Foreclosure Defense Options for Maine Residents

If you have been served with a foreclosure complaint, you could lose your home. If you do not want this to happen, you should know your options.

1. Court Mediation

The Maine Legislature recently created the Court Mediation program to allow homeowners to meet with their lenders and try to come to an agreement that would allow the homeowner to stay in the house.

When you are served with the Complaint, within 20 days, you must send the Answer that comes with the Complaint, or your own Answer, to the Court stating that you want Court Mediation.

At mediation, you will have an opportunity to sit down with the lender and their attorney along with a professional mediator who will try and negotiate an agreement to save the home.

If you want to keep the house, one option might be a loan modification that would provide you with affordable payments each month. You may be eligible for a loan modification through the Making Home Affordable Plan (HAMP) passed by the Obama administration. Generally, the HAMP program would modify your current monthly payment of principal, interest, real estate taxes and homeowners insurance to 31% of your gross monthly income. To read more about the program and to apply, visit http://makinghomeaffordable.gov/.

If you do not qualify for a HAMP loan, you may qualify for an “in-house” loan modification provided by your lender.

If you do not want to stay in the house, you can ask for a deed-in-lieu of foreclosure where you would sign over the deed of your house to the lender and they would not have to complete the foreclosure. You may also negotiate time to sell the house. If you owe more than what your house is worth, you can ask the lender for time to do a short sale meaning the lender would agree to take less than what is owed upon sale of the house. In both circumstances, you should always check with an accountant to see if there might be tax consequences. You should also note that if there is a deficiency (the amount of the loan left when the house is sold for less than what is owed) the lender may try to collect that amount from you. If this happens, you can explore bankruptcy with us as an option.

You Qualify for Court Mediation If:

  • a court case has already been started,
  • the property is residential (not commercial),
  • you lived in the home in the last six months,
  • the home is your primary residence,
  • the building has 4 or less units, and
  • the foreclosure was filed after January 1, 2010. (If you live in York County, you may be eligible for mediation if the foreclosure was filed before Jan. 1 2010).
  • WHEN YOU RECEIVE THE FORECLOSURE COMPLAINT, YOU MUST TELL THE COURT THAT YOU WANT MEDIATION.

You will be provided with a mandatory mediation informational session date where you will receive information and a mediation date.

The Court will provide you with a form to complete. Your lender may provide you with information to complete too.

What you need to provide for mediation:

  • a budget with information about your income and expenses;
  • proof of income, such as copies of your two most recent pay stubs; Social Security, food stamps, or unemployment award letter; or child support;
  • a copy of your most recent bank statements (if you have bank accounts)—If you don’t have a bank account, write out a signed statement saying that you have none;
  • a copy of your tax returns for the prior year;
  • a copy of your W-2 tax form; and
  • a hardship letter describing how you came to be in this situation (i.e.: you lost your job, your spouse became ill, etc.).

What you need to do:

  • Complete the court form and the lender’s financial packet.
  • Make two copies of your documents.
  • Send the completed form and financial packet to the Court.
  • Send a copy of the completed form and financial packet to the lawyer for the lender.
  • Keep the second copy for yourself.
  • Attend the mediation date on time with all of your documents. Bring your last two pay stubs and bank statements.
  • Court Mediation is a very important chance for you to negotiate something with the lender that will either let you stay in the house or give you time to sell or move.

    How We Can Help: Mediation Representation

    The mediation process can seem overwhelming. You may have many different options available to you but it can be hard to determine which one is best for you and your family.

    We provide representation at Court Mediations to promote your goals to the lender in an effective, organized manner. In many cases, we can begin negotiating with the lender even before the mediation happens so that when we reach mediation, we can move more quickly and efficiently toward achieving your goals.

    You can sit down with Jennifer Hayden, Tanya Sambatakos or Andrea Bopp Stark, experienced consumer rights attorneys. Both Tanya Sambatakos and Andrea Bopp Stark have been specially trained to represent homeowners in Court Mediation sessions. We can analyze your current financial situation, explain what choices you have in your particular situation, and help you determine which options would be best for you. We will begin at that first session evaluating information related to your loan and discussing what goals would be realistic given your circumstances. Please contact us.

    Useful Links:

    2. Bankruptcy

    If you want to keep the house, you can file a Chapter 13 bankruptcy as discussed in our Bankruptcy section. Chapter 13 may be an excellent way to save your home but you must be prepared to pay the monthly mortgage payment going forward unless you can get a loan modification from your lender.

    If you do not want to keep your house, a Chapter 7 bankruptcy may be an option to surrender the property and deal with any deficiency amounts.

    3. Loan Modification

    You can apply for a loan modification outside the Court Mediation process and, if you want to stay in your house, the sooner you do so the better. Visit the website of Making Home Affordable to see if you qualify for a HAMP loan.

    Or, go to the website of your lender or servicer (who you made your mortgage payments to) to see if they have an in-house loan modification program.

    4. Let the Lender Foreclose

    You can do nothing and let the lender continue with the foreclosure action. They can proceed to get a foreclosure judgment against you. After the judgment is entered, you have 90 days to pay off the entire amount they say you owe. If you do not, then they can ask the Court to allow them to sell the house. If they sell the house for less than they say you owe, they may come after you for that amount; the deficiency amount.

    5. Fight the Foreclosure

    Andrea Bopp Stark is an experienced consumer rights litigator with over thirteen years of legal experience, the past five of which have been dedicated to helping consumers in foreclosure. She was a Brooks Fellow with the National Consumer Law Center and is a member of the National Association of Consumer Advocates.

    While you are litigating the foreclosure case, you are not required to make your normal monthly mortgage payments to the lender. The legal process will give you time to explore all of you options including a loan modification, selling your home, filing a bankruptcy or receiving time move out. We will review and explain these options with you. You may be able to force the lender to completely rewrite the terms of your note and mortgage, enabling you to keep your home.

    You may have strong defenses and counterclaims against your mortgage company that could actually prevent foreclosure and even require your lender to pay you money. Across the country, judges are punishing mortgage companies for incomplete record keeping and for violations of the consumer protection laws. You may be able to bring defenses including fraud and violations of both federal and state consumer protection laws.

    Maine has a strong Consumer Protection law called the Maine Consumer Credit Code.

    Your lender may have done something to violate this law that may have caused you harm. We can review your information and personal circumstances to determine if you have defenses and/or counterclaims to the foreclosure.

    Useful links:

    Your mortgage company is probably not the same company that actually loaned you the money to buy or refinance your home. If a foreclosure action is filed against you, the party who is bringing the action, the Plaintiff, is probably not the same company that loaned you the money.

    How do you know if the party suing you has the right to do so? It may be that the Plaintiff does not have proper assignment of your Mortgage or endorsement of your Note. If they do not, then they probably cannot bring a suit against you.

    If the Plaintiff is not your original lender, it probably has never read your mortgage. Your mortgage, in addition to Maine law, may require that the mortgage company do lots of things before it can actually foreclose on you. If they did not do what they were supposed to do, then they should not have started the foreclosure action. You may be able to have the foreclosure dismissed.

    This all means that your mortgage company may have filed an improper foreclosure lawsuit and that you may have defenses and counterclaims to that lawsuit, but your time is limited. You have or will be served a copy of the foreclosure complaint by a process server. You typically have only 20 days to respond to the mortgage company's complaint, so you need to see an attorney immediately if you wish to defend against the foreclosure. Your defenses and counterclaims should be brought in your Answer to the Plaintiff’s complaint. If you are beyond the twenty days, there are still defenses that can be raised but you should contact us immediately to explore your options and determine the best choices for you and your family.

    Given the generality of the contents of this informational piece, this information should not be relied upon without consideration of your particular facts and circumstances by qualified legal counsel or compliance professionals. If you have questions regarding this informational piece, please contact us.

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