It occurred to me after I put up the post about VA loans, that not all servicers are complying with FHA requirements either. So, if you have an FHA loan, that loan is in foreclosure, about to be, in default or just in trouble; you probably want to read the FHA rules for loss mitigation (i.e., how mortgage servicers are supposed to deal with loans in trouble).
The FHA regs are also on my website. Check out the Foreclosure page, left hand panel, towards the bottom.
As usual, I don’t do mortgage workouts. If you need help, contact someone who has been trained by the FHA as a mortgage counselor or a lawyer who is well-versed in FHA regs.
I do not represent people in loss mitigation negotiations involving mortgage loans. I do, however, represent people in Bankruptcy who frequently are having problems with a mortgage. So, I see a lot of mortgage issues. One thing that I am seeing a distressing amount of is people who have a VA mortgage, get into trouble, wind up talking to their mortgage servicer and are never offered VA loss mitigation procedures.
I am not claiming to be an expert on VA loss mitigation. However, if I had a VA loan and I was having trouble making the payments; I would be reading two things. One is a 30-page publication put out by the VA called their Servicer Loss Mitigation Program. The latest version I have found is dated July, 1997. If anyone finds a newer one, please let me know. In the meantime, you can download a copy from my website’s Foreclosure page. You will find a link to it in the left-hand panel towards the bottom.
The other thing that I would be reading is essentially a memo put out by the VA describing the “VA Making Home Affordable Program” dated January 8, 2010. I found this at the VA’s own web site.
If you have a VA loan, are having trouble making the payments and are getting workout or mitigation procedure communications from your mortgage servicer that don’t include the words “Veterans Affairs” or “VA”, you need to contact the VA or somebody who knows a lot about VA loss mitigation. Make sure that you are getting everything you are entitled to as a Veteran with a VA loan.
Several times a week I get phone calls that go a lot like this:
Caller: I need to file for Bankruptcy.
Caller: My house is in foreclosure, and I can’t afford to keep it.
Me: Ok. So, why do you need to file for Bankruptcy?
I’ll cut to the punch. Most foreclosures in Oklahoma end when the Sheriff’s Sale is confirmed. The lender takes either the property or the sales proceeds in full satisfaction of the debt. To go after the former homeowner for any more money would require that the lender take what is called a deficiency judgment. They have to file a request for that with the Court, and it must be filed within 90 days of the Sheriff’s Sale. (12 O.S. Section 686 if anyone is checking)
If the lender doesn’t do that, they cannot come after the homeowner for any additional payment on the note and mortgage. There is an exception to that if the mortgage lender has other claims (like for mortgage fraud) against the home owner.
So, if you have been sued in foreclosure AND you want to keep the house. Call a bankruptcy attorney ASAP. If you have been sued in foreclosure AND you don’t want to keep the house, only call an attorney if you have reason to defend the foreclosure.
If you are sued in foreclosure, you don’t want to keep the house and you don’t have significant defenses or counterclaims to the foreclosure; then, just keep an eye on your mailbox. If you receive a motion seeking a deficiency judgment, then call a bankruptcy attorney. Of course, if you need to file for other reasons, you might want to go ahead and get it done.