Tag Archives: motion for summary judgment

Limited loan modification options for loans involving servicing and investor banks

Question: I received a foreclosure notice after 3 plus years of trying to get a loan modification through my servicing bank. They told me after many tries that the investor bank would not allow my loan modification. I would like to fight them in court as to their right to refuse my loan modification after they rejected my payments. Do I have any options? I’ve sent payments but they were returned, tried loan modification but that didn’t work. Is it       possible to fight the validity of my bank in court as the trustee of my note is considering they probably purchased my mortgage with thousands of others and are looking to write off the debt. I have saved up the 90% of my arrears, but I don’t want to give it to them without getting better mortgage terms. Should I hire a lawyer to fight this case for me?

Response: It sounds like your case will involve some serious litigation. It is very likely that the bank in the foreclosure action may not be able to prove its standing to sue (by not being the owner of the note) but that can only be disputed if it is timely brought up to the court. Unfortunately, most of these loans where one bank is the servicing company but another bank is the investor, the options for a loan modification are limited. In many similar cases, the investor bank granted the servicing bank very limited rights as to what can be done in terms of loan modification (that information is provided in the Pooling and Servicing Agreement that you would not necessarily know about).  Sometimes, when you speak to a       servicing bank representative over the phone, you can ask them for the type of limitations that the investor bank has provided in terms of loan modification. The investor bank, for example, may allow for an interest reduction but may not allow term extension, which is       another major component of achieving affordable monthly mortgage payment. Also, very often, the problem of being denied a loan modification is improperly filled out paperwork. If you are not properly documenting your income, it is very likely that you can be denied for       having insufficient income or you may be denied on the grounds of already having an affordable monthly payment (i.e. current payment is lower than 31% of your gross       monthly income).  In any case, your hope is not lost.  If you just ended up in foreclosure after 3 years, then your process is just beginning. First, you will have to go through the court mandatory foreclosure settlement conference part, where the bank must negotiate with you in good faith. You have a lot higher chances of obtaining loan modification while in court than on your own.  So, your battle is just beginning and good luck winning it!

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Does a default on a construction loan entitle the bank to the land as well as the home?

Question: We have been told by the foreclosure court that our foreclosure sale date will be in 90 days. We owned the property prior to obtaining a construction loan in 2005, to build our home. Now that we are in foreclosure for the mortgage from 2005, is the bank also entitled to the property which we had owned prior to the construction of our home? We were also told that filing Chapter 13 bankruptcy will prolong the sale date of our home, is this true? We got the construction loan solely to build our home that is now foreclosed on.

Response: If you signed a mortgage, then more likely than not, that you secured the debt with collateral, i.e., property.  Banks will generally not give out a home loan without having its interest backed up by collateral.  That’s what gives them the legal remedy to foreclose and to recover, if not the full amount owed, then at least the fair market value of the property. It is unclear what other property you own.  If you own one property and you refinanced several times, your debt to the bank is determined by the amount borrowed at the last closing.  It would be irrelevant if you bought your house a lot cheaper a long time ago and then you refinanced and took out a greater loan for whatever reason. You owe whatever you last borrowed. You can try to modify your mortgage so you could reduce your monthly mortgage payments as one way to avoid foreclosure.  However, you can also do a short sale, which would allow you to sell the home for the fair market value rather than for what you owe.  You can also do a deed-in-lieu of foreclosure. Many banks today offer financial incentives for you to do a short sale or a deed-in-lieu. Finally, filing for bankruptcy will stay the sale and a lot of people do file for bankruptcy as the last resort to avoid foreclosure. However, if you cannot work out a plan through the Bankruptcy Court on how to resume to make mortgage payments, the relief from the Bankruptcy court will be temporary. While the sale will be stopped, the stay will only last so long until the bank makes a motion to lift the stay, which would essentially take you back to square one (i.e. bank will continue the       foreclosure process).  Weigh your options carefully as to what exactly are you trying to accomplish…

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Does having the deed and the mortgage note in two different names delay the foreclosure process?

Question: What happens in foreclosure when the deed and the note are in the names of two different people? Quitclaim deed was done, the loan was never refinanced and the lender was never notified. The person owing the debt on the mortgage had since passed away. Will this delay the foreclosure process and for how long? What should the person on the deed do?       Unfortunately, I cannot keep the home due to financial hardship.

Response: If you are on the deed but you are not the one who took out the loan by signing the note, you have no financial obligation, nor do you have any rights as far as loan modification is concerned or any other type of negotiations with the lender. If you are behind on the mortgage, then you would have to assume the loan (if you qualify), which would then create the right for you to negotiate with the bank. If the mortgage is still current, then you can continue to make payments to avoid foreclosure.  However, there is no way around       avoiding foreclosure if you do not make payments and you do not assume the loan…it’s only a matter of time.  As far as the foreclosure process is concerned, it could be quite lengthy as the bank must follow proper legal procedural steps in order to effectuate a foreclosure sale, which could last anywhere from a few months to a few years, depending on the county in which the property is located.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Stopping foreclosure sale by reinstating the mortgage loan

Question: Is it possible to stop a foreclosure sale if I am able to make the account       current, despite the fact that since the commencement of foreclosure action the legal fees imposed on me have exceeded my budget?

Response: You can definitely reinstate the mortgage loan to stop the foreclosure sale. You can request the breakdown of the legal fees with the bank’s attorney’s firm if you believe there is something to dispute.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Refinancing a mortgage on a property saved from foreclosure via bankruptcy

Question: What steps need to be taken to refinance a mortgage on a property saved from foreclosure via bankruptcy?

Response: With bad credit history as a result of an earlier bankruptcy filing, you may not be able to refinance. You can apply for a loan modification, if you need to save your home from foreclosure once again. You may end up with more affordable payments that you will be able to make in the future, but you need sufficient income to qualify.  Consult with a professional to help you determine if you are eligible.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Unaffordable mortgage payments: loan modification, short sale or deed-in-lieu of foreclosure

Question: My property is under water by about $150k and my monthly mortgage payments right now only include: interest, taxes and an association fee. My interest only mortgage expires later this year, which means I will have to pay principal and interest. I can barely afford my monthly payments right now. I am considering either listing the house up for      short sale and then submitting the highest offer for bank’s acceptance, or walking away from it. I wanted to know what my options would be if the bank did not accept the short sale offer? If I walk away from the property, can the bank hold me financially responsible? This loan is a result of refinancing several years ago, when my financial situation was more stable. Since then, the bank has denied all of my loan modification requests.

Response: Banks generally approve short sales where the purchase price is roughly equivalent to the fair market value of the property. If you believe you can get a short sale offer that would roughly match the fair market value of your property, then that’s the       amount that should be accepted by the bank. If this is your primary residence, then you will not suffer any financial consequences. You can also try to do a deed-in-lieu of foreclosure if you have bad luck selling your home.  If you would like to get a loan modification, then you should consult with a professional who could determine if you are eligible for a loan modification based on your financials. For example, if you are unemployed and your only source of income is unemployment, then that would explain the denial. The bank, essentially, looks at your financials to determine whether you could pay off your loan at a lower interest rate and at a longer term (i.e. 2%  interest rate over 40 years). It is possible that your       paperwork was not properly filled out. If your priority is to save your home, you can always reapply for loan modification if you had a change in income (even if your paperwork was not properly filled out before and now it would be filled out correctly, that would be a change in income from the bank’s perspective).

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Saving your home through Chapter 13 bankruptcy

Question: I am self-employed and due to medical reasons, I have recently had a loss of income and therefore I am now in a foreclosure process. I might be able to borrow funds from family to get current on my mortgage. However, I am       wondering whether bankruptcy might be a better option. If I consider debt reconsolidation bankruptcy, would the house be included in the re-consolidation?

Response: If you are referring to Chapter 13 bankruptcy, then you could reorganize and consolidate the debts, such as a debt for a home. You would have to create a payment plan that would enable you to pay off the delinquent amount in 3-5 years.  The best decision for you would have to be based on the overall state of your financial affairs. If you have       delinquent credit card or medical bills, then most likely Chapter 13 is the way to go, as it helps eliminate some or all unsecured debts while being able to save your most valuable assets, like a home and a car.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Surrendering an under water property to the bank

Question: What’s the procedure to hand over an under water real estate mortgaged property to the bank?  I have an interest only mortgage that is up-to-date.

Response: Contact the bank and tell them you are interested in doing a deed-in-lieu of foreclosure.  Let the bank know that you are having a difficult time paying your mortgage and that you would like to surrender your property to the bank.  It is most likely that the bank will first ask you to list it for sale and see if you could receive a short sale offer. If you are unable to sell it, then the bank is likely to accept the deed-in-lieu, as long as there are no tenants living on the premises that the bank would then have to evict.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Short payoff offer on the property vs. short sale

Question: I have three mortgages on my current home: 1) first two are with the same bank and I am about 1 year and 6 months behind on them respectively, 2) the third is with a credit union and is currently up-to-date. I stopped making mortgage payments because I ran into financial difficulties. The fair market value of the property is currently as much as the       principal on my 1st mortgage alone, plus I owe back payments, interest, penalties and taxes in addition to principal. The bank is not willing to discuss a loan modification but is willing to entertain a short sale, the problem is I want to keep the property. Is there any precedence for approaching the bank that owns the 1st and 2nd notes and offer to purchase or payoff the notes using the money from my savings? I only want to pay fair market value or some compromise. Do you think the bank that owns the 1st and 2nd mortgages would entertain a cash offer without me having to disclose my finances?

Response: Most banks will agree to do a short sale but refuse to do a short payoff. They do not want the borrower to benefit twice by extinguishing part of the debt and allowing the same borrower to remain in the home, whereas the bank will agree to do a short sale for the fair market value of the home with a 3rd party.  Unless you are willing to pay the entire debt owed to the bank, the bank is not likely to entertain your offer. Some banks might agree to 80% of the full amount but you have to send them an offer in writing and you must stay on top of this, as banks often neglect to respond to such offers.  Also, it is important to note       that banks, upon realization that you have the ability to reinstate the loan, will refuse to entertain any short payoffs or loan modification offers. The bank might not necessarily       know of all your finances but they will likely have to verify your funds to be sure you show affordability.  This may, however, begin a cycle of questions that may be problematic and take you back to square one.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Responding to summons and complaint, and subsequent steps in foreclosure cases

Question: My bank is suing me because I have not paid my mortgage for about a year.       These are the reasons I am not paying my mortgage: 1) I applied for loan modification, but the bank never approved it, 2) for personal reasons, I fell into financial hardship. The       summons and complaint letter I got from the court states that I have 20 days to respond. What should I state in my response? In other words how do I proceed? My main concern is that following this foreclosure process I might end up with a larger debt than I had originally.

Response: When you personally get served with the summons and complaint, you get 20 days to answer unless you call the Plaintiff’s firm and ask for an extension to file an answer. Generally, such requests get granted if you don’t wait too long.  In your answer, you must answer to every allegation in the complaint, either by admitting, denying, or stating that       you don’t know the answer. If any paragraph of the complaint remains unanswered, it will be considered true and admitted. Once you answer the complaint, foreclosure action cannot take place because of your default. You will be put on notice of every legal proceeding in your case. You will have an opportunity to oppose Plaintiff’s motions, as well. In New York you       will be placed in the mandatory settlement conference part, where you and the lender will have to negotiate in good faith to try to settle the case, i.e.,  modifying the loan (if you qualify). Essentially, you have to figure out what’s most important to you–saving the home or getting rid of the debt as quickly as possible. If your priority is to save your home, then you will have an opportunity to do so in court settlement conference part. If your goal is to get       rid of the debt (and the house) as soon as possible, then you can either do a short sale or a deed-in-lieu of foreclosure. Regardless of what you decide to do, you should still put in an answer to the complaint. Consult with a professional attorney, who could advise you of your legal rights.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Extension on foreclosure sale in New York

Question: After the court has issued a foreclosure sale date, is it possible to get an       extension in New York? The bank dragged out my      short sale       until the last day and then declined the offer. I was       also told by the court that I would be able to get an extension but when I attempted to get one a few days later, the court told me there was no sale date on the calendar and once it was entered then I could file for an extension to complete a  deed-in-lieu. Now my goal is to try to get a  deed-in-lieu and keep this foreclosure off my credit report.

Response: If you initiate the  deed-in-lieu process with the bank, they are likely to hold off on the  foreclosure sale for now. In New York, there are       many procedural steps that the bank must take in order  to actually have the sale go through. If you have a foreclosure sale scheduled and need to stop it on an emergency basis, then filing for bankruptcy is the way to stop the sale. However, if you are afraid of having foreclosure appear on your       credit report, then you are not likely to agree to bankruptcy either, but it is a good idea to know your  options regardless. Consult with an experienced attorney to determine the best course of action for you at this time.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Qualifying for Deed In Lieu of Foreclosure

Question: We walked away from our house as we could no longer       afford it.  The interest rate on our mortgage was       unreasonably high by today’s standards and still our       bank was not willing to renegotiate the terms.        Therefore, we have been out of the house for several       months now.  At this point we would just like the bank to proceed with       foreclosure and take possession of the house, but       it’s not happening.  We heard about a process called “Deed in lieu of Foreclosure“.  How do we go about this or see if we qualify?

Response: Foreclosure is a complex, legal process. Just       because you stopped making payments and physically       walked away from the house does not mean that the bank       can just take the house away. The bank must initiate a       lawsuit and follow all the proper legal procedural steps       before it can get to the actual sale of your home. By       executing a            deed-in-lieu of foreclosure, you can expedite the       process. Essentially, by doing a deed-in-lieu, you are       transferring the title of your house to the bank, thus       avoiding foreclosure and all the fees and costs that the       bank accrues as a result of having to sue you.  However,       there may be tax consequences, depending on the value of       your home at the time the transfer takes place.       Generally, a deed-in-lieu is a better alternative than       foreclosure if you have no intentions to save your home.       As a side note, please take into consideration that if       foreclosure action would take place in New York, there       are mandatory settlement conferences in New York,       whereby banks are bound to negotiate with the borrower       in good faith, and it is oftentimes, easier to negotiate       with the bank and have the interest lowered than going       through the court process. Furthermore, it is important       to note that a deed-in-lieu still places the headache of       re-selling the property on the bank.  Therefore, the       lender might not agree to a deed-in-lieu unless the       homeowner has tried all other      loss       mitigation options first, such as      short sale.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Lack of legal standing defense in the assignment of mortgage cases

Question: We have been issued a summons and complaint in a foreclosure process from our mortgage servicer. We have been in the process of loan modification on our mortgage for approximately two years (and paying as requested). The mortgage servicer would periodically update us, letting us know that all is proceeding well and our loan would be modified within weeks, and then restart the whole process from scratch all over again. They have dragged their feet for reasons unknown to us, while telling us that we are doing everything expected of us. When we got the summons and complaint notice, we realized that it is not from the mortgage servicer but from the bank. We have always only dealt directly with mortgage servicer and not the bank. We have factual evidence that proves that we have been defrauded and that the bank has no legal standing in this matter. We have assembled documents in response and are alleging that the bank doesn’t legally own the debt or mortgage. Is there a specific process that we need to follow to get the foreclosure dismissed?

Response: First things first, you must answer the complaint. In your answer, you should definitely use the defense of lack of standing (along with other defenses if they exist). But you would also have to bring a Motion to Dismiss based on lack of standing and then it would be in the court’s discretion to determine whether your case is dismissible or not. It is a common practice for banks to do an assignment of mortgage, which would explain why another lender is suing you. It is a rather sensitive topic for banks today (as a lot of mortgage assignments were defectively executed) and your suing bank would thus have to prove their ownership of the note in order to proceed in their action. Also, whoever is servicing the loan is generally not the owner of the note. It is the servicer’s duty to collect the owed debt for the owner of the note. Please do your research accordingly. You may want to contact a knowledgeable attorney who could help you with foreclosure defense.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Notice of Motion for Summary Judgment (MSJ) and its role within the foreclosure process

Question: We have just received a notice that states that motion for summary judgment of foreclosure has been scheduled for hearing on a certain date. What does this mean and what is the next step in the foreclosure process? If the foreclosure entry is accepted by the court, what would be the next action taken by the lender? If the lender’s solicitor goes to court on that date and the court sets the foreclosure sale, does the solicitor contact us and how long do we have before the foreclosure sale takes effect?

Response: If you have received Notice of Motion for Summary Judgment (MSJ), that means that you put an answer to the complaint and now the attorneys for the bank are trying to tell the judge that there are no issues of fact to be decided by the jury, only issues of law to be decided by the judge. Along with the MSJ, banks usually move the court for an Order of Reference, seeking the court to appoint a Referee, who would indeed conduct the sale. If you are fighting to save your home, then it is best to put in opposition papers to MSJ, where you should state why MSJ should be denied. You would need an experienced attorney, who could help you oppose and then possibly argue before the judge. Also, please note, that even if MSJ is granted by the court, the bank must then move the court by filing a Judgment of Foreclosure and Sale (JFS). Foreclosure auction cannot take place until JFS is granted and a sale is scheduled and you are put on notice of the sale (in addition to having notice mailed to you if you were served more than a year ago, notice gets published a number of times in a local newspaper). If you do not have sufficient time to consult an attorney before the next court date, you can always come to court and ask for an adjournment (typically first-time adjournments are easily granted).

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Bankruptcy filing stalling the foreclosure process on my properties

Question: We filed for bankruptcy in first quarter of 2011 and it was discharged four months later. Two of our residential properties financed by different banks were named in the bankruptcy: 1) this property was financed through a mortgage from the first bank, 2) this property was financed through a mortgage and an equity line of credit from the second bank. Both lenders have not foreclosed on the properties yet. We tried to do a loan modification with the second bank, but ran into a roadblock. Since then we have decided to move on with our lives and let the banks foreclose on the properties. However, the banks keep on stalling the foreclosure process. Is there a “statute of limitations” that prevents the banks from foreclosing on our properties, because both properties were listed in the bankruptcy? At this point we would like the foreclosure process to move forward.  However since both properties were named in the bankruptcy, we are worried that banks will come back to us at some point and let us know that both properties are still our responsibility.

Response: Foreclosure can be a very lengthy process that could take a number of years, not just months, especially if you live in states that have experienced a lot of foreclosures in the last few years. In those states, courts are doing everything possible to slow down the foreclosure process to help save as many homes as possible. The date since you filed for bankruptcy is irrelevant here. The bank will foreclose on your home as soon as they can (legally and procedurally).  It will definitely be a quicker process if you do not oppose it. At the same time, you can perhaps try to do a deed-in-lieu of foreclosure, whereby you give up the deed to the house to the bank and that too could significantly expedite the process.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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In the case that I default on mortgage payments on my investment property, can the bank go after my primary residence, which is paid off?

Question: I own two homes: one is completely paid off and the other has a mortgage on it. Due to certain events in my personal life I am worried that I might default on the mortgage of the second home. In the case that I do default on the mortgage, would the bank be permitted to go after the home that is paid off? I have not pursued any options yet. However, I also have very unstable tenants in the house and will have trouble making the payments if they move.

Response: The only way the bank can go after your home that is paid off is if after a foreclosure sale, there is still money owed to the bank (i.e. difference between the mortgage and the sale price). That should only be a concern if your home is “under water.” Then again, the bank can’t just take your home but can obtain a deficiency judgment resulting from the difference in price and put a lien on your other property (you are unlikely to be forced to sell your primary residence). However, when you do voluntarily sell your home, that is when you would have to satisfy the lien. Nevertheless, if your home has equity, then the bank will be satisfied with the proceeds from the sale and that would not be a concern. Although most banks have a policy in place to try to modify the loan on the primary residence, some banks try to find a workout option even on investment properties. It is possible that if you could get a loan modification or refinancing, your payments could be much lower and more affordable.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Mortgage payments on my “under water” home are no longer affordable due to financial hardship. What can I do?

Question: I have been paying my mortgage on-time for many years. Now I am late on my payments by one month as I have ended up in financial hardship due to certain events in my personal life. Very soon I will not be able to afford my home. What can I do? I owe approximately $225K and my home is now only worth $200K. In the past, I tried to modify my mortgage and after a year of loan modification process I was denied.

Response: Whether you qualify for loan modification depends on various factors, such as gross monthly household income, debt to income ratio, net present value of the home. On the mortgage of $225K, you could likely qualify for HAMP loan modification (if your servicer participates in HAMP) if your gross monthly income is approximately $3K. However, if you are still unable to afford your monthly payments or you have insufficient income, then you should likely consider a short sale.  Consider contacting a knowledgeable attorney, who could advise you on options that would work best for you.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Does signing over quitclaim deed release me from financial obligation on foreclosed property?

Question: The bank is about to foreclose on my home. Someone had approached me and said that he will settle the debt with the bank if I sign over a quitclaim deed. He also stated that he will immediately take over possession of the house, deal with the bank, the tenant, etc. and I will be able to walk away from the house debt-free. I am very skeptical that this can happen so easily. I am worried that quitclaim deed does not release me from the financial obligation on the property in case the property ends up in foreclosure. How can this person make a deal with the bank? How can I get the bank to release me from my mortgage?

Response: You are absolutely right. Whoever is telling you to do a quitclaim deed is trying to scheme you. While this individual will become the new owner of your property, you will continue being financially obligated to the bank. It will be your credit report that will suffer and essentially you will be the one sued (although the new owner will be sued too for the sake of having his interest in the property cut off). The new owner will not be able to modify the loan or negotiate anything with the bank because the new owner is not the borrower and the borrower is the only person that the bank will deal with. If you want to get rid of this mortgage, sell your property to this individual or any other interested buyer and satisfy the mortgage. If the buyer will need to take out a mortgage, then let it be in their name, not yours. If your property is worth less than the mortgage, then do a short sale. This way, you will also be able to get rid of financial obligation to the bank, but do not, under any circumstances, transfer the ownership of the property to someone else while remaining financially responsible for it! If you want to learn more about your rights in this case and the proper transfer process, consider contacting a knowledgeable attorney.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Has my bank acted negligently by not modifying my loan for many years and now foreclosing on my home

Question: I have been trying for many years to get a loan modification from my bank. They are now putting me into foreclosure. I exhausted all my savings, retirement funds, credit cards and have had to file bankruptcy all because of them dragging their feet. Can I sue them for their negligence?

Response: While your foreclosure case is pending in court, it is much easier for you to show the bank’s negligence by explaining the details to the judge or referee. In NY, settlement conferences are mandatory and the judges/referees presiding over these cases have a lot of leeway to obligate the bank to conduct a good faith review of your financials for loan modification.  Unfortunately, if you don’t qualify for a loan modification, it is not an indication of bad faith. If you believe that the banks have been dragging their feet by constantly requesting additional documents, then unfortunately, it is part of the tedious loan modification process. The bank cannot even review you for a loan modification until it receives a “complete” package.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Compelling your lender to modify your loan

Question: How can I compel my mortgage lender to modify my existing loan with terms that will relieve my financial hardship? I have submitted five requests and each time they have responded by proposing to place delinquent payments on the back of the loan, refused to reduce the principle balance and increased the monthly payment. The principal on my loan is currently $100k more than the market value of my house. I am requesting of them that they reduce my principle balance to within 10% of current market value, and reduce the interest rate to reflect a monthly payment at or near $1,5k. A number of other homeowners have informed me they were able to achieve similar terms. My lender has been calculating our debt to income ratio using our gross income which is approximately 1/2 our net income in determining our ability to pay! How can we qualify for the HAMP program, or compel our lender to grant us an in-house modification that will relieve our financial hardship? What are the options that may fit our situation?

Response: In order to qualify for HAMP, the bank must look at your gross monthly household income. If you applied 5 times and were offered loan modification terms that have increased your monthly payment, then 31% of your gross monthly income must show affordability of such modified amount . It is also possible that the packages were filled out incorrectly, as is often the case. In order to continuously be reviewed for HAMP, you need to show a change in income. For example, when you last applied, you did not have rental income but now you do, or vice versa. Also, capitalization of all the arrears is the first step to mortgage modification. If you owe more than $100,000.00 in arrears, they must get added to the unpaid principal balance, including foreclosure fees and costs, and that becomes your new principal balance. When you do not have sufficient income, then your lender may elect to forgive some of your principal, or at the very least, it may defer up to 30% by adding a balloon payment to your agreement that would mature in 30-40 years. If your income is enough to show affordability without having to decrease your payments to 2%, extending the term to 40 years, or deferring some of the principal, then you are unlikely to end up with better terms under HAMP. Traditional modification may be another option if your net income outweighs your expenses (expenses include the mortgage payment that you are no longer making). You should consider speaking to a professional in order to determine what option will work best for you.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Stopping foreclosure while unemployed

Question: I am unemployed and facing foreclosure on my home that I have owned for over a decade. The court has accepted my request for time extension since I am scheduled for mediation in a couple of weeks. I also have a formal offer from an investor as the home has been up for sale since December. This offer has been submitted to my bank and is in the beginning stages of negotiation. My bank’s short sale department tells me I can look at both options and make my decision based on what mediator presents to me and the bank. Do I have a chance of saving my home through mediation if I have no income other than my unemployment benefits? Should I take any job – no matter how low the pay is to be able to negotiate better at mediation? Should I file bankruptcy instead (I have approx $20K in debt, most of which is medical bills).

Response: The purpose of mediation is to determine what type of loss mitigation option you are suitable for you in order to avoid foreclosure. If you have no income, then loan modification would not be an option. Oftentimes, borrowers do not understand what constitutes income. It is not necessarily a job. It could also be pension, disability, social security, rental income, even contribution from a family member who lives with you, etc. Basically 31% of your gross monthly income should be able to pay off your entire mortgage debt in the next 40 years at 2% interest. The 31% must cover principal, interest, taxes, and insurance. It is very likely that if you get a job, you would be able to afford a modified mortgage payment. If you file for bankruptcy, it may help you get rid of your other debts, but as far as your mortgage loan is concerned, the bank will file a Motion for Relief from Stay, which if granted, will allow the bank to proceed with foreclosure. The only true way you can modify your loan is by showing affordability.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Pursuing short sale on a property owned by a spouse

Question: My husband purchased a home under his name some time before we got married and everything on this property is registered under his name. The mortgage principal on this property is currently $20k less than the original purchase price, while the short sale asking price is $60k less. We didn’t want to pay $40k just to sell the home, and thus a real estate agent suggested that we do a short sale, which we have been pursuing since September and thus haven’t been making mortgage payments in hopes the house would be sold by now. We do have money saved up, but it is all under my name in my bank accounts. Are we doing the right thing by not making payments or should we start paying our mortgage? The bank is constantly sending us letters saying they will begin the foreclosure process on our home and our real estate agent tells us this is normal. Will this situation affect my credit score or just his? Will this matter the next time I purchase a home since we are married now? Can the bank come after us to collect?

Response: When you stop making your mortgage payments for over 90 days, the bank can begin a foreclosure action against your husband (since he is the borrower under the loan so long as the bank abides by proper procedural rules). Whether you can now resume making mortgage payments depends on whether the bank has legally commenced a foreclosure proceeding (i.e. you had to be served with summons and complaint). Short sale is an option that is pursued when you want to sell your home but your home is worth less than the mortgage. Short sale is considered an alternative to foreclosure, the benefit of which is that the bank cannot obtain a deficiency judgment against you and then try to enforce it (if you have joint assets, then the bank could try to enforce such judgment against your assets). What you have to keep in mind though is that the difference between what you owe to the bank and what the bank actually recovers at sale will be used as income when you file your tax returns, i.e., if the property sells for the asking price of your short sale, you might end up paying taxes to the IRS on the $40k that was forgiven by your lender. So, to cut more to the chase: (1) only your husband’s credit score will be negatively impacted as he is the only borrower under the note (his score is already adversely affected because he is no longer making payments); (2) you will be able to purchase another home in the future…if you intend to purchase another home with your husband before his credit recovers, then you may be better off taking out a mortgage in your name (your husband can still be a co-owner of the new property but you could be the sole borrower); and (3) the bank can go after you to collect only once the lengthy foreclosure process is actually completed (remember: it does not apply if you conduct a short sale other than the money you would owe to the IRS at the end of the year).

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Miscalculated escrow payments by the bank

Question: The bank that holds my mortgage miscalculated my escrow payments for last year and I now have a substantial shortage. They claim they were misinformed by the mortgage holder they purchased the loan from. Should I be held responsible for this discrepancy?

Response: You can request a payment history from the bank and see how the funds were applied. You should know what your escrow payments are, as you get the statements from the bank and from the city/county. Therefore, if you notice a mistake, you can argue with the bank over the wrong information. Please note that taxes typically go up every year or so, and that your taxes could have gone up a while back and you might not have noticed, while the bank has rendered the difference. Typically, if there was a mistake made on the part of the bank and you can prove that mistake, the banks will credit your account for the mistake made on their part.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Restarting the loan modification process after the first loan modification window has expired

Question: The bank I have a mortgage with has offered me a loan modification in September. However, due to minor changes in my records a couple of years ago, a notary public has refused to notarize my loan modification papers. I contacted my bank on the same day and subsequently in later days to come. Only now (three months later), my bank has accepted my amended records, but then said that my window for loan modification has expired two days prior to that. What can I do now?

Response: Unfortunately, the only place you can go from here is restarting the process from scratch. You will have to resubmit your paperwork and hopefully if the income is similar to what it has been at the time of previous submission, you will be approved with similar terms. The banks’ timeframe for accepting paperwork late is usually stretched out until the end of the month approval was granted (i.e. the entire month of September). Unless the bank issues a new loan modification agreement with a new deadline for return, the original offer for a modification agreement is no longer on the table. The good news is that since the agreement from September has not been properly enforced, the bank can still issue a new modification agreement (although it is in the bank’s discretion). You should try to speak to the same negotiator who issues the original modification agreement, supplement the bank with updated pay stubs and bank statements, probably re-date a few forms, and if the bank is working in good faith, it might re-issue the modification agreement with similar terms.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Walking away from under water property

Question: One of my properties is under water and I would like to walk away from it. The bank knows my financial situation and I am not in hardship. What is a proper legal procedure I can follow to walk away from my house?

Response: In a somewhat rare situation like yours, it is best to negotiate a deed-in-lieu of foreclosure with the bank. If you simply walk away from your house now, the bank will follow its typical foreclosure routine and obtain a deficiency judgment against you. What makes your situation rare is that you actually have assets to satisfy deficiency judgment, as opposed to most other cases where the bank would not be able to enforce such deficiency. Therefore, in your situation, it is best to do the deed-in-lieu to the bank as long as it has been agreed that you walk away with a clean slate, i.e., no deficiency. Please note that the bank will usually consider a deed-in-lieu as the last resort. They would want you to try to do a short sale first. With short sales, there may be tax consequences and again, in your case, it would have to be properly negotiated with the bank to avoid that. Also, please note that in order to do a deed-in-lieu, the property must not be occupied by tenants.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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Speeding up the foreclosure process

Question: My home is in foreclosure and I don’t know yet when the mortgage company will take over my home. My homeowners insurance will term next month and the mortgage company should start covering the house through the forced coverage. Given that my family is currently in financial distress, I would like get this home off our backs as soon as possible, since otherwise we could end up with a large financial obligation that we cannot afford. I am looking for suggestions on how to speed up this process.

Response: If your mortgage is under water (i.e. mortgage is greater than the appraised value of your home) and you are not renting any of the space to tenants, then consider contacting the bank to do a deed-in-lieu of foreclosure. Basically, you transfer the deed of the property to the bank and you walk away debt-free. It is then the bank’s responsibility to sell the property. Generally, the bank may require you to try to do a short-sale first (that is if the mortgage is under water). If you still have equity in your home, then you can always just try selling your home and paying off the debt to the bank. Otherwise, foreclosure process is very lengthy and will take a couple of years to be completed, especially in NY, and then the bank may obtain a deficiency judgment against you for the remaining balance (the difference of what is owed to the bank and what is recovered at foreclosure sale). Call an experienced attorney today to discuss your options.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2013 Law Office of Svetlana Kaplun, P.C.

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Unaffordable mortgage payments coming off the interest only loan

Question: The term on my interest only loan will end soon and my home is under water. At the end, I will end up owing $100,000 more than what my home appraises to with 20 years left to pay off. Given the above, I do not qualify for refinancing nor any government programs. Also, my new mortgage payments will be more than double of what I have been paying so far, and I will not be able to afford them when they start to kick in. What can I do?

Response: The first step for you is to find out if your lender participates in the government’s Making Home Affordable program (most major banks do). If you have sufficient income and have not yet defaulted on your mortgage, you may be able to refinance through Home Affordable Refinance Program (HARP). Another option is loan modification but beware that even though it is not required by law, most banks require that you default on your payments before you are considered for loan modification. Start off with calling your bank and inquiring as to what programs does the bank participate in. If they tell you to default on your mortgage payment, then a whole new can of worms opens up (i.e. ruined credit; potential foreclosure if the modification is not resolved) and I would recommend looking into other options first. The bottom line is–the bank does not want your home, and even more so if your mortgage is no longer secured by equity in your home.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics. The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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Unaffordable loan modification terms

Question: I have been applying for a loan modification for over a year. Finally, I got approved but my modified mortgage payment is only $50 less than my original payment. I still cannot afford this new monthly payment. If I do not sign this agreement will the bank continue to work with me in trying to modify my mortgage under better terms or will the bank automatically foreclose on my home?

Response: This is a tricky area. There are many factors that come into play in a situation like this, such as: monthly household income, the value of the home in comparison to your debt, how many payments were missed, whether your escrow has gone up, whether the loan is FHA (FHA loans generally end up in slightly higher monthly payments because different rules apply), etc . For instance, if you were qualified under HAMP and 31% of your gross monthly income is only $50 less than the original monthly mortgage payment, then the new amount is accurate, as it based entirely on your gross monthly income. Had 31% of your gross monthly payment exceeded the original monthly payment by any amount, you would have been denied altogether, citing that the original mortgage payment was affordable. This is precisely why it is hard to answer a question like this without knowing all the details of the situation. However, generally, once a loan modification agreement is issued, the bank will not conduct another review unless there is a material change in circumstances (for example, if your household income has increased since last submission of documents). Most banks conduct a review for HAMP and traditional modification. It is sometimes possible that a new review will result more favorably. It is always a good idea to consult with a professional who could accurately depict the picture of your available options before you choose an option that may later be regrettable. In any case, failure to accept proposed loan modification will not result in immediate foreclosure in NY. It is still a long and complex legal process that must run its course.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics. The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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The option of deed-in-lieu for those rejected for a loan modification

Question: I have been rejected for a loan modification. Should I do a deed-in-lieu? If I take that option, can I continue to live in my home?

Response: The idea behind doing the deed-in-lieu of foreclosure is that the borrower transfers the ownership of the home to the bank, thus, wiping out the entire mortgage debt. Some banks even provide a financial incentive for the borrower to do so. The reasoning behind it is that the non-paying owner leaves, allowing the bank to try to re-sell the property, and this way, earn some, if not, all of its money back. As such, you cannot continue to live in the premises unless specifically agreed so with the lender.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics. The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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Foreclosure auction and eviction

Question: If my home does not sell at a foreclosure auction, will I be able to stay in my home?

Response: Generally, if there are no bidders at a foreclosure auction, the bank that owns the loan usually bids a nominal amount to take possession of the property. This way, the bank can at least have some security that if it resells the property at a later time, it will recover some, if not all, of the money that was originally borrowed but not paid back. It is further important to note that unless no one is living at the property at the time of sale, the bank will have to institute an eviction proceeding to get the old owner or tenants out of the house. Essentially, the eviction process takes time. Eventually, unless you bring an Order to Show Cause to the Court to prove otherwise, the bank will prevail at its eviction proceeding and at that point, you will no longer be able to stay at your old home. Since it is in the bank’s best interest that you leave as soon as possible, oftentimes, the banks will offer different financial incentives to help speed up that process and avoid an eviction proceeding (some banks will pay for your move and offer extra money to start over, but that is not a rule of thumb).

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics. The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information. Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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Does ‘trial’ modification lead to ‘permanent’ loan modification?

Question: We have been working with the bank for the past two years to get a loan modification and now we are losing our house to foreclosure. Originally, we were put on a payment plan and have been paying less than what the actual mortgage payments were for the past two years. The bank has just contacted us with a decision that we were denied a loan modification stating that our debt to income ratio is not between 10-55%. What can we do?

Response: You most likely were given a “trial” loan modification in late 2009 or early 2010. Sadly, even as early as 2010, banks offered “trial” modifications over the phone without verifying financials, which is the essential component for banks now to offer a “trial” modification, and yet alone, permanent modification. I just successfully resolved almost an identical case, where the borrower was on a “trial” modification, paying a reduced sum for a duration of 18 months. After 18 months, he was denied a permanent modification. Generally, if foreclosure action has already been commenced, the court will regard this kind of a denial as bad faith and may even sanction the bank, but in this case, the bank did not commence a foreclosure proceeding and continued to accept payments from him and applied them as partial payments towards his original monthly mortgage payment (once foreclosure is commenced, the bank can no longer accept any payments from borrower other than to fully pay off the loan). Accordingly, upon denial, we resubmitted all the financial paper work to the bank and the financials showed affordability to the bank and my client was offered another modification plan (traditional, as opposed to HAMP). He was in a “trial” for 3 months, paying even less than he paid for those 18 months and after 2nd payment, he received a permanent modification agreement, offering very similar terms to HAMP (starting with 2.175% and eventually rising to 4.375% fixed). The bottom line is you still have options and can have a favorable outcome. You just have to reach out to an experienced attorney, who could help you and not mislead you.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics. The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.

Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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Short Sale vs. Foreclosure: Holding the mortgagor responsible for the difference between mortgage principal and short sale offer

Question: We are selling our house via a short sale and have received an offer of 25% less than the mortgage principal we owe on the house. The bank has accepted the short sale offer but asked that we pay an additional $15,000 to the offer. The bank stated that if we pay the $15,000, we will be released from the remaining debt on our loan. What is the law regarding holding a mortgagor responsible for the difference between the mortgage principal and the short sale offer? Should we pay the $15,000 requested by the bank (we made a counter offer of 25% of what the bank requested), or should we let the house go into foreclosure? The foreclosure date has been scheduled within two months from now.

Response: Generally, conducting a short sale has tax consequences for the borrower in terms of the difference between the sale price and the mortgage amount. In today’s economy, where the banks benefit a lot more from a short sale rather than waiting for many years to conduct a foreclosure sale, they are willing to negotiate with the borrower by releasing some or all of the additional debt. It is always a good idea to negotiate with the bank and you did the right thing by giving a counter offer. However, what is not clear to me is whether the bank has asked for additional $15,000 specifically to discharge additional debt or because they think the short sale offer is too low, i.e., they think they could receive $15,000.00 more if the bank conducted the sale itself (usually the banks look at today’s fair market value when deciding what amount to settle for). As far as letting the home go into foreclosure, that too, may have severe financial consequences. The bank may obtain a deficiency judgment against you and go after your other personal assets to try to recover some of its money that were previously lent to you. Both short sale and foreclosure will adversely affect your credit but more so with foreclosure than the short sale. If the bank is willing to accept a deed-in-lieu of foreclosure, that could be more advantageous to you, as you could avoid a deficiency judgment and it would be less harmful to your credit. However, the banks are not generally willing to entertain the idea of a deed-in-lieu when a short sale is still a possibility. Between two evils you are currently faced with, I would definitely say that a short sale is a lesser evil than foreclosure. As a side note, if you need more time to go through with the short sale and your foreclosure sale date is approaching, bring an Order to Show Cause to court to stop the foreclosure sale on an emergency basis. For example, short sale will take place soon and you need more time.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.

Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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Refinancing vs. Loan Modification

Question: I am thinking of stopping to make mortgage payments so I could modify my loan. What’s better: refinancing or loan modification?

Response: A lot of mortgage broker companies, as well as other types of real estate companies, that try to earn a living since the real estate market collapsed, will try to solicit you to get your loan modified with them. They might call or send you notices telling to that you are already approved to modify your loan at 2%. The actual process, however, is much more complicated before you have defaulted, i.e., stopped making your mortgage payments, your credit score may be good, if not excellent, to refinance your mortgage under today’s fair market rate, which could often be similar, if not the same rate that is being offered once the loan is modified. If you go with the option of refinancing your loan, then your credit history stays untouched and you win twice. People who default on their mortgage payment should only be those who truly face some financial hardship (which is essentially a prerequisite to getting your loan modified). If you are experiencing financial distress and you defaulted or plan to default on your mortgage payments, the bank cannot commence a foreclosure action immediately as they must first give you 90 days to accelerate the entire remaining balance due under the note and mortgage agreements. Please beware that your credit score will start to drop immediately after you missed one payment and will progressively get worse, thus refinancing will no longer be an option. Modification then may be your only option to save your home and potentially lower your monthly payments (with FHA loans, it is very hard to lower monthly mortgage payments), however, you will not know if your loan will be modified until it is actually modified. Even after it is modified, it will take years for your credit history to recover. Before you default, you are in superior position–you have the time and resources to weigh all your options…

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.

Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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Should I stop making home mortgage payments to get a loan modification?

Question: I keep on getting phone calls from mortgage brokers trying to convince me to stop making mortgage payments on my property in order to modify my loan at 2%. Should I actually stop making payments in order to get a loan modification?

Response: A lot of mortgage broker companies, as well as other types of real estate companies, that try to earn a living since the real estate market collapsed, will try to solicit you to get your loan modified with them. They might call or send you notices telling that you are already approved to modify your loan at 2%. Unfortunately, it is often true that banks themselves will also advise you to stop making mortgage payments in order to qualify for a loan modification. What they don’t tell you is that you might not qualify. Most people do not realize that once you stop making monthly payments, a foreclosure action may be commenced after 3 months, and from that point on, a long, tedious process begins to save your home. Your unique circumstances will play a big role as to whether your loan will be modified. If you have not yet defaulted, first call your bank and see if they will even entertain an idea of working on a loan modification for you prior to default. It is always your best bet to consult with an experienced attorney and allow the attorney to negotiate with the bank on your behalf. Loan modification may save you up to 40% in your monthly mortgage payments but the process can also cause you a lot of stress and uncertainty (i.e. foreclosure). Weigh your options carefully before you voluntarily choose to default or believe someone that you are already approved for a loan modification!

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.

Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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Can the bank go after my assets if my home is foreclosed upon?

Question: I own a second property that is under water. If the house is foreclosed on can the bank pursue any other assets that I have?

Response: If the house is foreclosed upon, the bank can get a deficiency judgment (the difference between what the bank recovered at a sale and what was owed) against you from the court and then try to go after your assets to try to satisfy such a deficiency. If you know in advance that you will not be resisting the foreclosure action taken by the bank, you might want to consider doing a deed-in-lieu of foreclosure, whereby you voluntarily transfer the deed of the property to the bank and they release you from any financial obligation to them. The bank will usually agree to a deed-in-lieu after you have tried other types of loss mitigation options, like a short sale. In a short sale, you would sell the property to a 3rd party at a fair market value but for less than is owed to the lender. Please note that unless a short sale is properly negotiated with the lender, there may be tax consequences to you as a result of a short sale. The banks typically prefer a short sale over a deed-in-lieu because they do not want be the ones then responsible for selling your home. If you can show to the bank that you tried to do a short sale but failed, they will consider a deed-in-lieu.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.

Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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Can second bank foreclose when first loan is already modified?

Question: I have two mortgages on my home. The first was recently modified under HAMP. The 2nd lien holder sent me a letter stating that they do not participate in the government program and I was denied for a modification for 2nd. My house appraises to $300,000.00. My first mortgage is $330,000.00 after modification. I cannot afford to make my second mortgage monthly payments and am now 2 1/2 months behind. The 2nd bank is threatening to foreclose on my property even though I am paying my first mortgage. What can I do?

Response: The 2nd mortgagee (2nd lender) is an unsecured creditor because there is no equity left in your home to preserve the 2nd mortgagee’s interest. If they were to commence a foreclosure proceeding right now, they will incur fees and costs for foreclosure that they would not be able to recover. If the sale took place right now, the 1st lender would get around $300,000.00 that the home appraises to and would end up losing the other $30,000.00. The second lender would get nothing at all because everything would go to the first. Therefore, the second lender is in the worse situation. Some banks choose to extinguish these debts altogether or they might try to settle with you by agreeing to a haircut on the debt you owe them. Alternatively, just because the bank does not participate in the government program does not mean they cannot offer you their own traditional loan modification. After all, it is in their best interest to do so. It is in your best interest to conduct proper negotiations with the financial institution that owns your debt.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.

Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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Does bank review automatically put foreclosure on hold?

Question: Our bank said that our mortgage qualifies for a review. There are no motions that were granted by the judge yet. Actually, our court process is just in the beginning stages. I was wondering if a judge could make a decision while we are waiting for a review to be done? Can foreclosure be put on hold while we are in review?

Response: The review process that you are referring to is the bank’s review of your financial documents for a loan modification. Foreclosure process, today, from start to finish, takes a quite long time. In NY, before a judge could render any decision (Judgment, Order of Reference, or Motion for Summary Judgment), you are first required to attend a mandatory court settlement conference. While you are in the settlement conference part, your foreclosure action is stayed, or put on hold. That means the bank cannot move forward with its foreclosure process, the judge cannot render any decisions, and definitely, no sale at an auction can be scheduled. However, even if you are past the settlement conference stage and are approaching a Judgment stage, the bank can still review and approve you for a loan modification, which would essentially end the entire foreclosure proceeding. Just remember: it is in the bank’s best interest to try to modify your loan rather than to foreclose.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.

Copyright © 2012 Law Office of Svetlana Kaplun, P.C.

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