Why Just Letting the Bank Take Your Property Could Present a Real Problem:

 Your home is underwater. You owe more on the mortgage than the property is worth. Maybe hundreds of thousands of dollars more. You cannot afford the mortgage payments, the homeowners’ association dues, the property taxes, and the upkeep. Why not let the Bank take the property? Why shouldn’t you just mail the keys back to the Bank and let the Bank sort it out?

With thousands of mortgage foreclosure lawsuit being filed each month in Florida, it appears that not just a few homeowners and investors are choosing to ignore the problem and head for the hills. Many of these lawsuits are won by default for failure of the homeowner to file a response to the complaint of foreclosure.

Be careful.  Ignoring this particular problem could have consequences you could not possibly have imagined.

For example, pursuant to Rule 1.560(b) of the Florida Rules of Civil Procedure, the lender may request that the Final Judgment of Foreclosure include an order requiring the judgment debtor to complete a Fact Information Sheet (Form 1.977) within 45 days of the entry of the Final Judgment. The Fact Information Sheet is a form of interrogatories in aid of execution that was adopted by the Florida Supreme Court in 2000. The information sought includes the judgment debtor’s income, employment information, bank account information, motor vehicles owned by the judgment debtor, real estate assets, paycheck stubs, income tax returns, and any other such financial statement or loan applications submitted within the last three years.

Most importantly, this Rule specifically states that “Failure to obey the order may be considered contempt of court.” Civil contempt is defined as the failure to do something ordered by the court for the benefit of a party to a civil action. Accordingly, it is within the court’s power to issue an arrest warrant against a judgment debtor who refuses to complete the Fact Information Sheet. It is becoming increasingly common for aggressive lenders to pursue entry of an order of civil contempt against a party who continues to ignore a judgment creditor’s legal right to discovery of the debtor’s financial condition as part of the creditor’s efforts to collect on deficiency judgments. In other words, the legal system does not let you simply ignore or walk away from the problem.

While your situation may seem hopeless, relief may be had by attacking the problem head-on. Keep open communication with your lender and explore loan modification options. If that doesn’t work, hire a Realtor that specializes in short-sales immediately, to assist you in the sale of the property.  And if you decide to pursue a short sale, with some persistence, your lender may even agree to waive their right to pursue the loan deficiency balance remaining after the sale of the property or negotiate a lesser amount.

If you have been served with a foreclosure lawsuit, hire an attorney. Your attorney can assist you in defending the foreclosure, buy you additional time to obtain a short-sale, and also assist with your negotiations with the lenders. Making this effort to mitigate your damages can result in a reasonable settlement and may help you escape liability for a large amount of debt.

Foreclosure Scams to Watch Out For!

The Federal Trade Commission (FTC) announced six new lawsuits brought against companies accused of running foreclosure rescue and loan modification scams.  The suits are the latest action federal and state authorities are taking in “Operation Stolen Hope,” which to date includes 118 actions by 26 federal and state agencies, including a total of 28 FTC lawsuits filed against alleged fraudulent firms. According to the FTC, foreclosure “rescue” professionals identify targets by researching public information about foreclosures. They often send a personalized letter to distressed homeowners and they may also rely on public advertising. They promise they will save your home and may promise they can negotiate a better deal with your lender. But there’s always a catch. Often these firms want you to pay an upfront fee. Sometimes scam artists require you to make payments directly to them while they negotiate with your lender. In both cases, once the money leaves your hands, the scammer disappears.  Other tactics include having you sign documents that surrender the title of your home to the scammer, or asking you to “rent-to-buy” your own home after surrendering title.

The appeal of this scheme is that you are told you can remain in your home as a renter and repurchase it within a few years. But the terms of the deal are usually unfavorable for you, and the scam artist walks off with most of the home’s equity or worse — if they default on the loan, you get evicted.  A variation on the theme occurs when a scammer says they have a buyer for the home, and asks you to transfer the deed. The scammer then rents out the home and keeps the profits while the foreclosure proceeds. Even worse, you are still responsible for the unpaid mortgage, because transferring a deed doesn’t dismiss a mortgage obligation.  A final tactic is when a scam artist files a bankruptcy case in your name, sometimes without you even knowing about it. The scam artist keeps the fee for his “services” during a temporary pause in home foreclosure proceedings, while you end up with the fallout from having a bankruptcy on your credit history.