Sarasota foreclosure defense action calms distressed homeowner facing unnecessary (and potentially illegal) debt collection abuse by mortgage debt owner’s assigned agent.
Failed Loan Mods & Short Sales lead to foreclosure & bankruptcy! image: http://minnesotaindependent.com
“Some mortgage debt owners try to bully borrowers into actions they normally wouldn’t take with the right information,” claims Orlando foreclosure defense attorney Craig Lynd.
Especially some SECOND mortgage debt owners and their agents (that is, mortgage loan SERVICERS).
According to Mr. Lynd, most (but not all) 2nd and 3rd mortgages on properties are subordinate to the 1st mortgage.
In case of default, a subordinate debt owner is not able to pursue remedy against the property. Chances are, the property value is LESS than the 1st mortgage, leaving NOTHING for a subordinate debt owner once the distressed property eventually sells.
This is very common today.
What’s not common today is for subordinate debt owners to lie down & give up. In a strange twist, some debt owners in subordinate positions rely on gorilla tactics to force settlement.
If you or someone you know is facing foreclosure and TONS of phone calls from debt collectors, you will discover how many distressed borrowers are forced to settle financial difficulty.
Click Read More below now for foreclosure “tricks” you must know before thinking your short sale approval letter lets you walk away.
HOW TO WALK AWAY FROM STUBBORN MORTGAGE DEBT OWNERS
It’s reported 7 out of 10 Florida properties with a mortgage are worth LESS than what is owned on them. It’s further reported many of these properties have a subordinate mortgage attached.
In default, what is a second mortgage holder’s remedy?
According to Mr. Lynd, debt owners in subordinate are pursuing an aggressive attack on the borrower by personally suing the borrower for deficiency balance…after foreclosure!
Important: Many second mortgage holders simply file a suit on the note. In Florida, mortgage debt owners can wait up to five years to file for a court judgment to make the borrower pay. After the judgment is granted, the lender has up to 20 years to collect the cash.
Mr. Lynd describes the common procedure of pursuing deficiency against the defaulting borrower.
Many debt owners are killing short sale attempts or are trying to “trick” borrowers (home owners in distress) with Short Sale Approval Letters appearing to release borrower from deficiency.
Many borrowers in distress choose NOT to have an attorney review this “approval” letter. As a result, many borrowers unintentionally subject themselves to debt collectors after the sale.
Debt Owners Pursue Deficiency Action Against Borrowers!
Legal action includes:
- Often the first count of the complaint will be a suit on the note and a copy of the original promissory note (if it can be produced that is) executed by the borrower will be attached as an exhibit to the complaint filed by the lender’s attorney. NOTE: It appears most debt owners CANNOT produce original paperwork.
- Of course, additional counts may be included by the lender’s attorney to increase deficiency amount pursued.
- A process server representing the court will hand deliver the complaint to the borrower.
- Once the complaint is served, the borrower/defendant has 20 days to respond to the lawsuit. NOTE: Responding to the Complaint affirmatively should be done by an attorney practicing foreclosure defense. Here is more information on the process @ Sarasota Foreclosure Defense.
Debt Owners FORCE Borrowers Into Corner!
According to Mr. Lynd, many informed borrowers are taking action against debt owners, if only to prolong foreclosure.
Suddenly, attorneys throughout Florida have become “foreclosure defense” attorneys, capable of filing affirmative defense motions against foreclosing debt owner.
What do you think happens next?
That’s right, the legal process grinds to a halt, allowing (many) borrowers to remain in the home for months, perhaps years.
Hard to believe?
If you’re new to foreclosure reality, I understand your skepticism. However, it’s true. I’ve worked several properties in default for more than 2 years…all the while the value dropped…and dropped some more.
I’ve worked short sales with buyers willing to pay 100% market value…in as-is condition.
Debt owner refuses offer @ $329,900. A few months later, same debt owner refuses another 100% market offer at $299,900. A few months later, same debt owner refuses offer at $279,900…and so on.
Debt owner forecloses and sells for $239,000. Debt owner forces borrower into bankruptcy. Debt owner gets nothing.
However, the corner is not necessarily a bad place to be.
Mr. Lynd and other attorneys defending borrowers against foreclosure are seeing more bankruptcy filings, as the only way to avoid judgment…before judgment is entered.
Though no one to whom I’ve talked has wanted to file bankruptcy, some of these debt owners force people into a corner.
The Solution Becomes Bankruptcy
Depending on type of bankruptcy for which borrower qualifies (that is, chapter 7 or 13), according to Mr. Lynd, the borrower may discharge this personal money judgment in a Chapter 7 liquidation bankruptcy.
A Chapter 13 filing prior to a foreclosure sale also may allow the borrower to include unsatisfied debt, discharging a BIG portion of the debt.
Recently, a borrower filed bankruptcy on 3 houses, discharging over $900,000. For 5 years, he will pay around $200 /month or $2,400 x 5 ($12,000 vs $900,000+). He doesn’t care about his credit, though he knows 8 SECRETS TO A 680 CREDIT SCORE at repair credit fast.
If the foreclosure has already occurred and the bankruptcy petition is filed under Chapter 13, then the second mortgage lender’s claim could be unsecured debt. This unsecured debt claim will be added to the unsecured “bucket” under Chapter 13. Upon discharge of the Chapter 13 five year plan, the borrower will emerge from bankruptcy a free man.
Got an opinion on this topic? I’m sure you do, even if you agree with how debt owners are handling distressed properties and even if you don’t agree with bankruptcy. I’d like to hear what’s on your mind. Please go below and leave a comment. If you have experienced short sale, foreclosure and/or bankruptcy, please share your insight. Further, if you are considering buying or selling a house in or around Sarasota, please call me now with your questions. I want to help you.
Sarasota foreclosure defense resulting in bankruptcy doesn’t have to be the death sentence many people never facing financial hardship think it is. Naturally, many debt owners believe (falsely) that people will not file bankruptcy or walk away from their home. Using this flawed logic (from my experience that is), many debt owners are pushing borrowers into bankruptcy…at the expense of shareholders/investors. Is it your money these banks and corporate investors are losing by not approving short sales when they can?
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