Due to the fall of the real estate market, alongside the recent sub prime mortgage crisis, many Americans have lost their homes due to foreclosure. The large amount of relatively expensive property contained in Florida, combined with the economic downturn, has caused the sunshine state to rank # 2 nationwide in foreclosure rates. If you feel that you soon may be forced to enter into foreclosure, or the process has already begun, educate yourself about ways to prevent the lenders from seizing your biggest asset, your home.
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Florida is a judicial foreclosure state, meaning that the proceeding is carried out through the courts. The borrower is given a Notice of Default if they fail to make their monthly mortgage payments. The borrower than has time to make up missed payments. If they are unable to do so, the lender files a notice of pending lawsuit with the court. The borrower has up until the sale date of the property to repay their missed payments, plus any fees incurred. Unlike some other states, there is no mandatory right of redemption or grace periods following the auction, meaning that after the auction takes place borrowers are not given rights to repossess their lost property. But there are ways to effectively defend you against foreclosure including refinancing your existing mortgage, short sale, mortgage modification, and filing bankruptcy.
Mortgage modification is when you ask your lender to modify the terms of your current mortgage to more affordable ones. This is useful if you are often late on payments, cannot afford the monthly mortgage rate, seek different interest rates, etc. Lenders would rather keep you as a paying client rather than go through the hassle of liquidating a foreclosed home, so they are willing to help, especially in today's market. A Mortgage modification is attractive to borrowers because it does not affect credit score, and has no associated fees. You do not already need to be in default in order to qualify for a modification of your mortgage terms, but you must prove to your lender that the loan is causing financial problems for you.
An attorney can make the case of hardship for you, as well as negotiate new terms on your behalf.
Loan refinancing is taking out a new loan with a different lender to pay off your current mortgage. The new loan will have different, and assumed better terms than your current loan, and can be used to lower interest rates, extend loan life or pull out equity to pay off other bills. In order to qualify for a refinance, you must have good credit, equity and a stable job. Since a refinance is taking out a new loan, you would need to pay all associated fees including prepayment penalties.
A short sale occurs when borrower sells his home for less than the amount due on their loan. The lender than would have to agree to accept the proceeds from the sale, even though it is, "short" of the entire amount due. Short sales are useful if your home has dropped in value and you owe more than your home is worth. The lender may actually prefer to take a hit on some money owed rather than have to foreclose and manage the property.
Like a loan modification, one does not need to be in default in order to qualify; they just need to be able to prove some type of hardship which is preventing them from making their monthly payments. The lender will usually check if the seller has any assets, and if they do the sale will either be denied, or the seller will have to pay the lender back the short amount from the sale. Having an experienced real estate attorney is recommended, as short sales are generally more complicated than traditional real estate transactions. An attorney can influence lender to accept a short sale.
Bankruptcy is proceeding in which an individual legally declares their inability to pay off their debts. The creditors and lenders then are notified to cease all legal actions against a debtor, including foreclosure. If a homeowner is already in foreclosure, then filing bankruptcy will put a halt to the proceedings, allowing them extra time to place together a plan to get their payments back on track.
If you are living in Florida and you are currently facing a foreclosure, realize that you have options. Don't wait for the lender to seize your home; take action now! Since foreclosure is a complicated legal process, it makes sense to seek advice from a skilled attorney in order to protect your home. One must be careful of whom they select for legal assistance, because unscrupulous lawyers are out there who will look for an easy way out, and end up doing more harm than good.
Choose a well known, highly respected foreclosure defense expert, such as an attorney from the Consumer Law Firm of America PA. And know that the quicker you act, the better your chances are of working out a solution to help you get back on track with your payments and keeping your home.
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