Life has a way of throwing us curveballs–sometimes because of our poor decisions or sometimes because of circumstances beyond our control or a combination of both. If you are facing foreclosure, you are most likely feeling depressed, frustrated, and perhaps even helpless. If you have received a Notice of Default (NOD) from your lender, not all hope is lost. If you act quickly, preventing foreclosure is possible. Let’s take a closer look at the foreclosure process in Florida, followed by some foreclosure tips to help you stop or slow the process.
Foreclosure in Florida
Florida is a judicial foreclosure state, which simply means that to foreclose on your home, your lender must file a lawsuit with the court. Before doing so, they must provide you with a Notice of Default that includes the following things:
- default amount
- action required to remedy the default
- date by which you must remedy the default
- the notice that if you do not remedy the default before the specified date, your debt will be accelerated and your property will be sold
If you don’t catch up your mortgage payments to get out of default, your lender will refer your file to an attorney so they can file a petition with the court. Once the court grants a judgment to the lender, your property is sold at auction, the foreclosure is completed, and you are evicted from your home.
Ways for preventing foreclosure vary depending on how far along you are in the foreclosure process. Three opportune times exist for you to stop the process: immediately after receiving a NOD, after the petition has been filed, and during the right of redemption period.
Preventing Foreclosure When You Receive Notice of Default
If possible, this is the best time to stop foreclosure because you don’t have to go through the court process. Here are some things you can do after receiving a NOD:
- Pay the default balance. This may be stating the obvious because if you could pay your missed payments, you wouldn’t be in default. But, now is the time to pull out all the stops. Ask friends or family for a loan or gift, sell valuable personal belongings, pick up a second or third cash job. Get creative about ways to raise some funds.
- Contact your lender. Banks hate foreclosure almost as much as you do because of all the associated costs. If you’ve avoided talking with your lender, make the call and see if you can work out some kind of payment arrangement. If you can make a good faith partial payment, they are even more likely to work with you.
- Apply for a loan modification. Federal law states that if you file for any loss mitigation efforts, like a loan modification, more than 37 days prior to foreclosure the lender may not ask for a judgment or schedule a sale unless they have informed you that you are not eligible, you have rejected all loss mitigation efforts, or the lender fails to comply with the terms of a loss mitigation effort.
- Exhaust other potential relief options. The U.S. Department of Housing and Urban Development (HUD) has a webpage dedicated to helping homeowners that are struggling with their mortgage. They also provide information for reputable credit counseling to help eliminate your debt. Once your lender has filed a petition, some of these relief measures won’t be available to you, so it’s best to apply as soon as possible.
- Short sale. A short sale is when you sell your home for less than what you owe on your mortgage. Once a lender sends you a NOD and files a petition with the court, but before the court makes a judgment, they are required to consider all offers made on your home. Continue to aggressively seek a buyer; if you present a reasonable offer to your lender, they will most likely accept the terms to save them the time and effort of finding a buyer at an auction or otherwise.
Preventing Foreclosure After a Petition Has Been Filed
Once your lender’s attorney has put the foreclosure process in motion, it’s a bit harder to stop; however, you still have some options:
- File an answer to the foreclosure petition. After the lender has filed a complaint with the court and served you a summons, you have 20 days to respond in the state of Florida. If you do not respond, your lender will get a default judgment from the court. If you file an answer, your lender will file a motion for summary judgment, or go to trial. Filing an answer slows the process to buy you time, but you need to provide a defense if you want to prevent foreclosure.
- Defend your foreclosure in court. The following four things are common reasons for challenging a foreclosure in court.:
- Your lender didn’t follow Florida’s laws during the foreclosure process.
- Your lender cannot prove they own your loan. Be forewarned that this defense doesn’t usually end well for homeowners. Lenders have become meticulous about getting paperwork in order before initiating foreclosure, but perhaps your case is the exception.
- Your lender made a serious mistake, especially things like crediting your payments to the wrong party, dual-tracking (pursuing foreclosure at the same time that a foreclosure avoidance option is pending, such as a loan modification or short-sale), imposing excessive or unauthorized fees, or grossly overstating the amount you need to pay to reinstate your mortgage.
- You are an Active Duty Servicemember. The Servicemembers Civil Relief Act protects active duty military from foreclosure.
- File Bankruptcy. Filing Chapter 7 or Chapter 13 bankruptcy will immediately stop foreclosure proceedings. Federal law prohibits your lender, and other debt collectors, from pursuing collection activities. Both types of bankruptcy only temporarily freeze your foreclosure. In Chapter 7, the foreclosure is slowed, giving you time to live in the property without making payments. Hopefully, you can save money for other living arrangements during this time. Chapter 13 bankruptcy involves paying all of your creditors. You will have the opportunity to work out a payment arrangement with your lender and as long as you make good on that arrangement, you will be able to keep your home.
Preventing Foreclosure During the Right of Redemption Period
A redemption period is a specific window of time that you have during foreclosure in which you can buy back your home. Redemption periods are meant to ensure a fair price at the auction by ensuring that bidders are bidding a fair price and that there is no collusion. Florida has a statutory redemption period; you can buy back your home before the clerk files the certificate of sale from the auction or within the time stated in the judgment.
Hopefully, the previous foreclosure tips give you some ideas for stopping or stalling foreclosure of your home.