Why have 3 major lenders suspended foreclosures, and what does that mean for you?
Here’s the short story of why. It seems that banks were in such a hurry to foreclosure, they forgot to follow the rules. With all the work involved in taking all those homes, who would notice if they cut a few corners along the way? Well they got found out, and it turns out that many of the foreclosures they have already done or were about to do, may have no legal basis because they didn’t follow the rules.
Here’s what this means for homeowners.
If you have had a home taken by any one of these banks that include Bank of America, Chase and GMAC, contact an attorney immediately, because you may have a law suit on your hands with damages as big or bigger than the amount of your mortgage — with the possibility of rescission! What’s rescission? They may have to forgive your mortgage balance entirely, and give you your home back. Make sure the attorney you contact knows mortgage notes better than the lenders who wrote them.
If you have a foreclosure pending, or if you have received a notice of sale, and have a foreclosure auction date, the first thing to do is to call the sheriff or attorney that sent you that letter. Don’t assume anything.
Ask them if your sale is canceled. Just because you have a Bank of America loan, doesn’t mean YOUR sale is canceled unless the attorney or sheriff has actually received word that YOUR sale is canceled. In other words, they could be pulling a fast one on you. We just called about a Bank of America sale for next week and as of today it is not canceled.
In other words, you may want to still have a “Plan B” in place. That could be having the preliminary documents so that you can file a chapter 13 bankruptcy and stop your sale on the spot. Have everything ready to go to the court house in case they are still going through with your sale. You can actually prepare these documents yourself without an attorney. That’s pretty cheap insurance (a couple of hours and the cost of some instructions).
If the foreclosure attorney hasn’t received notice of cancellation of your foreclosure sale, then call your lender. Don’t rely on them just “telling” you. They probably won’t confirm anything. The only way to get confirmation is to establish an open channel with the foreclosure attorney who sent you the letter. Let them know you spoke with your lender who said the sale was canceled, and would they please confirm that. Then get something in writing from them. Remember that the foreclosure attorney has no authority to act on their own. They can only do what the lender has instructed them to do.
There is nothing stopping your lender from going back one mortgage at a time, and doing what is necessary to fix their compliance mistakes and shortcomings. In that case, they may be able to resume foreclose with confidence that they are in compliance.
So you may have less time than you thought.
And finally, take full advantage of the time you you have just been given. Now you may find yourself with time to get started or reapply for that loan modification. In one sentence, a loan modification changes your loan with lower payments, so you can afford your own home. This takes months, even when things go right. So DO NOT PUT THIS OFF! The more you know the less the chances are that you will do this wrong, and waste months of valuable time. Get educated, and get started!