Foreclosure … it’s not over till it’s over
Many people facing foreclosure are confused about the process of foreclosure. Therefore, I will attempt to explain the process in a step by step fashion:
Step 1: If you miss a payment, you, the “mortgagor” (homeowner) will likely receive a letter by mail with the heading, “Notice of Default.”
Step 2: If you miss three payments you are likely to have a document brought to your home by a process server. He will knock on your door and present you with a court document that has LIS PENDENS written on the top. This means that there is a lawsuit pending at the courthouse. This means the bank has filed a foreclosure action and will try to get back the property (your home) since you defaulted on the loan. Typically, the process server will bring five or six copies to be served on the husband, the wife, and any tenants that may be occupying the property. Later, a notice will be filed with the courts dropping parties from the lawsuit. It’s called “Notice of Dropping Parties.” The bank wants to be sure they have served everyone with an interest in the property so they don’t have to repeat any steps. Foreclosure is expensive for the bank. It costs anywhere from $30,000 to $60,000.
Step 3: An affidavit for non-military service will be filed by the bank. There are certain rights that those in the military receive.
Step 4: A memorandum in support of the foreclosure will be filed by the bank stating what you have failed to pay including past due amounts, late fees, taxes and insurance, attorney fees, and other fees associated with the loan, etc.
Step 5: A motion for summary judgment will be filed which basically asks the judge to sign a final judgment of default and give the house back to the lender (bank).
Step 6: A hearing date will be set for the judge to hear the case. You will receive a notice of hearing by mail. The judge will require at the hearing that the lender produce the original mortgage documents, including the inked signatures on the mortgage and promissory note that you signed when you bought the house. (In a future article, I will explain these documents and why originals are so important in a mortgage defense).
It is imperative that you, the homeowner in default, show up for this hearing. Bring your kids or borrow your neighbors’ kids to bring to court. The judge has some discretion as to the time he can allow you to stay in the house. If he sees you are living in the house with children, he will give you more time. This extra time may be just what you need to work out a deal with the bank (lender) and stay in your home. If you don’t bother to show, the judge will assume you don’t care and tell the bank they can have the house in 30 days. This is enough time for the bank (lender) to publish the sale of your home in a local paper and sell it to the highest bidder on the second floor of the courthouse (Justice Center).
When the judge signs the final judgment, many people think this is the end of the process but it isn’t. There is still time for you to come to some agreement with the bank regarding your past due payments so don’t give up! A short sale or loan modification can stall these proceedings, and in fact, the case may be dismissed by the bank (lender). In the event a short sale or loan modification is not approved by the lender, the lender can then proceed to a foreclosure sale.
Step 7: A notice of sale is then published in a local newspaper that runs for three weeks. The lender is required to prove they ran the Notice of Sale.
Step 8: A foreclosure sale will take place. Most people who bid at the foreclosure sale or “Sheriff’s Auction” are professionals. (This subject will also be addressed in a future article). The successful bidder will have to wait two weeks for any objections to the sale. Then, a certificate of title will be issued along with a certificate of disbursements so the bank can get its money for the sale of the house.
Step 9: This last step is a writ of possession forwarded to the Lee County Sheriff’s Office. This is when the sheriff actually comes to the door and asks you to surrender the property within 24 hours. In many cases, lenders will give you “Cash for Keys” or moving money to help you get out. (This is the topic of a future article).
The foregoing is not intended to be legal advice, and the information contained herein is a composite of cases taken from public records.
Mario D’Artagnan is a broker associate with The Jim Fischer Team at Gulf Coast Realty Network, Inc. D’Artagnan is a former Florida Real Estate Commission investigator, a former real estate instructor, and a published author. For more information, contact D’Artagnan at: mariodartagnan@yahoo.com, or call 239-565-4445.