When A Lender Threatens To Storm Your Castle

Facing foreclosure on your home can be frightening and disheartening. However, there are effective ways to stave off this threat, so that you can feel safe again in your abode.

Organize For Battle

 You start your crusade to save your kingdom by getting organized, so:

  • Write a one page chronology of your situation.

  • Include any bait-and-switch tactics the lender used to stick you with a predatory loan.

  • Include information about times you were turned down for a mortgage modification.

  • Gather any applicable documentation that starts from the time you got the loan until the present time, including the original contract.

  • Gather any correspondence with the lender.

  • Keep a log of phone calls and in-person conversations with lender officials, and include this with your other documentation.

Seek Support From Neighboring Entities

The next thing you should do is contact a HUD (Department of Housing and Urban Development) certified housing counselor who offers counseling for mortgage delinquency and default resolution. If you are desirous of a mortgage modification, a counselor can help you get one easier than you can on your own. They can also help you prepare to see a lawyer, if you decide to look into alternatives.  

Find A Worthy Knight To Fight For You

(Yes, female attorneys can be "knights," in case you're wondering.)

You might qualify for assistance through your local legal aid office. If not, there are attorneys who specialize in foreclosure law, and one of these is what you need. When you go to an initial consultation, be sure to take all your organized paperwork and act professionally.

Your attorney will mainly want to examine the business aspects or the facts, of your situation, and then look for legal remedies. They will discuss several different options with you:

  • A loan workout – working with the lender to get smaller payments and longer loan life.

  • To prevent or defend against a deficiency judgment (this is an action a lender can take once the house is sold in a short sale, to come back after you for any amount still owed that was not covered by the sale).

  • A different (and better) loan – you want help in keeping your house and curing a predatory loan situation.

  • Finally, you may just want to buy some time to sell the house for a decent price and look for a cheaper place to live, or find a better paying job.

After talking to you, the lawyer will scrutinize everything to see if you were victimized by illegal predatory lending practices according federal and state laws. This may include lying to, or defrauding you, or giving you a loan you were not qualified for, due to your circumstances.  They will also examine where the lender met the legal standards of the type of loan you were given, and whether the paperwork is in order.

You should expect that once they have done these things, your lawyer will help you come up with a plan of action. This may be to file a fraud complaint, challenge the foreclosure, or ask for a loan modification.

Surrender? Never!

Basically, what you are going to get is more time to cure your deficiency. In the end, a lawyer (such as the Legal Clinic Of Jerry Paeth) may suggest a bankruptcy filing which may result in a more livable repayment plan (chapter 13) or it may prevent you from owing a lot, and still losing your home. Bankruptcy may also clear away some other consumer debts that are making it hard for you to keep up with your house payments.