In Part I of this Foreclosure Defense series we discussed “the final action” clause of the current moratorium signed by Governor Ron DeSantis’ providing for the courts to initiate foreclosure proceedings against homeowners in Florida. Given that tens of thousands of Floridians have lost their jobs in the current economic climate, and that the current foreclosure rate is artificially low due to the moratorium, we can expect a tidal wave foreclosures after September 1, 2020.

If you or someone in your circle of family or friends have been struggling to pay the mortgage during this uncertain time, it is important to know that there are options.

Foreclosure Defense Options in Part I

In Part 1 of this series we mentioned 1) the options to negotiate a reinstatement of the loan following the receipt of a foreclosure notice. We also discussed 2) working with your legal counsel to ask your lender for forbearance or forgiveness of some or all of your arrears. Today, we look at the options of 3) doing a short sale or, alternatively, 4) suing the financial institution for its predatory lending practices.

3. Do a Short Sale

In a short sale, the lender is asked to accept a lesser amount to pay off the mortgage in its entirety. Then, the mortgage holder sells the house for the lesser amount and gives all the proceeds to the lender. The process for managing a short sale is complex and fraught with challenges at each step. In order to ensure success in the short sale process, Florida mortgage holders must select a competent local real estate attorney with experience in managing short sales.

The first step in the process is to reach out to the lender and ask if the property qualifies for a short sale. If so, the second step is to have your attorney draft and submit a hardship letter explaining why you are financially unable to make mortgage payments. Other factors to mention in the hardship letter might include the fact that the value of the property has decreased warranting the property being sold for a lower price than the value of the loan.

It’s important to note that through the entire short sale process, you are expected to maintain constant contact with the lender, often receiving their verification and approval of key steps.

For example, once an offer is secured, you or your attorney must submit a buyer’s offer to the lender along with a copy of the Realtor’s commission agreement for the lender’s approval.

The lender’s approval of a short sale may take up to 60 days in Florida and does not come with a guarantee that the lesser sale amount would satisfy the loan. There is a good probability that a well-run and managed short sale will be approved, with the lender writing off the balance of the loan as a result. However, a poorly run short sale process that does not prioritize constant contact with the lender may result in the lender attempting to obtain a deficiency judgment. This means that the lender will sue the mortgage holder for the difference between what is owed on the mortgage and the price at which the property was sold. In Florida, deficiency judgments during short sales can occur, however, they are rare especially in cases managed by a competent real estate attorney.

“In a short sale, the lender is asked to accept a lesser amount to pay off the mortgage in its entirety.”

4. Rescission of loan

Your attorney may review your loan and determine that a rescission or cancellation of the loan can be sought in court based upon the lender’s violations of predatory lending guidelines.

Taking this step involves filing a serious lawsuit against what is often a well-established and funded financial institution. It is absolutely essential that you seek legal advice and representation in your case otherwise your chances for success will be remote.

South Florida Law, leaders in foreclosure defense

At South Florida Law, we are committed to helping people and protecting families by mounting a foreclosure defense that can help them keep their homes. We help our clients avoid foreclosure, in many cases keeping their homes, protecting their finances and avoiding damage to their credit. In cases where it is appropriate, we have the big firm resources to go head-to-head with financial institutions that have victimized our clients with predatory lending practices. At the same time, we provide personalized service and attention to detail in your case at a price point that can only be achieved with a boutique firm of our size. Are you in danger of default on your mortgage? Are you in arrears with your payments and/or facing foreclosure? Call South Florida Law today on (954) 900-8885 or reach out to us via our contact form.