A
foreclosure action begins when a homeowner is served “process” in a foreclosure
action. Receiving these papers, usually a summons and complaint, can be
one of the most nerve-racking experiences a homeowner can endure. The
thought of one’s home being jeopardized and the potential for ensuing
liability can cause a great deal of stress for one who has become unable
to afford his or her mortgage due to financial hardship. I recommend a
two-step process for anyone in this situation (1) take a deep breath and
relax; (2) contact an attorney with experience in foreclosure defense
and/or bankruptcy. The second step may seem obvious coming from me, since
my firm practices heavily in these two areas. But rest assured, my advice
is the same whether you call my firm or another: get legal advice!
What comes as a surprise to many facing foreclosure is that they have
a number of options, and even more so that these options can be very effective
and flexible.
Loan modifications are the key to the whole system. Modifications have become somewhat commonplace
since 2009, and although the thought of a mortgage holder voluntarily
making the terms of one’s mortgage more favorable is counterintuitive,
rest assured: mortgage holders only offer modifications where it will
benefit them. Mortgages today are primarily held by groups of thousands
of bundled mortgages called mortgage backed securities (MBS), or bundles
of these mortgage bundles called Collateralized Debt Obligations (CDO).
Owners of these securities are primarily concerned with cash flow. Naturally,
they also prefer less cash flow over no cash flow. So, the reasoning goes,
it is better to get some money rather than no money, if the homeowner
walks and files for bankruptcy.
Many clients who never imagined themselves seeking a loan modification
before the present (and never-ending) financial crisis find this option
to be music to their ears. Faced with losing the home they have worked
tirelessly to purchase and maintain and possibly substantial legal liability
beyond that, they often discover that there are a number of options available
which can yield unexpectedly positive results that far-outweigh the alternatives.
New York, especially, has great options for dealing with residential foreclosures.
The most important first step a homeowner in trouble should take is to
evaluate all of his or her options with a qualified attorney (and, don’t
forget, breathe).
Foreclosures and Loan Modifications In New York
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