Absolutely. In many ways, I would say that their chances have increased once the foreclosure proceedings begin simply for the reason that now it’s in the court system. Now there is an actual lawyer representing the bank. There is an actual person, a lawyer who represents the bank, who can be contacted and we can discuss the case as opposed to before the case was in the court system.
You have in calls from customer service reps, call centers and there is really no accountability as far as what they tell you. Most of the people don’t have any authority to do anything but from some standpoints it’s easier once the foreclosure process has begun.

Some lenders say that they won’t modify a mortgage or they won’t do any loss mitigation for the borrower until the borrower has been in default and a foreclosure case has been filed. That can open up additional possibilities and there is also court ordered mediation where the borrower can sit down with the lender and see if something can be worked out to keep the home. In my experience there are a lot of opportunities to save a home once a foreclosure has started and when I am discussing bankruptcy options which certainly can help out.

Can I Save My Home If Stop Making Payments On A Mortgage?

Yes. Anybody who is in that situation who is facing foreclosure is going to have been a default in the payments. There is going to be some sort of default whether it’s in making payments, if they are to pay insurance, if they are to pay the concerned interest. That’s really just the beginning of the process so certainly there are numerous points between when you stop making payments on a mortgage and the property is sold on the courthouse steps. There are numerous points along the way where it’s possible for you to save your home. The best ways can take all different shapes and sizes but if you stop making payments in a lot of ways, at the very beginning of this process from a court standpoint, from defending a foreclosure case standpoint.

Is It Ever A Good Idea To Walk Away From A Mortgage?

Depending on what’s meant by walk away, I would say it’s never a good idea to simply walk away from the situation and have a head in the sand type approach. In some situations it does make sense and it is a good idea for the borrower to walk away in a way that we typically call strategic default where the borrower can presumably still make the monthly payments but because of the amount of payment or because of the value of the house or the outstanding balance, it’s not a good idea for the borrower to continue to make payments but whether you walk away, strategic default or whether you vacate the property, it’s 100% absolutely necessary to have a foreclosure defense attorney counsel you on that. You want to do what’s best for you and you want to maximize your situation.

Most of the time, it’s possible for me as the borrower’s attorney to see what type of loss mitigation options will be available. I’ve had cases where clients have come and they’ve said there is no way we can keep it, it’s too much, it’s killing us and we really don’t have much of a prospect of keeping the house but if do go through a process of asking for a loan modification and there have been occasions where I have been very surprised. It doesn’t happen very often but the banks on occasion have reduced principal and reduced interest rate and restructure the loans such that the borrowers can stay in their house and they don’t need to walk away when it was one of those cases where there was no equity and they needed to walk away.

Even if there is no equity in the property or if there is not going to be any equity in the property and the bank won’t work with you, it’s still a good idea, a necessity to consult with a foreclosure defense attorney because a properly defended foreclosure case can generally take at least a year, so many borrowers find it advantageous to have that year to make a soft landing and figure out where their next step is going to be. They realize that they are not going to be living in this home forever but instead of being out in 20 days on not answering the foreclosure complaint, they can dictate more on their terms when they are out, they can have alternate living arrangements and thereby, what I would call a soft landing. Have time to move and do an orderly vacation of the property.

Is Loan Modification A Viable Defense To A Foreclosure Proceeding?

You can do that and typically if those efforts are successful then the case never comes across my desk because if you are able to obtain a loan modification with your bank then that would avoid the default and you would continue to make the payments and there never would be a foreclosure. Once a foreclosure has been filed, you can still try to get what we call loss mitigation which is anything from negotiating a lower rate to extending the term or forgiving principal. Different lenders have very different requirements in this regard and I see situations where two borrowers were basically very similar. They had similar type of properties and similar amounts owed but different lenders. Some lenders are more willing to work with borrowers than others and that is really lender specific.

It can depend on whether or not the loans are owned by the bank itself in house or if it’s a securitized loan. Is it a loan where there are so many different owners of the mortgage that you are not dealing with one particular owner, you are dealing with a loan servicer. In my experience, it can be harder to get a loan modification there because generally the loan servicers are trying to liquidate these troubled assets, they are really not trying to work with borrowers to reach a resolution and have the loan be a performing loan. Most of the loan servicers that I deal with like Ocwen, Nation Star, etc. are large loan servicers that really just want to liquidate the loans and move on. They don’t have an interest in working things out.

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