COVID-19 Mortgage Relief
As of March 31, 2021, lenders and loan servicers may not foreclose on properties with federally backed loans until after June 30, 2021. This is not a hard date and could be pushed back again per the Biden Administration.
If you are struggling to make your mortgage payments due to the COVID-19 pandemic, you can contact your loan servicer for options which may include deferring or reducing your payments for up to 180 days plus extensions up to 360+ days.
To see which protection you qualify for, contact a HUD-approved housing counselor.
Be ready to provide financial information to make the process faster: mortgage statements, copies of your monthly debt (car payments, student loans, credit card payments, etc), paystubs, and income tax returns.
As well, there are government and charitable groups helping people with payments at Aunt Bertha. Type in your zip code and select housing to see which groups in your area can help you.
While the foreclosure moratorium is still in place, these are your best options to stop or avoid foreclosure.
How Can I Stop Foreclosure?
First, no matter what option you choose if you want to keep your home, it is important to stay in communication with your lender!
Do not ignore them.
This will only make the situation worse and ruin your chances of saving your home from foreclosure.
There are many ways you can stop foreclosure before and during the legal process that will stop the Bank from selling your home at auction.
Which way is best?
Ultimately, the best decision for you depends on your situation and what your desired outcome is for your property and your future afterwards.
This article contains 3 different outcomes of foreclosure: Keep Your House, Sell Your House, and Delay Foreclosure – these outcomes are dependent upon where you are in the foreclosure process and your financial situation.
1. Keep Your Home
This option allows you to repay the total amount you owe in missed payments back to the lender over a fixed amount of time.
Typically you will add a portion of your missed payments to each of your monthly payments.
This allows you to defer payments for a set time period, however at the end of the period you will owe the lump sum.
During Covid-19 many investors are allowing for the forbearances to be deferred until the loan matures or the house is sold.
This will keep your payment the same post-forbearance. Sometimes they lender will let you combine this with a repayment plan.
The lender modifies the homeowner’s loan by adjusting the interest rate, adding missed payments to the back of the loan, or extending the term of the loan.
It is suggested you keep documents showing you have been trying to cut expenses in order to stay current on your loan before requesting forbearance or loan modifications.
This option is usually combined with forbearance where the lender allows you pay the past due payments as a lump sum by a specific date.
Reinstatement is normally for people with temporary income issues.
Refinancing would help if you could get your loan interest lowered in order to decrease the amount of your monthly payments.
This option would only work if you had some equity in your house to pay for the closing costs of your new loan.
Renting the Property
If you still want to keep the house, it is possible to rent your house either on a 1-year lease to a long term tenant or leave your furnishings and Airbnb the property.
If you can make enough money to cover the mortgage payment, this would help you avoid foreclosure and retain ownership of the property.
Chapter 13 Bankruptcy
With Chapter 13 Bankruptcy it is possible to keep your home by creating a plan to pay back your debts over the next 3-5 years.
At the minimum, this process will allow you to stay in your home for additional months and give you more time to come up with a plan with your lender.
Florida Mortgage Assistance Programs
- Making Home Affordable (.gov) – A branch of the US Department of the Treasury and Housing and Urban Development that provides information and counsel to homeowners struggling to make the mortgage payments.
- HUD-Approved Foreclosure Avoidance Counseling (.gov) – US Department of Housing and Urban Development has a search tool to help you find counseling agencies in your area
- Neighborhood Assistance Corporation of America – Is a non-profit whose goal is to build strong, healthy communities in the US through affordable home ownership. Their Home Save Program helps those in foreclosure trouble by permanently restructuring the mortgage to make payments more affordable.
- Housing and Neighborhood Development Services of Central FL – HANDS was founded to aid the Central Florida communities by increasing the supply and availability of affordable housing. They provide assistance to those in foreclosure who are unable to make their payments.
2. Sell Your Home
Sell Your Home & Pay Off The Mortgage
If your the home is worth more than the remaining balance on your mortgage, then selling and paying off your mortgage is a great way to avoid foreclosure.
But what is the best way to sell for your situation?
There are 3 main options to choose based on where you find yourself in the foreclosure process:
1. Selling With A Realtor
If you are early on in the foreclosure process and have some time to consult your lender, this could be a great way to sell your house (maybe even make some money) and avoid a foreclosure on your record. This ideally works best if your house is in an high growth area where your home will sell quickly and/or your home is up-to-date with repairs and cosmetics. If you have time to wait and your house is in good shape, this is an option you should consider.
Note: This option can take up to 6 months, depending on the location and price point of your home.
2. Selling For Sale By Owner
This way will be more difficult to sell your home but if you know a friend or family member who is interested in buying your property, you can save a lot on commissions by selling it yourself. Again, if you are farther along in the foreclosure process and do not have time to wait to sell, this is not the best option.
3. Selling To A Professional Home Buyer
Professional Home Buyer’s pay cash for houses. If you find yourself in a situation where you want the certainty of a closing date, your house needs a lot of repairs, and you do not have much time before foreclosure, this could be your best option. You can always request a free offer to see what your house might sell for to a home buyer.
Sell Subject-To The Loan (Or Called Assumption)
What is Selling Subject-To The Loan?
This option permits a qualified buyer to purchase your home, assume your mortgage, and make the payments on your behalf.
Typically Professional Home Buyers use this method to help homeowners with low equity to sell their homes and put some money in the homeowner’s pocket.
In addition, since the mortgage is your name, the homeowner benefits by receiving an increased credit score by the Professional Home Buyer making payments on the loan.
If your home is worth less than the amount owed on your mortgage, the lender will agree to write off the difference between what you still owe them after the sale of the property.
This will allow the homeowner to avoid foreclosure but will still affect your credit score.
3. Delay Foreclosure (Ultimately Lose The House)
Chapter 7 Bankruptcy
This will not normally allow you to keep your home unless you can work out a plan with your lender and mortgage counselor.
This will still delay the foreclosure and allow you additional time and money to come up with a back plan and save for a place to rent.
Contesting The Foreclosure
There are many different ways you can contest a foreclosure with the lender.
Usually this would happen after you have been served your Court Summons and you give your Answer.
It is recommended to consult an attorney before considering contesting the foreclosure.
Again, this will at least buy you some time if you are working on a plan to try and stay in your home.
Deed-in-Lieu Of Foreclosure
This is an agreement between you and your lender. You agree to transfer title of the property back to the lender and the lender agrees to cancel your mortgage debts.
Before this option is considered, normally you try and sell your house for 60-90 days.
This will still affect your credit score but not as drastically as a foreclosure.
Not the most popular option is walking away from the house and allowing the lender to foreclose.
This is also recommended only with the advice from an attorney because the bank can still come after you for the debts owed and your credit will be severely impacted.
How Long Does Foreclosure Take? (Full Timeline)
In Florida, foreclosure takes 8-14 months depending on the situation.
In 2010 in Florida, foreclosure proceedings could take as long as 720 days when the courts were experiencing their worst backlog.
Don’t expect this amount of time, but it is something to consider due to the expected high volume of foreclosures when the courts are eventually allowed to pass judgements on the pending foreclosure cases after the moratorium ends.
On the other end, an uncontested foreclosure can take less than 6 months when there is no backlog. Each case is fact specific and depending on whether the case is contested or uncontested the time period can widely vary.
Day 1 – Missed First Payment
Usually there is a 10-15 day grace period where no late fees are charged to your payment.
Day 2-36 – Live Contact Requirement
Under federal law, the lender must contact you by phone or in-person about your options to avoid foreclosure.
They must contact you 36 days after each delinquent payment if there is more than one. If they do not contact you within this period, they have broken federal law.
Day 37-45 – Loss Mitigation Letter & Contact
The servicer must contact you, in writing, no later than 45 days after your delinquent payments.
This letter will include options to avoid foreclosure on your home and give you contact info to an employee at the lender’s company to help you through this process.
Day 90 – Breach Letter
This letter is a notice of your mortgage being in default since you’ve missed 3 payments at this point.
You still have time now to reach out to your lender to create a payment plan!
Day 120 – Filing Lis Pendens
The lender hires an attorney to file a Lis Pendens with the Court which is a Summons and Complaints showing the lender is officially suing you.
Day 121-140 – Serving Legal Notice
The lender 20 days to serve you notice that you have a Lis Pendens filed against you.
Day 141-160 – Answering The Court
You have 20 days after you are served to respond to the Court.
In order to get more time in your house, you need to answer this otherwise the court will most likely issue a default judgement and allow for the sale of your home.
*At this point it is recommended to seek help from an attorney
Day 161-220 – Serving Discovery
You can serve Discovery with the Court to give you time to strengthen your case.
This will also give you some additional time in the house to figure out a back-up plan.
Day 280 – Motion Of Summary
This summary alleges that there are no discrepancies in the fact or law that would stop the Court from ordering a final judgement of the foreclosure proceedings on your home.
Day 340 – Foreclosure Sale
After the judgement is granted, the home will be put up for auction.
The typical sale auction date occurs between 1-3 months after the Final Judgement is granted by the Court.
The highest bidder of the auction will obtain title of the property 10 days after the auction closes.
Day 370 – Writ of Possession
If you are still in the house after the sale is completed, the new owner will have to file for eviction to remove you from the property.
This typically takes 30 days but can take up to 60 days depending on the situation.
After the Court orders the Writ of Possession a Sheriff will come to remove you from the house.
How To Avoid Foreclosure Scams
Foreclosure happen when someone falls on hard times or is in a dire situation such as job loss, divorce, or even death of a loved one.
Unfortunately, there are people out there that will try and take advantage of you.
If you decide to seek help from an Approved HUD Counselor, they will help you identify scams but otherwise here are 4 things to look out for when looking to get out of foreclosure.
1. Companies promising to help you ask for a fee up-front to “consult with your lender on loss mitigation.”
It is illegal for a company to take money in advanced for these types of services.
If a company does this, seek guidance from a counselor or attorney.
2. Companies that guarantee they can stop your foreclosure.
Nobody can 100% guarantee that they can get you out of foreclosure.
3. They tell you to stop paying your mortgage company or to send them payments instead.
Never send anyone a mortgage payment other than your approved lender.
4. The pressure you to sign paperwork that you have not read fully.
Signing paperwork that you did not have time to read and understand can make your situation ever worse.
Reputable companies will never put pressure you to sign paperwork until your are comfortable.
EasySellFl.com is a Professional Home Buyer.
We have helped people out of foreclosure and saved their credit score.
We cannot promise that we will be able to make all of your problems go away but we can at least point you in the right direction if you need assistance.
If you would like to get our advice on your situation feel free to fill out the contact form below, or call or text us at 407-439-173.