Introduction to Foreclosure (Video & Transcript)

Introduction to Foreclosure

(4 minutes, 34 seconds)

[Andrea Bopp Stark, Esq., Molleur Law Office]

Hi, I'm Andrea Bopp Stark. I'm an attorney here at Molleur Law Office.

Foreclosure Mediation

In Maine, if you are behind on your mortgage and the lender is going to foreclose on you, they have to serve you with a summons and complaint. But Maine is very unique. We have a mediation program that allows home owners to sit down with the lender, their attorney, and a mediator, and discuss ways in which they might be able to prevent the foreclosure. What this process does—the court process, the foreclosure diversion process—is it allows you to submit a packet of financial documents and other information to the lender's attorney, and then the lender's attorney will forward it to the lender and then you will go to the mediation, review those documents, and see if you might be eligible for some type of loan modification. The process still is very complicated and very comprehensive and you have to provide exactly the correct documents. I hear all the time that people try for a year or two years on their own to try to get a modification and they just can't do it. We provide a service here where we can represent you in that process. We will provide you with excellent service and excellent attention to make sure you put forth a really great application and a complete application and to make sure the bank reviews that. We'll check in weekly with them for status updates so they provide you with a response.

Home Affordable Modification Program (HAMP) - Making Home Affordable

http://www.makinghomeaffordable.gov/programs/lower-payments/Pages/hamp.aspx

Something to be aware of: The government program is the "Making Home Affordable" or HAMP program, it's also known as the "Obama program". What that program tries to do is get your payment down to 31% of your gross monthly income, and the payment for your mortgage would include principal, interest, taxes, and insurance. If you're denied a HAMP for some reason then there are in-house programs that your lender probably has. It looks at what you're paying out each month—for expenses and credit card debts and any other bill that you have—versus what you're taking in each month—your net income.

"Short sale" and "deed in-lieu foreclosure"

I know that letting the house go might not be a priority, it might not be your first choice. I understand that, but sometimes it makes sense—financially, emotionally, whatever your personal decision is—and one way to let the house go is a short sale. A short sale is where you sell the house for less than what you owe, so you might sell it for $175,000 when you owe $200,000. That's something you really need to be careful of if you do a short sale. You also have to be careful that with a "deed in-lieu" foreclosure. A deed in-lieu foreclosure is when you sign over the deed to the lender and they take over the house. Again, there might be a difference between the value of that house and what you owe on the loan, and there may be a shortfall or a deficiency they can come after you for. So with both the short sale and the deed in-lieu, we can represent you and make sure that the lender is evaluating you for a waiver of that deficiency, so you're not liable for that deficiency.

Bankruptcy

Another option, if you have other debt—maybe credit card debt or medical debt—and you don't want to worry about a deficiency and you want to let the house go, is to look at bankruptcy. You could meet with one of our other attorneys about bankruptcy and how you might get rid of the house and the deficiency in the bankruptcy, or you may be able to save the house in a bankruptcy as well. If you have significant other debt, then it makes sense to go that route.

[The intent of this video is for educational purposed only.]

[It is not legal advice.]

[If you are in need of legal advice, you should seek advice from a qualified bankruptcy or foreclosure defense attorney licensed to practice in the state in which you reside.]

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