Why have 3 major lenders suspended foreclosures and what does that mean for you?

Here is the brief history of why. It seems that the banks were in such a hurry to foreclose that they forgot to follow the rules. With all the work that goes into taking over all those houses, who would notice if they cut a few corners along the way? Well, they found out, and it turns out that a lot of the foreclosures they’ve already done or were about to do, may not have legal basis because they didn’t follow the rules.

Here’s what this means for homeowners.

If your home has been seized by any of these banks, including Bank of America, Chase, and GMAC, contact an attorney right away, as you may have a lawsuit on your hands with damages as large as or greater than the amount of your your mortgage. — with the possibility of termination! What is termination? They may have to forgive your mortgage balance in full and return your home to you. Make sure the attorney you contact knows the mortgage notes better than the lenders who wrote them.

If you have a pending foreclosure, or if you have received a notice of sale and have a foreclosure auction date, the first thing you should do is call the bailiff or attorney who sent you that letter. Don’t assume anything.

Ask them if their sale is cancelled. The fact that you have a loan from Bank of America does not mean that YOUR sale is off, unless the attorney or bailiff has received notice that YOUR sale is off. In other words, they could be pulling a quickie on you. We just called about a Bank of America sale for next week and to this day it’s not off.

In other words, you may want to have a “Plan B” instead. That could be having the preliminary documents so you can file a chapter 13 bankruptcy and stop your sale in the act. Have everything ready to go to court in case they are still in the process of your sale. In fact, you can prepare these documents yourself without a lawyer. That’s pretty cheap insurance (a couple of hours and the cost of some instructions).

If the foreclosure attorney has not received your foreclosure sale cancellation notice, then call your lender. Don’t trust them to just “tell” you. They probably won’t confirm anything. The only way to get confirmation is to establish an open channel with the foreclosure attorney who sent you the letter. Let them know you spoke to your lender, who said the sale is off, and please confirm. Then get something in writing from them. Remember that the foreclosure attorney does not have the authority to act on their own. They can only do what the lender has told them to do.

There is nothing to stop your lender from going back one mortgage at a time and doing whatever it takes to correct your mistakes and compliance deficiencies. In that case, they may be able to resume foreclosure with confidence that they are in compliance.

So you may have less time than you thought.

And finally, make the most of the time you have just been granted. Now you can find time to start or reapply for that loan modification. In one sentence, a loan modification changes your loan to lower payments, so you can pay for your own home. This takes months, even when things are going well. So DON’T LEAVE THIS! The more you know, the less chance you have to get it wrong and waste months of your valuable time. Find out and get started!

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