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Exceptional Legal Representation Throughout
Long Island and New York, Since 1993.
CALL FOR A FREE CONSULTATION
Exceptional Legal Representation Throughout
Long Island and New York, Since 1993.
As many of you may know, a significant number of homeowners are struggling with mortgage arrears due to the 2020 recession triggered by the coronavirus. Initially, most lenders were understanding and offered temporary payment suspensions. However, as time passed and arrears worsened, many lenders began to demand a solution, such as a modification that requires an application from the homeowner or a reinstatement that may take over a year and the lender’s approval. These new foreclosure challenges are emerging during a time when the aftermath of the 2008-2014 crisis, which was primarily caused by aggressive lending practices, continues to affect homeowners, particularly in areas like Queens and New York.
The previous recession led to a foreclosure crisis, and its effects are still felt today in the form of unresolved foreclosure cases and homeowners battling mortgage issues from that period. Many homeowners have found themselves behind on their mortgages or facing foreclosure due to the recent disruptions caused by the Covid recession, which is compounding an ongoing foreclosure problem in a market still struggling to recover from the previous crisis.
Some mortgage issues are a direct result of recent furloughs, layoffs, and lockdowns caused by COVID-19, while others have been ongoing for years but have been worsened by the current recession. The fact that this new potential crisis is unfolding before we have fully recovered from the foreclosures caused by the last recession makes the situation even more challenging.
However, despite these hardships, homeowners may have a better chance of saving their homes thanks to various programs, policies, court rulings, and laws—some of which were introduced during the previous recession and others enacted in response to the current COVID-driven recession. Homeowners facing foreclosure or already in the foreclosure process should seek reliable advice from an attorney who specializes in this area as soon as possible, as they may be confused about their options and the advice provided by their mortgage servicers could be misleading or incorrect.
There are a number of different foreclosure solutions that rely on a number of different circumstances. These include bankruptcy (chapters 13, 7 or 11), negotiations (mortgage modifications, forbearance agreements, and short sales), and litigation (responding to the complaint, defending the foreclosure action, and Emergency Orders to Show Cause). We can counsel and defend our customers in every way conceivable during the foreclosure process; these options are evaluated in light of the client’s objectives and the currentthe process of foreclosure. We pose the following crucial questions to our clients in order to help them determine which foreclosure solution to choose: I What stage of the foreclosure is it in? ii) What is your primary objective with the house? iii) What is your primary financial challenge with the mortgage? We investigate and present to our clients the following options for foreclosure solutions:
1.Mortgage Modification:If a homeowner has a steady income but is facing temporary financial hardship, negotiating a mortgage modification can help by adjusting the loan terms to make payments more manageable.
2.Bankruptcy: Filing for bankruptcy may offer immediate relief by halting foreclosure proceedings. Chapter 13 bankruptcy, in particular, allows homeowners to reorganize their debt and catch up on missed mortgage payments over time.
3.Foreclosure Defense: If a homeowner believes the lender’s actions are improper or that there are errors in the foreclosure process, defending against the foreclosure in court may buy time and, in some cases, prevent the foreclosure from proceeding.
4.Short Sale: In cases where staying in the home is no longer financially feasible, a short sale may be an option. This involves selling the home for less than what is owed on the mortgage, with the lender’s approval, to avoid foreclosure.
5.Deed in Lieu of Foreclosure: This option involves voluntarily transferring the property title to the lender in exchange for the cancellation of the debt. It can be a way to avoid the lengthy foreclosure process.
Deciding on the best option requires careful consideration of the homeowner’s financial situation, long-term goals, and the available legal and financial remedies. It’s important to consult with an experienced foreclosure attorney to explore all possible solutions and make an informed decision.
The Law Office of Ronald D. Weiss, P.C. can file an application on behalf of a client involved in a foreclosure action that has been ongoing and is nearing a foreclosure auction. In appropriate cases, the office may file an Emergency Order to Show Cause or initiate an emergency Chapter 13 or Chapter 7 bankruptcy case to stop the foreclosure sale. These actions aim to protect the client’s rights, provide extra time to address their situation, and/or pay off their debt.
Most foreclosure cases involve residential properties where homeowners or borrowers have fallen behind on their mortgage payments. Typically, these loans have a 30-year term and are either fixed or adjustable, depending on the interest rates at the time the loan was taken. However, there are many foreclosure cases today that deviate from this standard pattern, and the common arrangement is not always applicable. Any type of secured interest in a property grants a secured lender or lien holder the right to foreclose on it. With expertise in real estate law, bankruptcy law, mortgage modifications, negotiation, foreclosure lawsuit defense, and estate administration, our practice is well-equipped to handle various foreclosure situations. Here are some alternative foreclosure scenarios to consider:
1.Reverse Mortgage Foreclosures – When someone of a certain legal age—determined by the lender—takes out a reverse mortgage, they can borrow money secured by their home without making monthly payments. Instead of periodic payments, the borrower agrees to transfer the entire estate to the lender upon their death. Reverse mortgages are often marketed to seniors with substantial home equity, and in some cases, these individuals may be left with no other option due to financial hardship. However, to obtain a reverse mortgage, certain conditions must be met. Even when the borrower passes away, foreclosure issues can arise if they fall behind on property taxes or fail to maintain or repair the property. In most cases, reverse mortgages only lead to foreclosure when the borrower dies, assuming the borrower’s adult children still live in the home and are unable to sell or refinance it quickly enough to pay off the lender. That said, the borrower may try to remain in the home longer, which was often also their residence, while they explore ways to raise the funds needed to prevent foreclosure. We often defend these lawsuits to delay foreclosure for debtors and/or their heirs while considering alternatives such as Chapter 13, refinancing, and sale options.
2.Business Loan Foreclosures – A private loan taken by a small business often requires security, and in many cases, the borrower’s personal residence serves as the primary or only collateral. If the borrower withdraws cash in exchange for a personal guarantee secured by their home, they have pledged their residence and risk foreclosure if they face financial difficulties and fall behind on the business loan. Our assistance to borrowers in defending against lenders with business loans typically involves addressing the fact that these loans are commercial, meaning the interest rates and terms are often more stringent than those of a standard residential mortgage. However, since these foreclosures can impact the borrower’s family home, these are compassionate cases where the borrower works with our office to explore all possible options to prevent the property from going into foreclosure.
2.Business Loan Foreclosures – A private loan taken by a small business often requires security, and in many cases, the borrower’s personal residence serves as the primary or only collateral. If the borrower withdraws cash in exchange for a personal guarantee secured by their home, they have pledged their residence and risk foreclosure if they face financial difficulties and fall behind on the business loan. Our assistance to borrowers in defending against lenders with business loans typically involves addressing the fact that these loans are commercial, meaning the interest rates and terms are often more stringent than those of a standard residential mortgage. However, since these foreclosures can impact the borrower’s family home, these are compassionate cases where the borrower works with our office to explore all possible options to prevent the property from going into foreclosure.
3.Tax Lien Foreclosures – Seniors who own their homes typically have them paid off and only need to maintain the property by fulfilling their real estate obligations. However, even with New York State STAR programs, real estate taxes for elderly homeowners can still be exorbitant. Combined with declining health and limited income, this can lead to arrears in tax payments. We often oppose foreclosures based on real estate tax arrears and represent our clients by filing a Chapter 13 case on their behalf. The goal is to help them catch up on tax arrears over a 60-month period to prevent the loss of their homes to foreclosure.
4. Judgment Lien Foreclosures – A home owner frequently has debts and/or liabilities outside of their mortgage. The debt for that judgment, albeit it was often unsecured before becoming a judgment, usually becomes a judgment lien against the borrower’s house if these become troublesome and wind up in court and result in a judgment against the borrower. Although most judgment liens are not often permitted to be used for foreclosure, in more extreme cases, the court awarding the judgment may decide to permit a foreclosure based on the judgment lien. situations that are subject to change, such as large debt amounts, unusual or emotional reasons for the debt, forceful actions from the lender or their counsel, and situations in which the borrower’s substance, health, or welfare don’t seem to require the home. In order to combat judgment lien foreclosures, we frequently defend ourselves in court, participate in settlement talks, and work to have what are essentially default judgments vacated.
5. Foreclosure of Condominium Apartment in a Doorman Building or a Gated Townhouse Community – Similar to privately owned residences, community living arrangements can face foreclosure in the event of a major mortgage default. The service of process, however, can present a problem in condominium buildings and guarded communities since the service processor might not be able to get inside and visit each individual residence. If the security guard, doorman, or “gate keeper” are served, it is legally questionable whether that is proper service.
6. Home Improvement Loan Foreclosure -Home repair loans with problematic terms and frequently subpar home remodeling services are aggressively marketed to people, particularly in minority or impoverished neighborhoods, as well as to seniors. Foreclosure proceedings may ensue if these loans are not paid back on schedule. Based on the suitability of the loans, the services provided in exchange for the loans, and the experience of the businesses involved in these transactions, we can defend the lawsuit and work out a settlement.
7) Death of the Borrower/Owner and Foreclosure Against Heirs –Even while family members may continue to reside at the house and may wish to stay and keep the property and settle the mortgage concerns, it is common for the borrower and owner of the home to pass away without a will, causing the debt to go into default without a clear owner. Determining which relatives to serve with process and to name as defendants in the foreclosure action presents service of process challenges for the lender frequently. In addition to defending these lawsuits, we frequently work to find a solution by assisting with estate administration problems. In the presence of a willIt is easier for us to have a new legally recognized owner who can defend and/or try to settle the foreclosure, request a modification, file a Chapter 13 case, or take other action to save the property because it is more obvious who is the new owner of the property. But in cases when there are multiple prospective heirs, it becomes more difficult for the lender to serve the relevant parties and initiate foreclosure; conversely, it becomes more difficult for the surviving relatives to work with the lender to try to prevent foreclosure. Our practice frequently deals with similar circumstances and finds solutions by defending against foreclosure lawsuits, acting as surrogates in court, and/or engaging in discussions to preserve the property for the heirs who choose to stay on it.
The Governor of New York State, the state court system, and the FHA all imposed moratoriums that effectively prevented lenders from foreclosing. Additionally, New York State courts were closed until May 4, 2020, and upon reopening, they initially refused to accept foreclosure action documents. They handled foreclosures and evictions differently from other legal proceedings. From mid-March 2020 to January 2022, numerous federal and state moratoriums and restrictions in New York State discouraged or outright prevented foreclosure lawsuits.
Since 2021, courts allowed defendants to file a Covid Hardship Affidavit, offering protection unless the plaintiff requested a hearing to determine whether the defendant was indeed experiencing Covid-19-related hardships, in which case the foreclosure process could proceed. During this national crisis, these measures provided significant relief to homeowners who couldn’t make mortgage payments, giving them time to recover financially.
On January 15, 2022, New York State lifted the moratorium, allowing foreclosure proceedings to restart. This led to a backlog of mortgage issues, as the moratorium applied broadly to foreclosures unrelated to Covid-19. Normally, lenders would have been able to proceed with foreclosures more quickly. The court-mandated pause provided borrowers extra time to resolve or alter their mortgage arrears or seek alternative solutions.
During this time, most borrowers and lenders opted for forbearances, allowing them to defer payments for up to 18 months without penalty. New York State’s Rule 9-X encouraged lenders to either adjust Covid-related arrears or defer them, promoting resolutions outside of foreclosure.
Additionally, in January 2022, New York State allocated $530 million from federal funds to help homeowners facing mortgage arrears due to Covid-19. Through the Homeowners Assistance Fund, eligible homeowners could receive up to $50,000 to help them catch up on missed payments.
The success of preventing a home from going into foreclosure largely depends on the expertise of the attorney defending the homeowner. Since 1993, we have successfully helped many homeowners in Queens, Nassau County, and Suffolk County avoid foreclosure. We have also assisted them in regaining financial stability and securing their homes for the long term. A homeowner facing foreclosure must carefully evaluate their legal options, as these choices are limited in terms of how and when they can be pursued. Let us help you save your home with our friendly, affordable, and experienced legal assistance.
Our consultations are free, but the advice could be invaluable.
Contact us by phone at (631) 570-8742, or e-mail us at weiss@ny-bankruptcy.com to discuss your legal options in a free consultation Your legal alternatives for halting or averting a foreclosure.
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