Welcome to the The Warner Fisher Team Help Center. We’ve pulled together 18 of the most frequently asked questions from clients and compiled them all here. The answers are short and simple, but every situation is unique.
Therefore, please Contact Us earlier rather than later, and we’ll do our best to help out.
What is Pre-Foreclosure?
Usually when a homeowner misses four mortgage payments, their bank serves them with a Foreclosure Notice (Lis Pendens) stating that the bank has started the foreclosure process against them. Legally, this has to be filed in the County Clerk’s Office in the county where the property is located. All owners on the mortgage or deed will be listed and served. It will automatically appear on your credit report, usually preventing you from further credit applications.
How Long Do I Have Until Foreclosure is Final?
New York State is a Judicial State. For a bank to go through the court system to get the required legal authority to take back your home it can take six months to two years.
What Should I Do When I am Notified of Foreclosure?
Call your bank right away. You do have options specific to your bank that they can explain to you. You want to speak to the Loss Mitigation Dept. Keep detailed records of dates, times and who you spoke with. Don’t hire anyone to do this for you.
What Options Do I have in Foreclosure?
If you do not have the funds to pay off the delinquent amount, most banks recommend trying to qualify for a Loan Modification first. Your bank can send you the paperwork for that. Another alternative is a Forbearance Agreement where your bank will allow you a series of installment payments to bring you current. A Bankruptcy gives you an umbrella of protection from creditors but doesn’t relieve you of your mortgage debt. If you do not qualify for any of these options, most banks will recommend a Short Sale.
Should I Go To the Settlement Conference?
Yes, Always. New York is a Judicial state which means if a bank tries to take your house back in a Foreclosure Action they have to get permission from the Supreme Court Judge first.
About 60 days after the Foreclosure Action is started you should receive a letter from your bank to appear in Court. You can appear there by yourself but a lawyer from your bank should be there also. If they do not send a lawyer, sometimes the hearing will be delayed or even the entire case might be dropped by the Judge.
Take all of you letters, documents with you. Explain to the Judge your case. It will help if you are proactive and attempting to do a Loan Modification or Short Sale. Remember, interest, late fees & penalties will still be building up the longer this Conference hearing is delayed.
If you don’t show up in court, the Judge will automatically determine a default of your case in favor of the bank allowing them to continue with the foreclosure.
What is a “Deed in Lieu”?
This is a title-transferring document that transfers the home's title from the homeowner to the bank that holds the mortgage. Never just deed your house back to your bank or do a “Deed In Lieu.” Most banks will not allow a “Deed in Lieu” unless there are no other liens on your property including back taxes or water bills. You are not in control of the foreclosure process with this method and might end up with a deficiency judgment for the balance (including late fees, interest, fines, etc) when all is said & done. Plus a this will still heavily impact your credit report.
What is a Short Sale?
A Short Sale is when you sell your home “short” of your mortgage balance. Generally, Private Mortgage Insurance (PMI, i.e. FHA loans) will reimburse your bank for the “short fall.” In a Short Sale, most expenses such a Realtor Commission, legal fees, back taxes and delinquent water bills come out of the net proceeds to the bank, not out of the home owner’s pocket. A Short Sale usually takes two to three months to process. However, you must have a purchase offer first and it must be MLS listed for sale by a Realtor to guarantee the bank that they are getting fair market value for your home.
What Documents does my Bank Need for Short Sale?
Most banks have their requirements on their website but generally they are :
Past two years income taxes
Past two months banks statements
Past two months paycheck stubs
If self employed- last quarter P& L
Monthly income/expense statement
What Are My Benefits For a Short Sale Versus Other Options?
Less Impact On Your Credit Report
Be Able To Buy Another Home In 2-5 Years With Mortgage Insurance (PMI)
No Promissory Note
No Deficiency Judgment
No “Out of Pocket” Expenses
Attorney & Realtor Commission Paid By Lender
Junior Lienholders Settled
No Mortgage Payments Made During This Process
Cash Relocation Incentive
Clear Title Given to Buyer
What Is A Deficiency Judgment or Promissory Note?
If you bury your head in the sand and do nothing about your foreclosure and the bank takes back your home, they can file a Deficiency Judgment against you for the delinquent amount or force you to sign a Promissory Note for repayment of that amount. Generally in a Short Sale all debts are permanently relieved.
How Does A Foreclosure Affect My Credit?
If your bank does take back your home, it can be up to a negative 300 points off your credit score. You will not be able to qualify for an insured mortgage loan for up to five years. If you qualify for a Short Sale it can be up to a little as a negative 50 points with a two year wait for a new mortgage application.
What is a Quick Sale?
A Quick Sale is generally considered selling your home at a “wholesale” price versus market value. Most investors only want to pay less than 60% of market value but if you need to get out from underneath your house quickly then this might be an option.
Is my Debt Relief Taxable Income?
Yes, generally most banks will send you a IRS Form1099 for any Gift or Debt Relief. However, the IRS will provide you with Form 982 to discharge these debts when you file your income taxes. Always consult with your accountant first.
Should I sign an IRS 4506-T?
This is the form that banks use to pull your income taxes directly from the IRS if you can’t provide them. This is usually acceptable but you should consult with your Attorney or Accountant first.
How Does A Forbearance Agreement Work?
This is generally considered a repayment plan worked out over time with your bank to pay back missed mortgage payments. This is usually on top of your regular monthly payment unless the amount due is just added back onto your principal balance.
Does The Home Affordable Foreclosure Alternatives Act (HAFA) Apply To Me?
Yes it does. The first step that all banks must determine when working with a homeowner in foreclosure is to qualify them according to these Federal Guidelines. For more information click here for official HUD information.
What is The Home Equity Theft Protection Act (HETPA)?
This law was passed by Albany legislators exclusively for New York State homeowners to prevent unscrupulous investors from taking advantage of distressed home owners and stealing their hard earned equity. There are a lot of guidelines concerning this law so you should consult with your attorney before signing any documents to make sure your best interests are legally protected.
Can’t I Just Refinance My Mortgage?
The heavy negative credit score impact of missed monthly mortgage payments plus the Lis Pendens on your credit report usually prevents you from obtaining a new mortgage, especially with today’s higher lending standards. Depending on the equity in your home or the credit worthiness of your spouse there may be other options to consider if you are thinking about refinancing.