Most Florida homeowners obtain a mortgage to finance the cost of their house, condo, duplex, or other residence types. Homeowners are required to make a monthly payment to their mortgage company until the mortgage is paid in full. If a homeowner defaults, doesn’t make his/her monthly payment, then the mortgage generally has the right to seek to take possession of the home. The formal process to take your house based on payment defaults or other mortgage violations is called a Florida foreclosure.
The right to foreclose is based on the original mortgage agreement. In that agreement, the homeowner almost always agrees that the home can be used as collateral/security if the monthly payments aren’t made. More precisely, homeowners normally sign a contract to pay for the home loan they received. The homeowner signs a mortgage which gives the mortgage company the right to foreclosure when the loan is in default.
Homeowners who obtained a second or third mortgage against their home can also get behind on their bills – causing the latter mortgage holder to begin foreclosure proceedings.
How do Florida Foreclosures work?
Generally, most mortgage companies work with a loan service company that keeps track of all the payments. Most loan companies allow the homeowner a 10-15-day grace period if they fall behind. Usually, the homeowner pays an extra fee because of the late payment.
If the homeowner falls several months behind, the loan service company will send letters and make calls to try to figure out why you’re in default. Homeowners should read these letters and respond to these phone calls. Often, some sort of plan can be worked out so you can catch up on the arrears and continue to pay what’s due.
Some Florida and Federal Rules That Help Homeowners
The federal Consumer Financial Protection Bureau requires that the mortgage servicing company wait until a homeowner is 120 days behind on the bills before starting foreclosure proceedings. The 120-day waiting period is meant to give the homeowner time to explore possible ways to avoid foreclosure. You still will likely get notices that you’re not making your payments.
In Florida, most mortgages require that the mortgage lender send a formal letter, called a breach letter, which lets you know the mortgage company is considering holding you liable for the whole loan. The breach letter should state that you are informal default, what steps are required to cure the default, and the time you have to cure the default. The breach letter will state that if you don’t cure the default, that foreclosure proceedings may begin.
The Florida Foreclosure Process
The formal Florida foreclosure process begins with a lawsuit, usually in the county where the property is located. The mortgage company files and serves the complaint. You are then given a limited time to reply. If you don’t reply in time, you lose your rights. If you do file in time, the lender will then proceed to seek approval to foreclosure on your home. The mortgage company will seek a summary judgment if your defense is not viable. If the case goes to trial and you don’t have a defense, the court will then approve the foreclosure.
Florida allows mortgage holders to seek expedited foreclosures if the homeowner doesn’t have reasonable grounds for stopping the foreclosure.
In a foreclosure, the home is sold to the highest bidder or reverts to the mortgage company if no reasonable bid is made. Foreclosures must comply with certain formalities such as publication notices. If the sale of the home yields less than the amount of the loan, the loan company may seek a personal deficiency judgment. Once the foreclosure takes place, the new owner will usually seek to evict the homeowner.
Some Ways to Avoid a Florida Foreclosure
As a general rule, the best policy is to understand what bills are due and to pay them on time. Homeowners should keep their loan and mortgage documents ins a safe place. They should understand what mortgage payments, property taxes, insurance obligations, and other bills are due. The homeowner needs to know whether they pay these bills separately or if they make one payment to the loan service company.
Anyone who can’t make their mortgage payments; because they lost a job, an illness or any reason should speak with an experienced Florida mortgage rights lawyer. Some of the items you need to review are:
- If paying the arrears is all you need to do
- The number of penalties and fees
- Documentation such as your tax returns, bank statements, pay stubs, social security payments, alimony, and other income.
The attorney will review your income, debts, and regular payments such as food and utilities – to see how much you can really afford. This information helps to determine if alternatives are realistic.
Some possible alternatives
The lawyer will review the following options:
- A modification of the loan. You might be able to extend the term of the loan or reduce the interest amount. Typically, if the mortgage company agrees to extend the loan, the arrears are made part of the loan.
- Repayment plans. If you have a strong reason for being behind, such as a temporary illness, or needing time to take care of someone in ill health, the mortgage company may agree to suspend or reduce some payments for a period of time.
- A loan refinance. Here, you obtain a new loan to pay off the current loan. The Home Affordable Refinance Program (HARP) may help you refinance the loan.
Homeowners should avoid companies that promise easy solutions. Review any alternative with your Florida foreclosure lawyer.
Other alternatives may include selling your home in lieu of foreclosure, giving a deed to the mortgage company instead of foreclosure. A Chapter 13 bankruptcy may also be an option. The Florida foreclosure attorney will explain the pros and cons of each alternative.