Full question:
I have gotten a letter from court about foreclosure but I am currently in the process of modifying my loan. I need to respond to this letter. Can you tell me or send me a sample of a response to this kind of letter?
- Category: Real Property
- Subcategory: Foreclosure
- Date:
- State: Florida
Answer:
Mortgage Law & Legal Definition
A Mortgage is a pledge of real property to a creditor as security for the repayment of a debt involving the property. For example, if you have borrowed money to purchase a house, the entity you’ve borrowed the money from can take ownership of the home should you default on payments. The promissory note executed along with the mortgage creates an obligation to repay the debt. The Statute of Frauds requires that a mortgage must be in writing. Mortgages must be registered with the County Recorder or Recorder of Deeds. There is no specific form for mortgages. Mortgages may even be handwritten.
In the United States, mortgages are usually governed by state law. Therefore, to be valid a mortgage must meet the requirements of the law of the state in which the property offered as security is located. However, there are also federal regulations governing mortgages.
There are many types of mortgages used worldwide. Mortgages vary in interest rates, terms, payment amount, payment frequency, and prepayment penalties. All of these may be subject to local regulation and legal requirements. Mortgages are offered by banks, building societies, insurers, financial advisers and estate agents.
Deed of Trust Law & Legal Definition
A deed of trust is a document which pledges real property to secure a loan, used instead of a mortgage in certain states. A deed of trust involves a third party called a trustee, usually a title insurance company or escrow company, who acts on behalf of the lender. When you sign a deed of trust, you in effect are giving a trustee title (ownership) of the property, but you hold the rights and privileges to use and live in or on the property. The trustee holds the original deed for the property until you repay the loan. When the loan is fully paid, the trustor requests the trustee to return the title by reconveyance. If the loan becomes delinquent the beneficiary can file a notice of default and, if the loan is not brought current, can demand that the trustee begin foreclosure on the property so that the beneficiary may either be paid or obtain title. Unlike a mortgage, a deed of trust also gives the trustee the right to foreclose on your property without taking you to court first.
Foreclosure Law & Legal Definition
Foreclosure is the procedure by which a party who has loaned money secured by a mortgage or deed of trust on real property (or has an unpaid judgment), forces the sale of the real property to recover the money due, unpaid interest, plus the costs of foreclosure, after the debtor fails to make payment. The lender must serve a notice of default on the debtor after a certain time period from when the payment becomes past due, which varies by state. The notice will give the borrower a certain time period and amount necessary to be paid in order to "cure" the default and avoid foreclosure. If the delinquency and costs of foreclosure are not paid within this time, then the lender (or the trustee in states using deeds of trust) will set a foreclosure date for selling the property at public sale. The property may be redeemed by the borrower by paying all delinquencies and costs, up to the time of sale and in some state, for a period after sale.
There is also judicial foreclosure which is used in several states with the mortgage system or in deed of trust. This procedure is used when the amount due is greater than the equity value of the real property, and the lender wishes to get a deficiency judgment for the amount still due after sale. However, some states give deficiency judgments without filing a lawsuit when the foreclosure is upon the mortgage or deed of trust.
A buyer who makes less than a 20% down payment will typically have to pay for foreclosure insurance, called private mortgage insurance (PMI), which will pay the bank if the home gets foreclosed on. Some of the leading causes of bankruptcy have been cited as overspending, loss of employment, predatory lending practices, divorce, and medical emergencies.
It is suggested that a person in risk of foreclosure try to work with the lender to prevent the foreclosure. The lender may be willing to give the borrower extra time to pay, or may suggest debt counseling to restructure or consolidate the debt. It may be possible to create a trust account to protect the debtor's assets, or rework the loan for an extended period of time to lower the monthly payments. The past due amount could be added into the new loan. A debtor will sometimes sell the home to pay off the delinquent amount. A voluntary foreclosure involves selling the home to the lender. Voluntary foreclosure may be pursued to minimize the damage to the debtor's credit record associated with involuntary foreclosure. In a voluntary foreclosure, the debtor not be held liable if the home sells below the debt amount. Due to the loss of financial control and credit damage involved, bankruptcy is generally viewed as a last resort to avoid foreclosure. In bankruptcy cases, the lender is entitled to apply to the court for relief from the automatic stay to allow it to continue foreclosure proceedings.
After the sheriff sale, the bank will have to request that the court order the former owners and current unlawful occupants to be evicted from the house. Usually all that is required to get an eviction order is proof that the title was transferred on the day of the sheriff sale. Therefore, as the new owner, the lender has the right to determine who lives on the property. After the foreclosure victims have exhausted their options to stop foreclosure with no success, and the sheriff sale has been conducted, the eviction process will typically begin very soon.
Other types of foreclosure include foreclosure by power of sale and strict foreclosure. Foreclosure by power of sale is allowed by many states if a power of sale clause is included in the mortgage. This process involves the sale of the property by the mortgage holder without court supervision. It is generally quicker than foreclosure by judicial sale. Strict foreclosure is a process available in a few states which allows the mortgagee to petition the court for foreclosure, and if granted, the court will require the mortgagor who is behind in payment to make payment within a specified time. If the mortgagor fails to do so, the mortgage holder gains the title to the property with no obligation to sell it. This type of foreclosure is generally available only when the value of the property is less than the debt.
When the lender makes a motion for an eviction order, the foreclosure victims have an opportunity to raise any violations of required procedure in their defense. Procedures vary by jurisdiction, so local law needs to be consulted. The owners will always get a chance to respond to any motion the bank makes in court, and the lender's attorneys often violate some rule of procedure, which include state laws, county rules, and specific court rules. However, the foreclosure victims need to consider whether they want to answer every motion the bank brings and drag out the process, which will increase the legal fees that will eventually be added to the total payoff.
Real Estate Foreclosure Law & Legal Definition
Foreclosure is the procedure by which a party who has loaned money secured by a mortgage or deed of trust on real property (or has an unpaid judgment), forces the sale of the real property to recover the money due, unpaid interest, plus the costs of foreclosure, after the debtor fails to make payment. The lender must serve a notice of default on the debtor after a certain time period from when the payment becomes past due, which varies by state. The notice will give the borrower a certain time period and amount necessary to be paid in order to "cure" the default and avoid foreclosure. If the delinquency and costs of foreclosure are not paid within this time, then the lender (or the trustee in states using deeds of trust) will set a foreclosure date for selling the property at public sale. The property may be redeemed by the borrower by paying all delinquencies and costs, up to the time of sale and in some state, for a period after sale.
There is also judicial foreclosure which is used in several states with the mortgage system or in deed of trust. This procedure is used when the amount due is greater than the equity value of the real property, and the lender wishes to get a deficiency judgment for the amount still due after sale. However, some states give deficiency judgments without filing a lawsuit when the foreclosure is upon the mortgage or deed of trust.
A buyer who makes less than a 20% down payment will typically have to pay for foreclosure insurance, called private mortgage insurance (PMI), which will pay the bank if the home gets foreclosed on. Some of the leading causes of bankruptcy have been cited as overspending, loss of employment, predatory lending practices, divorce, and medical emergencies.
It is suggested that a person in risk of foreclosure try to work with the lender to prevent the foreclosure. The lender may be willing to give the borrower extra time to pay, or may suggest debt counseling to restructure or consolidate the debt. It may be possible to create a trust account to protect the debtor's assets, or rework the loan for an extended period of time to lower the monthly payments. The past due amount could be added into the new loan. A debtor will sometimes sell the home to pay off the delinquent amount. A voluntary foreclosure involves selling the home to the lender. Voluntary foreclosure may be pursued to minimize the damage to the debtor's credit record associated with involuntary foreclosure. In a voluntary foreclosure, the debtor not be held liable if the home sells below the debt amount. Due to the loss of financial control and credit damage involved, bankruptcy is generally viewed as a last resort to avoid foreclosure. In bankruptcy cases, the lender is entitled to apply to the court for relief from the automatic stay to allow it to continue foreclosure proceedings.
Other types of foreclosure include foreclosure by power of sale and strict foreclosure. Foreclosure by power of sale is allowed by many states if a power of sale clause is included in the mortgage. This process involves the sale of the property by the mortgage holder without court supervision. It is generally quicker than foreclosure by judicial sale. Strict foreclosure is a process available in a few states which allows the mortgagee to petition the court for foreclosure, and if granted, the court will require the mortgagor who is behind in payment to make payment within a specified time. If the mortgagor fails to do so, the mortgage holder gains the title to the property with no obligation to sell it. This type of foreclosure is generally available only when the value of the property is less than the debt.
Deed in Lieu of Foreclosure Law & Legal Definition
A deed in lieu of foreclosure is a method sometimes used by a lienholder on property to avoid a lengthy and expensive foreclosure process, With a deed in lieu of foreclosure (DIL), a foreclosing lienholder agrees to have the ownership interest transferred to the bank/lienholder as payment in full. The debtor basically deeds the property to the bank instead of them paying for foreclosure procedings. Therefore, if a debtor fails to make mortgage payments and the bank is about to foreclose on the property, the deed in lieu of foreclosure is an option that chooses to give the bank ownership of the property rather than having the bank use the legal process of foreclosure.
A DIL can be used in limited circumstances. The debtor must have exhausted all efforts to sell the home professionally marketed at it's as-is, fair market value. The debtor also can't have another mortgage in default and must not have the ability to make the monthly payment or make up the difference between the sale price and what is owed.
Redemption Law & Legal Definition
Redemption in legal terminology refers to a seller's right to repurchase something sold by returning the purchase price to the buyer. It is often used in the context of sales of municipal bonds, shares of stock in a corporation, or foreclosures on real property, where the owner buys back property by paying off a loan, interest and any costs of foreclosure.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
