Foreclosure is a broadly used term to describe various processes that share a common purpose – the changing rights between a lender and a borrower.
Like so much of modern American law, the concept of foreclosure traces its roots back to English common law. In Feudal England, the relationship between borrower and lender was a power struggle, with the scale weighing firmly in favor of the lender. The borrower would title the ownership of the land to the lender by way of an absolute deed. The lender was only obligated to deed the land back to the borrower when the borrower had paid the loan in full and according to the terms of the contract. Any failure to meet the stringent guidelines of the loan by the borrower forfeited the lender’s obligation to re-convey the land and terminated the borrowers rights in the property.
It wasn’t until the Equity Courts intervened that the pendulum of power swung to favor the borrowers and allowed borrowers additional time to “cure” certain types of failures. An enormous victory for borrowers was the right to “redeem” the property by paying the lender in full. This equitable right of redemption allowed the borrowers to redeem their property and regain their title of ownership, even after the date originally agreed upon between the borrower and lender.
Fast-forward to modern-day America.
The most recent power shift has been the enactment of “non-judicial” foreclosure laws, which permit lenders to foreclose on property outside of the traditional court processes. In non-judicial states, such as Nevada and Colorado, the lenders are able to obtain a “non-judicial foreclosure” without affording the borrower the right to argue their case in court. New Mexico maintains “judicial foreclosure” requirements that mandate that the parties address the dispute in court. The ways to stop foreclosure are therefore different for those borrowers in “non-judicial foreclosure” states than for those in “judicial foreclosure” states.
James’ 13 tips for stopping a foreclosure
The following instructions are meant for New Mexico and other judicial foreclosure states as the best way to help stop a foreclosure:
- Maintain regular communication with your lender. Written communication ensures you have a record of your attempts to resolve any issues you may have. If telephonic communication cannot be avoided, maintain a log outlining the contact numbers, persons, dates and times of calls, as well as any other pertinent information. Many issues can be quickly resolved with your borrower, especially if you are merely experiencing temporary financial struggles or if your issues relate to other matters beyond the monthly mortgage payment.
- Pursue free public information available to you. You can access sites such as makinghomeaffordable.gov and hud.gov to access information on whether you might qualify for and request loan modification with the assistance of a government specialist.
- If a loan modification is a possibility, diligently and promptly compile all of the necessary information and submit the entire packet. Obtain certification of mailing or faxing the packet. Some lenders allow online submissions of packets, in which case save screen shots and email confirmations of your submission. Follow up with your lender to confirm that the application was received. Depending on your particular situation, you may need to submit multiple applications and supplemental documents. It is up to you to make sure that additional applications and supplemental documents are promptly submitted.
- DO NOT STOP MAKING YOUR MONTHLY MORTGAGE PAYMENTS! If a lender’s representative tells you that you need to keep paying your monthly mortgage in order to qualify for a loan modification, then do so. Seek the advice of qualified foreclosure attorneys before you make any decisions about discontinuing your mortgage payments, especially If your financial situation is not temporary or if you have other debt concerns.
- Talk to a real estate broker. Get an informed decision about the value of your home and whether or not your house is “underwater.”
- Evaluate a short sale. If your house is underwater you should strongly consider pursuing a short sale of the property.
- Evaluate graceful surrender options. There are numerous options for gracefully surrendering your property, such as a deed-in-lieu of foreclosure and stipulated foreclosure judgement, amongst others.
- Prepare for litigation. If you remain behind on your mortgage payments, you will eventually face the prospect of foreclosure litigation. DO NOT IGNORE this lawsuit, no matter what you hope to do with the property. Seek the advice of a foreclosure attorney to make sure that your rights are protected and to evaluate your legal defenses to the foreclosure.
- Keep trying. Even if a lawsuit has been initiated, continue to pursue modification or surrender options discussed above.
- Speak to a Bankruptcy attorney. Bankruptcy is one of the most powerful rights afforded to citizens of the U.S.A.. Through the different chapters of bankruptcy, you may be able to obtain your goal of modifying the mortgage or surrendering the property.
- Redemption. Even if you lose a property to a foreclosure and sale, all borrowers have a right of redemption that allows the borrower to purchase the property back from the foreclosing party (or the purchaser at a foreclosure sale).
- Rebuild your credit. After suffering the risk of foreclosure, it is important to take steps to rebuild your credit. Even if your loan has been modified once, if future issues arise, a good credit score can help if you encounter financial difficulties again in the future.
- If you need help navigating the muddy waters of the foreclosure process then don’t hesitate to call for council. The Foreclosure Defense attorneys at Albuquerque Business Law are experienced professionals with many success stories and a lot of happy clients.