What is Foreclosure Defense?
Foreclosure Defense is the legal fight you engage against mortgage companies and homeowner associations seeking to sell your property to satisfy their security interest in your property (get paid). Your goal should be to stall or stop the foreclosure to cure the arrears (back payments) and save the property or sell it if you’re unable to save it.
Is Foreclosure Defense My Best Option? What Are The Options To Save My Home?
The answer is – It depends. Foreclosure Defense is usually the best option if 1) you reside in the property or it’s an investment property that produces rental income, and 2) the property is upside-down (worth less than the mortgage balance). Mortgage lenders and homeowner associations file a foreclosure action when you fall behind on payments (arrears).
Your goal should be to seek the most cost-effective option to cure the default (and dismiss the foreclosure). If you’re only a few months behind, you should ask your lender or homeowner association for a 6–12-month repayment plan. If you can cure the default/reinstatement balance in three to five years, you should consider filing Chapter 13 bankruptcy.
Refinancing or loan modification are your remaining options if you don’t want to file bankruptcy, or if the reinstatement balance is too high to repay in five years. Unfortunately, a large default usually reduces your credit score, making it hard to refinance.
Therefore, loan modification would likely be your best/only option to save your property. If there’s no equity in your property, Foreclosure Defense and/or Chapter 13 (or a combination of both) are great tools to buy you time to save the property and pressure your lender to offer a favorable loan modification that reduces the loan balance to the property’s current fair market value, reduce the interest rate, and extend the term of the loan up to 40 years, resulting in a monthly mortgage payment you can afford.
But beware! Unless you have a strong case to prove your mortgage company or homeowner association engaged in fraudulent or wrongful handling of your case, they will add their attorney’s fees and costs to the loan balance.
If you don’t have equity, it’s usually a non-issue. If you have equity, you should consider selling the property if you’re not able to cure the default in a reasonable amount of time.
There are a lot of factors to consider when facing foreclosure. If you live in Hawaii, we offer free consultations in Honolulu, or over the phone if you can’t travel.
Call us now on 808-201-6000 to get started!
How Can We Help?
Defense against foreclosure requires quick thinking, and quick actions by foreclosure lawyers and attorneys that know what they’re talking about. We completely understand the ins and outs of these situations and have the tools and resources to come to your defense right away.
Foreclosure can be a frightening prospect, but to make quick decisions that give you the best possible outcomes, it’s also important not to cut corners. We understand that in a delicate financial situation, you’d want to avoid getting overwhelmed, and may need assistance in sorting through what you need to do, and how it needs to be done. By offering a free consultation session from our base in Honolulu Hawaii, our foreclosure lawyers and attorneys take a personal approach and can guide you through all of your available options.
To take your first steps towards financial freedom, give us a call to schedule an appointment.
We’re here to help you!
Frequently Asked Questions About Foreclosure Defense
In all the time working with clients, we have found that there are many frequently asked questions about Foreclosure Defense. Here are some of them:
Call us right away. Most foreclosures in Hawaii are handled by the courts (judicial foreclosures). Your mortgage lender or Homeowners Association must provide a minimum 30-day notice of foreclosure to allow you to cure/repay your back payments (arrears). If you don’t cure the arrears, your mortgage company files a Complaint, and you must file an Answer within 20 days of service to avoid a default judgment against you. After you file an Answer, your case will go through discovery that can take anywhere from a few months to possibly years (depending on how aggressive your lender is), and at some point, most lenders file a Motion for Summary Judgment (MSJ) to obtain a foreclosure judgment.
The MSJ is one of the key phases of the foreclosure process that will determine the length of the process and in turn how much leverage you have against the lender to get a preferable resolution. If you defeat the MSJ, the case will continue to Trial and possibly for another MSJ before Trial if the lender feels it has new information that may justify granting an MSJ.
Absent lender fraud or serious wrongdoing, your lender is more likely than not to win at Trial and obtain a judgment. After the judgment, the Court appoints a Commissioner to handle the foreclosure sale via Auction. At that point, the Commissioner will contact you to seek permission to conduct three open houses that you may refuse. If you refuse, the Commissioner will file a Motion to Permit Sale without Open Houses and will usually schedule the Auction sale for about 3-5 weeks after the Motion is granted.
After the Auction, the lender must file a Motion to Approve the Sale. If the Court approves the Motion to Approve Sale, the lender must prepare the Order Granting it and give you 5 days to respond to it. After that, the lender will send the Order to the Court for the Judge to Sign. The moment the Judge signs the Order granting the sale, you no longer own the property, and your only remedy is seeking damages against your mortgage lender for wrongful foreclosure.
Filing a Chapter 13 bankruptcy at any time before the Judge signs the written Order Granting the sale will stay (pause) the proceeding to give you some time to cure the arrears via refinancing, loan modification, through a five-year repayment plan, or a non-distressed sale of the property. Foreclosure defense would usually buy you time too, but it is usually most effective before there’s a foreclosure judgment. For these reasons, it’s important to consult with an attorney as soon as possible. Ideally, before the Answer to the Complaint is due, and certainly at least 30 days before the MSJ hearing.
If you’re unsure what to do, schedule a free consultation right away. With phone consultation available, wherever you are in Hawaii, we can help get you on the right track.
Bankruptcy is usually the most effective way to discharge your debt and protect your home, so long as you do it the right way. Do it the wrong way, and you risk losing your home.
First, you need to determine how much equity you have in the property, which is the property’s value minus all the obligations/liens against the property (common obligations are mortgage, HELOC, tax or judgment liens, etc.).
Second, if there’s no equity or minimal equity, Chapter 7 bankruptcy (if you qualify), may be safe to file without the risk of losing your house. If you have a lot of equity, you should consult with your attorney to determine whether you can exempt (protect) the equity in bankruptcy. If the answer is yes, you should discuss the option of filing chapter 7 or 13 with your bankruptcy attorney.
If you can’t protect the equity in your property in bankruptcy, you may be able to file chapter 13 bankruptcy to repay part of your debt at 0% interest or prefer to settle with your creditors outside bankruptcy.
For the best advice on your options in Hawaii, schedule a free consultation with our Honolulu firm in person or over the phone.
You have three ways to deal with foreclosure.
- First, catch up on payment in full, which is usually easier said than done.
- Second, hire an attorney to defend you in the foreclosure case. That’s a good option if you have a strong case for wrongful foreclosure or wrongdoing on the part of the lender, or when the mortgage balance exceeds the property value and you apply for a loan modification, or if you plan to sell the house within a few months and want to complete a non-distressed sale.
- Third, file Chapter 13 bankruptcy that stays the foreclosure proceeding (pauses the proceeding) while you either repay your arrears (back payments) over five years (in addition to your ongoing regular payments, or sell the house, or apply for a loan modification (usually effective for 6-12 months). The bankruptcy option is usually considerably less costly than foreclosure defense. Therefore, it should be the preferred method when there’s a lot of equity in your property and the foreclosure is due to non-payments and not mortgage lender’s fraud or wrongdoing.
There’s no one-size-fits-all solution, and your best option is to talk to a professional who specializes in the laws governing your state. If you live in Hawaii, we offer free consultations in Honolulu, or over the phone if you can’t travel.
Yes, we do! Wherever you are in Hawaii, our firm provides free initial consultations regardless of your situation. We know that weighing your options is very important, but big decisions shouldn’t cost you when you need to be tender with your finances. You can’t afford to not take advantage of a free consultation.