On the day you buy your house you have to sign stacks of paperwork at the real estate closing office. Among all those papers that we might skim, but rarely read closely, are a “Promissory Note” and a “Mortgage.” Your promissory note is a relatively short document that says how much money you promise to repay the bank. The Mortgage is a longer document that states that if you miss a payment or otherwise default under the terms of the Promissory Note, the bank can foreclose against you.
A foreclosure is the forced sale of real estate at a public auction. Proceeds from the sale of the real estate go to pay off the balance of the loan or lien against the property. If any proceeds from the sale are leftover they can be paid to other liens against the property and if there are none, the owner gets to keep the remaining proceeds.
In Florida, your lender has to file a lawsuit in order to foreclose against your house. If you are served with a lawsuit for foreclosure, you will have twenty (20) days to file a response to the complaint. You can lay out those reasons that you do not believe your home should be foreclosed. The reasons are called “affirmative defenses.” You can also lay out reasons that you think the lender may be wrong and may owe you money. These are called “counterclaims.”
After you file your response you can send the lender discovery requests, including requests for copies of your loan documents, your pay history, any assignments of your loan, comments logs from your loan servicer, and other documents. You can also send the bank interrogatories, or numbered questions, about the status of your loan. The lender may send you requests for documents or interrogatories for you to complete.
At the close of the discovery period, the lender may file a Motion for Summary Judgment and attach affidavits from someone who works for the lender. The Motion and affidavits will lay out the reasons the lender believes that it can prove its case without a trial. If you receive a Motion for Summary Judgment you must file a response well in advance of a hearing on the Motion. A hearing on a motion for summary judgment takes the place of a trial and you will not be able to present any evidence. You must submit your evidence in support of your case and affidavits in support of your evidence well in advance of the hearing and you must serve your documents on the lender’s attorney. The lender’s motion for summary judgment and attached affidavits have to prove conclusively that you defaulted on your Note and/or Mortgage. If the lender prevails at Summary Judgment or at a trial with witnesses, the Court will enter a Final Judgment against you. The Final Judgment will state how much money is owed to the lender. The Final Judgment will also set a foreclosure sale date, at which time the property will be sold at a public auction.
Once the property is sold at a public auction the lender will request that the proceeds of the sale are paid to satisfy its final judgment. Ten days after the sale of the property the Clerk of Courts can issue a Certificate of Title to the new owner of the property. The new owner may ask for a Writ of Possession, which the Sheriff’s Office will serve on the homeowner or other occupants of the home.
Once a Writ of Possession has been served the occupants have twenty-four hours to vacate the premises. The Sheriff will return 24 hours after serving the writ to allow the new owner to change the locks.
Note that filing a chapter 13 bankruptcy will stay a foreclosure sale, but only if it’s filed before the foreclosure sale takes place. See our other articles on chapter 13 bankruptcy. Make sure if you are considering filing bankruptcy to stay the foreclosure that you talk to a bankruptcy attorney well in advance of the foreclosure sale so that he or she can walk you through the process and the pre-filing requirements imposed by the bankruptcy laws.
Getting Foreclosure Help
Because Florida is a judicial foreclosure state, meaning the lender has to file a lawsuit in order to foreclose against the house, borrowers have opportunities to defend their rights in court. Additionally, there are few things all homeowners can do to avoid foreclosures.
- Take advantage of refinance programs before becoming delinquent. These usually require you to be current on your home loan and to have relatively good credit.
- Interest-only home loans from your bank can buy you a little time to beat foreclosure, but because the interest adds up fast, you may struggle to catch up the loan down the road.
- Forbearance plans can excuse you from payments temporarily because of natural disasters and in some occasions for a work or health crisis. In forbearance, the loan payments are suspended, but must be caught up all at once, so the option is suitable for borrowers with temporary financial crisis who believe they can save up all the missing payments by the end of the forbearance period.
- A deed in lieu of foreclosure allows the borrower to essentially give the property back to the bank and move out, thereby avoiding the negative repercussions of a foreclosure on his or her credit report and avoiding a deficiency judgment.
- Similarly, a short sale is an option where underwater property is sold pre-foreclosure at a lower price than the outstanding loan balance.
- A chapter 13 bankruptcy allows a homeowner to start making regular payments again even after a foreclosure lawsuit has been filed. The homeowner can start making regular payments again and can catch up late payments by paying into a 3 to 5 year repayment plan.
- Work with your state housing finance agency to help you keep your home. Government agencies can also help you with free housing counseling and information through the US Housing and Urban Development.
When the foreclosure is already in process, you can fight back by –
- Meeting with an attorney that specializes in foreclosure defense;
- Getting properly educated on the foreclosure process;
- Corresponding with your lender for a loss mitigation options that will give you a second chance at making your payments timely;
- Consider a short sale before the foreclosure sale takes place; and
- Filing for bankruptcy to stay the sale.
To further protect yourself, be vigilant against possible scams. Contact a licensed attorney in your area that specializes in foreclosure defense and loss mitigation options. HUD-backed housing counselors may be available to assist you in seeking loss mitigation options from your lender. It is important to vet information you receive from outside sources like mailers and flyers.