Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 
RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com       Website www.Florida-Counsel.com.

 

See our easy to understand articles at:
TABLE OF CONTENTS - SHORT SALE AND LOAN MODIFICATION ARTICLES

 

 

 

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Topic:
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Legal Aspects of Short Sales, Foreclosures, Loan Mods
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PALM BEACH COUNTY SHORT SALES
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Rainmaker
591,122
William J. Archambault, Jr.
The Real Estate Investment Institute

Richard,

Thank you!

As simple as this is so many home owners don't understand.

The Media tells a different story.

The entitlement crowd ignore simple truths.

Worst of all many agents don't know ether.

Bill

November 10, 2011 08:31 AM
Rainmaker
210,253
Richard Zaretsky
Florida Real Estate Attorney
THE ZARETSKY LAW GROUP P.A. - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

Bill - what does "X" mean?

November 10, 2011 08:34 AM
Rainmaker
591,122
William J. Archambault, Jr.
The Real Estate Investment Institute

Richard,

It means that it's an Honor to be the first comment on your post and I don't type so fast.

It gave me time to type in my word program witch is better at correcting my spelling. Not to mention I work in 20 point type so it's easer to read.  8>))

Bill

November 10, 2011 08:39 AM
Rainer
277,079
Steven Cook
- Pierce, King, Kitsap, Thurston, Mason Counties
No Longer Processing Mortgages.

Richard -- Great advice for those who may be looking at falling behind on their mortgage.  Now if Bill's spell check could distinquish between the person and the pronoun, things would all make sense.

It might be helpful if one of the courses for CE for everyone affiliated with real estate dealt with foreclosure/short sales and the process, costs, and sequence of events (and why some things take so long) - it might help the clients become better educated as well.

 

November 10, 2011 02:16 PM
Rainmaker
967,323
Gary L. Waters, Broker Owner Waters Realty of Brevard, LLC
Personal Service, always.
Waters Realty of Brevard, LLC

Thanks for the explanation. When a motion for final summary has been filed I guess that is the final step then?

November 14, 2011 08:36 AM
Rainmaker
210,253
Richard Zaretsky
Florida Real Estate Attorney
THE ZARETSKY LAW GROUP P.A. - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

Gary -

The motion for summary judgment is one of the last steps.  Next will be the hearing on the motion, which must be supported by affidavits.  Then a final judgment will issue and it will in the judgment set a date for the foreclosure sale.  Next the sale will occur and usually 10 days later the certificate of title will issue, at which point the foreclosure is complete.

November 14, 2011 03:33 PM
Anonymous
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Rainmaker
210,253

Richard Zaretsky

Florida Real Estate Attorney
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