Harriet Robinson: How To Stop Or Postpone A Foreclosure Sale Date

in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

Formally, a mortgage lender (mortgagee), or other lien holder, obtains a termination of a mortgage borrower (mortgagor)’s equitable right of redemption, either by court order or by operation of law (after following a specific statutory procedure).

Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, it is a cloud on title and the lender cannot be sure that they can repossess the property. Therefore, through the process of foreclosure, the lender seeks to immediately terminate the equitable right of redemption and take both legal and equitable title to the property in fee simple. Other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes, unpaid contractors’ bills or overdue homeowner association dues or assessments.

How Foreclosure Works

When you buy expensive property, such as a home, you might not have enough money to pay the entire purchase price up front. However, you can pay a portion of the price with a down payment, and borrow the rest of the money (to be repaid in future years).

Homes can cost hundreds of thousands of dollars, and most people don’t earn anywhere near that much annually. Why are lenders willing to offer such large loans? As part of the loan agreement, you agree that the property you’re buying will serve as collateral for the loan: if you stop making payments, the lender can take possession of the property in order to recover the funds they lent you.

To secure this right, the lender has a lien on your property, and to improve their chances of getting enough money, they (usually) only lend if you’ve got a good loan to value ratio.

How to Stop or Postpone a Foreclosure Sale Date

Many homeowners believe once they’ve received a letter saying their home is being foreclosed on, all hope is lost and they have no option to turn it around. Some people even make an effort to move out once the letter arrives because the foreclosure sale date has already been set. All it takes is to know how to postpone a foreclosure sale date to stop foreclosure.

Some folks are not aware of the fact that home foreclosure can actually be stopped or postponed. Experienced foreclosure attorneys know how to stop a foreclosure sale date and even postpone a foreclosure sale date if that works better for your life situation.

How to Stop Foreclosure Sale Date

When looking to stop a foreclosure sale date, the first course of action is to remain calm and realize there are many options available.

1. Contact lender for mortgage statements and ask for forbearance.

2. Decide if you want to pay the balance or refinance.

3. Challenge the foreclosure with a lawsuit.

4. File for bankruptcy.

5. Offer the house up for a short sale.

These are just a few approaches that obviously require more detail and activity to achieve the goal of stopping a foreclosure. However, it gives you an idea of the variety of possibilities available for keeping your home despite receiving a notice of default letter.

The best way to know what option is viable for your life situation is to consult with an experienced law firm with a previous track record of helping families save their home from foreclosure.

Our law firm is available to offer a Free Consultation. Call us at 8801-676-5506

There are options you can take to postpone foreclosure date. Homeowners can postpone their sale date multiple times. There are even some steps to stop a foreclosure sale date but the best tactic is to let the expert help you, hire a foreclosure attorney.

Options that can Postpone a Foreclosure Sale Date

Simply ASK for a Postponement

This is a logical step to getting your sale date postponed. Call your mortgage company and ask them to postpone the sale date. Then make sure to keep in touch with them so the lines of communication remain open.
Many mortgage companies have websites that include assistance pages for those facing foreclosure. Visit these and see what steps are available for you with your particular mortgage company. It’s true that some mortgage holders are very cold and indifferent, but it’s also true that many of them are not. The smart ones understand how important ‘word of mouth’ advertising can be, and how effect compassionately helping out their customers is for earning trust and gaining future customers.

Filing Bankruptcy

Bankruptcy stops

foreclosure dead in its tracks. Once you file a bankruptcy petition, federal law prohibits any debt collectors, including your mortgage lender, from continuing collection activities. Foreclosure is considered a collection activity, and so the day your lender becomes aware that you have filed for bankruptcy, the foreclosure process will effectively be frozen. But here’s the rub; once you get to court, the bankruptcy trustee’s role is simply to play referee or mediator between you and your creditors. Bankruptcy really just buys you more time to replace your lost job or recover financially from a temporary disability; it doesn’t let you off the hook for your debts. The law requires your mortgage company and other creditors to work in good faith with you to formulate a reasonable repayment plan so you can get back on track. Consult with a bankruptcy attorney regarding whether filing for bankruptcy is a good strategy for you.

A Chapter 7 bankruptcy and Chapter 13 bankruptcy (one in which you are looking to discharge, as opposed to restructuring, debt) may buy you some time, but eventually, the foreclosure process will continue, seeks to discharge all debt. A Chapter 13 bankruptcy (BK-13), by contrast, seeks to establish a manageable debt repayment plan. Once a BK-13 has been filed, the foreclosure process automatically stops — immediately. Under a BK-13 plan, the homeowner must continue to make monthly mortgage payments to the lender, while paying any past due amounts to a court-appointed bankruptcy trustee.

Litigation

If you choose to sue your lender, a judge may grant you a preliminary injunction. This will prevent the lender from foreclosing on your property while the lawsuit is ongoing. Should you fail to win, however, the foreclosure process will continue.

Short Sale

If you owe more on your property than the current value of the property, a short sale may be an option. In a short sale, the lender agrees to take possession of the property and, in exchange, forgives all additional mortgage balances owed on the property. The borrower must be able to prove that they cannot afford to repay any additional loan balance. While a short sale is being negotiated, the foreclosure process will be postponed.

After your lender files an NOD but before they schedule an auction, if you get an offer from a buyer, you lender must consider it. If they foreclose on your home, the lender is going to simply turn around and try to resell it; if you present them with a reasonable short sale offer, they may see it as saving them the time, effort and trouble of finding a qualified buyer in a soft market. So, if your home is on the market, continue to aggressively seek a buyer for it, even after your lender initiates the foreclosure process. Read our guide on How to Sell Your Home Fast When Foreclosure Looms for action steps you can take to unload your home fast, then make your best pitch as to why your lender should agree to the short sale.

1. Deed in Lieu. A deed in lieu of foreclosure is exactly what it sounds like. The homeowner facing foreclosure signs the deed to the home back over to the bank — voluntarily. This sounds like it would be a great option, but actually has the same impact on a homeowner’s credit that foreclosure does. Lenders are very reluctant to agree to take a home back through a deed in lieu of foreclosure for a number of reasons: They fear the homeowner will sue later alleging they didn’t understand what was happening, the lender must pay any second or third mortgages or home equity lines of credit (HELOCs) off before executing a deed in lieu, and the lender wants to be certain that the borrower’s financial distress is real. Allowing the foreclosure process to proceed is one way the lender can be sure the borrower is not faking poverty.

As such, a deed in lieu of foreclosure is virtually never granted unless: foreclosure is imminent; the owner has had their home on the market for several months and been unable to sell it; there are few or no junior loans or liens the lender will have to pay off; the seller can document their financial hardship; and the seller initiates the process and documents the voluntary nature of their request for a deed in lieu. Even when all these factors are present, many lenders will not agree to a deed in lieu, but it is worth a try!

2. Assumption/Lease-Option. Most loans these days are no longer assumable. The average mortgage now contains a “due on sale” clause by which the borrower agrees to pay the loan off entirely if and when they transfer the property. However, if you are facing foreclosure, you might be able to persuade your lender to modify your loan, delete this clause and allow another buyer to assume your loan. The lender may want to assess the new buyer’s qualifications, but it can be a win-win-win option for all. You might be able to negotiate a down payment from the buyer which you can use to pay off your outstanding past due mortgage balance.

In a lease-option scenario, the buyer becomes your tenant, and you continue owning the property until the buyer has saved enough down payment money, improved their credit sufficiently or sold their other home. In some situations, the buyer will make a one-time, lump option payment upfront, paying you to obtain the option to purchase your home. You can apply the option payment to bringing your mortgage current. Then, the buyer will make lease payments monthly which you, the seller, then apply to your mortgage. To successfully use a lease-option to stop the foreclosure process, you must negotiate lease payments that cover most or all of your mortgage payment, property tax and insurance obligations — enough that you can make up any difference and still pay to live somewhere else.

Talk to an Attorney

If you’re facing an imminent foreclosure sale and considering any of the options discussed in this article, it is strongly recommended that you consult with a local foreclosure attorney or bankruptcy attorney immediately. To get information about different loss mitigation options, you should also consider talking to a HUD-approved housing counselor.

Consequences of Foreclosure

The main problem with going through foreclosure is, of course, the fact that you will be forced out of your home. You’ll need to find another place to live, and the process is stressful (among other things) for you and your family.

Foreclosure can also be expensive. As you stop making payments, your lender will charge penalties and legal fees, and you might pay legal fees out of pocket to fight foreclosure. Any fees added to your account will increase your debt to the lender, and you might still owe money after your home is taken and sold if the sales proceeds are not sufficient (known as a deficiency).

Foreclosure will also hurt your credit scores. Your credit reports will show the foreclosure, which credit scoring models will see as a negative signal. You’ll have a hard time borrowing to buy another home for several years (although you might be able to get certain government loans within one to two years), and you’ll also have more difficulty getting affordable loans of any kind. Your credit scores can also affect other areas of your life, such as (in limited cases) your ability to get a job or your insurance rates.