Avoiding Judgment Through Connecticut’s Foreclosure Mediation Program

foreclosure defense attorneys newtown ct

In 2008 Connecticut established what was one of the first Foreclosure Mediation Programs in the country to help homeowners with the record-breaking number of foreclosure cases being filed. When a qualifying homeowner enters mediation, the foreclosure action is stayed pending conclusion of the mediation.

The mediation process is overseen by a foreclosure mediation specialist who is employed by the Court. They are neutral third parties that do not represent either the bank or the homeowner. The mediator will meet with the homeowners (and their attorney) and the attorney for the bank. The goal is to reach a fair and reasonable agreement. This could be:

  • Repayment terms for the past due balance
  • Modification of the mortgage to terms that the homeowner can afford
  • Short sale
  • Deed in lieu of foreclosure
  • Other voluntary agreement

Mediation is available to those who:

  • Signed the note secured by a mortgage on the property
  • Occupy the property as their primary residence
  • The property is a 1 to 4 family residence
  • The foreclosure case has a return date on or after July 1, 2008.

Note: if you did not sign the note, you can still qualify for mediation if you are now the owner of the property and:

  • You are a defendant in a foreclosure action having a return date on or after October 1, 2015
  • You are a successor-in-interest, meaning that:
  • You are the spouse of a deceased borrower, and you became the owner of the property through your spouse’s estate or
  • You held title with your spouse with rights of survivorship or
  • The property was transferred to you by a divorce decree or legal separation

There are time deadlines for requesting mediation when you are served with foreclosure papers, so it is imperative that you act quickly. The attorneys at Bellenot & Boufford, LLC have been helping homeowners in mediation since the inception of the program in 2008. We offer a free initial phone consultation. Please call if you have any questions or want to save your home and / or avoid judgment. We can also help negotiate a resolution prior to your being served with foreclosure papers.

Law@BBesq.com     203-304-9050     WWW.BBesq.com

How To Save My Home From Foreclosure

Connecticut Attorney

The most important step to savings one’s home is to take action immediately… even before you are served the summons and complaint that starts the foreclosure process. A little time and money upfront consulting with an attorney can save you thousands of dollars, sleepless nights, heartache and may be the key to saving your home.

The next most important step is asking a very difficult question: Can I save my home?”

It may be the toughest question to deal with and will certainly be the most emotional question to handle, but it is necessary.

YES, You can save your home:

If it appears that you can save your home, then you need to ask, “Is it worth saving my home?” If your home is worth less than your mortgage, if your budget is choking you, or if for any other reason it is not worth saving your home, consider all other options.

If it’s worth saving your home, don’t waste one second. Do everything necessary to save your home. Act immediately.

NO, You cannot save your home:

If your circumstances are such that you cannot save your home, you need to consider other options to minimize your losses. Don’t put good money after bad. Don’t dwell on how difficult it is to accept the loss of your home. Don’t be blind to the reality of what is and isn’t possible. Again, expert advice can help you understand what can and can’t be done. Start planning the rest of your financial life. Your family’s quality of life moving forward is most important.

Prioritize Your Expenses

  • You need to survive, so expenses such as food, utilities, insurance and medical needs must always come first. Then your mortgage.
  • Let the credit card companies yell and scream all they want. Pay your mortgage first.
  • If your mortgage company will not accept your payment for any reason, save the money. Don’t spend it on anything. You may need every penny of it to eventually bring your loan current or to modify your mortgage. Do not give it to other credit companies or be tempted to spend it on anything other than your mortgage.

Develop A Financial Plan / Budget

You will need to do a comprehensive review of your finances and financial resources. Develop a budget. This will help determine what options are available to you and how to approach your lender.

Forbearance

If your financial setback is temporary, the lender may grant you a forbearance. This will relieve you of having to make payments for a fixed number of months. Most likely the missed payments will be added to the end of the mortgage term.

Modification

You should apply for HAMP (Home Affordable Modification Program). A modification can reduce your interest rate, monthly payments and place the arrearage to the end of the loan. Though rare, there are occasions where a lender may even forgive some of the arrearage.

Refinance

You may qualify for a HARP (Home Affordable Refinance Program) Refinance, even if your home is underwater.

EMAP (Emergency Mortgage Assistance Program)

EMAP is a program by CHFA (Connecticut Housing Finance Authority) that will help pay your arrearage and bring the loan current. In some cases, it may help you make mortgage payments going forward for up to five years. This is a loan and CHFA will put a lien on your home, but you are not required to repay the loan until you are financially able. EMAP is a very good program and can help save your home. Again you need proper legal and financial advice to know if it is your best option.

Chapter 13 Bankruptcy

If you qualify for a chapter 13 bankruptcy, you can force the lender to allow you to pay the arrearage over a 5-year period. You need to discuss this option in detail with an attorney.

Chapter 7 Bankruptcy May Be Necessary

If you have extensive unsecured debt (credit cards, medical bills, etc.) you may need to discharge debts with a Chapter 7 bankruptcy in order to afford your mortgage. You may need to eliminate this debt to qualify to modify or refinance your mortgage. If you cannot save your home, you may need to file bankruptcy to obtain a discharge of any deficiency. This is a valuable option if you qualify and can not only help save your home, but improve your family’s quality of life. It can be the beginning of your new and better financial future. You can rebuild your credit after bankruptcy and faster than you may think.

Timing

If you can and decide to save your home, timing is crucial. You don’t want to miss deadlines and lose your home by default. There are usually a number of options available when you start to have financial difficulties. The longer you wait, the fewer options will remain available.

If you cannot or choose not to save your home, work on timing. How much time to you need to move? How long can you stay? Do you need time to save money so you can afford to move? Leave with a savings? Everyone’s circumstance is different, but there are advantages to bankruptcy planning.  If you would like to discuss your options, contact us for a free telephone consultation

Serving Danbury, Connecticut and all of Fairfield and New Haven Counties.

True Or False? … Bankruptcy Will Ruin My Credit Forever! Or At Least 7-10 Years

Bad credit

No! Not True!

Filing Bankruptcy does not have to be the end of your financial life. It is the beginning of your New and Better Financial Future. If you manage your finances properly moving forward, bankruptcy will be the last negative mark on your credit report. Without bankruptcy or paying off your debts, the delinquencies and late payments will continue to add up month after month indefinitely. Bankruptcy will stop the reporting of late payments and delinquencies for included debts.

There is NO law requiring that Bankruptcy, or any negative credit mark, remain on your credit report for 10 years, 7 years or any amount of time. You have the right to demand that the Credit Bureaus verify all of the information reported. Credit Bureaus are businesses that are paid by creditors to report whatever information the creditor submits. That is how they make money. And they are not government agencies. They don’t make money verifying the information. They make money reporting information.

They also do not report to you when items, including negative items, are placed in your credit file. They do not report to you when changes to your credit report occur. You have no way of knowing what, if anything, they have verified. Yet The Fair Credit Reporting Act requires that:

“Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information.  Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days…”

It is important to know what is on your credit report. Even items that appear to be correct, may not be and you have the right to ask that the information be verified.

With proper guidance your credit score can grow and grow fast after discharging your debts. Many of our clients have seen their credit scores improve into the 700s, sometimes within a year. This would not have been possible without stopping the negative reporting, which Bankruptcy will.

Contact Bellenot & Boufford, LLC for more information. Law@BBesq.com / 203-304-9050

Serving Danbury, Connecticut and all of Fairfield and New Haven Counties.

Mortgage Modification & An Increasing Trend To Keep Homeowners Home

Below is a success story I would like to share.

Please note that this success story is not common. It is the exceptions, BUT there is a trend in this direction that I hope will continue to grow. What is more common today is the willingness of more and more lenders to work with financially troubled homeowners in an effort to reduce their monthly payments to a level that they can afford and by doing so, keep them in their home and out of foreclosure.

However, in all cases, including these, persistence and patience is required in heavy doses.  It is not as simple as asking the bank to reduce your payments and they reply, “Oh sure, no problem”. In most cases there are endless communications with the lender’s collection and / or loan mitigation departments. There are many disappointing responses, including eventually being served with foreclosure papers.

This is where the State Of Connecticut’s foresight has come to the rescue of so many. Connecticut was swift and first to allow homeowners the opportunity to mediate their loan terms. This is not a guarantee that all will succeed, but more and more are.

Shared Appreciation Loan Modification

A Connecticut couple owed approximately $300,000 and was seriously delinquent on their $2,000 Plus monthly mortgage payment with a large national mortgage company. There were many months of discussions and providing documentation and information, over and over and over again. All apparently in vein as the couple felt hopeless and desperate when a State Marshal left the dreaded Summons and Foreclosure Complaint.

Mr. Homeowner attended a foreclosure intervention clinic that I speak at each month and learned that, although there are no guarantees, there is a process and if managed properly he could buy a lot of time in an effort to explore every possible option to save his home, and if that failed, to leave on his terms and maybe with some money to start new.

I filed an appearance and request for mediation with the court. I did so within the time allowed by law, but not early. Timing is critical. We forwarded the required financials to the lender’s attorney and eventually the couple was offered and accepted a loan modification.

—————————————————————————————————

The terms reduced the principal balance on the loan by more than $170,000, reduced the interest rate to almost 2%, thus lowering payments more than $750.

If the property is sold or refinanced, the couple will have to share any appreciation by paying the lender 25% of the appreciation gained from the date of the modification. At no time will the homeowner have to share more than the approximately $170,000 deferred principal. At all times the homeowner gets to keep at least 75% of the appreciation.

If you are in need, or know someone who needs to modify the mortgage, please have them contact us at 203-304-9050 or learn more about how to stop foreclosure.

What is a Short Sale?

A short sale is a means of selling your residence when the loan balance due to the lender is more than the value of the real estate. In other words, if you sell your residence at fair market value, there will not be sufficient proceeds to pay the mortgage in full. In years gone by this meant that, if you didn’t come up with the balance, “short fall”, out of pocket, the bank would not release the mortgage and you could not convey clear title. You couldn’t sell your home and it would eventually be lost in foreclosure if you couldn’t afford to make your payments.

The economic crisis, that has been lingering for years now, has taken its toll not only on the homeowners, but mortgage companies as well. Banks, in many cases now, will cooperate to allow the short sale.  The home owner sells the mortgaged property, for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in exchange for a full release of the mortgage on the land records. In such instances, the lender would have the right to approve or disapprove a proposed sale.

How a Short Sale can help the seller.

Sellers avoid having to go through a costly foreclosure and the full impact that a foreclosure has on their credit score. The seller and the lender negotiate the details of the agreement, but usually sellers who complete a short sale are forgiven the balance of the loan. Sometimes the bank will even offer an incentive to help pay for the cost of moving. If the lender agrees to forgive the shortfall, the seller may avoid bankruptcy, which would otherwise be needed to discharge the balance due to the lender.

Short Sale Are Not Always Perfect

Not all lenders will forgive the balance of the loan. Sellers must understand all of the terms of the short sale agreement before signing anything. A short sale may affect your credit score to some extent, though usually not as much as a foreclosure.  There can also be a tax consequence of completing a short sale. The IRS usually taxes any balance that a lender forgives for most debts. However, for a number of
years Congress has been allowing exemptions that may eliminate the tax consequence in short sales of one’s personal residence, at least through the end of 2014. We may not know until the end of this year if Congress will extend the exemption for 2015. Not everyone will qualify, so this is another issue for which  you should consult an expert.

Is there more I need to know about short sales?

There is much more to working through a short sale and maximizing your benefits.  It is important to get the best advice you can and as soon as possible. There are other options that may also be available, in addition to, or in lieu of short sale. If you need further information about whether you are a candidate for short sale or other programs to work out your financial difficulties, do not hesitate to contact us.

Contact Bellenot & Boufford about a Real Estate Short Sale