Although you made a deal with a particular entity (usually a bank) when you signed your mortgage, you most likely agreed to have it be freely assignable. Therefore, you may now be receiving mail from some business you never heard of. Mortgage assignments — when done properly — are fully effective.
Sometimes you will be asked to deal with an entity that does not actually own your mortgage. These servicers often act as an agent for the owner the same way a building manager would act for a landlord. They accept payment, pay fees, manage legal affairs and sometimes seek foreclosures on behalf of another party. This is perfectly legal so long as they are acting within the scope of their authority and are upfront with you about their role.
In Maine, there can be complications when it comes to bringing a foreclosure if the ownership interest in your mortgage has been assigned (sold, transferred or otherwise given) by a party that did not fully own the mortgage. If you believe this has happened with your mortgage, you should seek legal advice immediately.
Why Hire An Attorney?
Before, during or sometimes even after a judicial foreclosure we can:
- Analyze your options
- Negotiate with your lender on:
- Temporary changes to your obligation such as a reduction in interest rates
- Modification of the mortgage
- Discuss a sale of the property to satisfy the obligation.
- Help you decide whether bankruptcy protection would be in your best interest.
- Handle all paperwork on your behalf
Sometimes the paperwork is worse than the foreclosure. The mountains of paper can be addressed by our staff under the supervision of an attorney.
Digging out from default on your mortgage isn’t going to be easy. But that’s not a reason to give up hope. But if the solution sounds too good to be true, it probably is. There are criminals who use this time of crisis to exploit unsuspecting homeowners. You may hear from someone offering to repair your credit or save your home. As a general rule, do not agree to anything, and do not sign anything, until you can talk to a lawyer or reliable housing counselor.
But how will I tell who is trying to help and who is trying to cheat me?
First off, legitimate third parties (that is, not your mortgage servicer or lender) such as attorneys or housing counselors, will not be calling you. We only become involved with a potential client when that homeowner calls us. A scammer will probably contact you or advertise in a newspaper or on the internet.
Sadly in some cases, even “reputable” attorneys are violating their client’s trust.
- Do not sign papers without reading and understanding them (or asking for help from someone you trust to read and understand them);
- Do not pay money for services that are not clearly defined and written in an agreement;
- Do not sign blank documents to be filled in later.
For more information visit the Federal Trade Commission’s website.
Steps To Get Help
- Identify your situation
- Explore programs for which you might qualify
- Prepare what you will need
- If you can’t manage the process, seek help as soon as possible. An attorney is often the best choice, but there is free help available as well.
In Maine, a homeowner can answer the complaint with a request for mediation. If so, the parties do not go to court but rather meet with a trained mediator to attempt in good faith to resolve the issue without going to trial.
Mediation generally consists of:
- An information session, which allows the homeowner to understand the process from start to finish.
- Meditation between the parties seeking to resolve the issues to reach a mutually agreeable solution.
Additional mediations can be held to further explore possible solutions that require more analysis, investigation or submission of documents (usually financial information from the homeowner).
In Maine, mediation is often between a homeowner and a lawyer representing the lender or servicer. While a homeowner may have an attorney, homeowners often represent themselves.
Documents To Review And Keep Current (As Time Goes By The Dates Need To Stay Recent)
- Mortgage documents (the actual “deal” that was signed)
- Tax returns (at least for the latest two years). If you are planning to submit these as legal documents, if they have been electronically filed, also provide the IRS e-file Signature Authorization form. You may be asked to add your signature to the electronically filed document;
- Pay stubs for at least two months;
- Bank statements from all of your accounts;
- All mail from the lender/servicer;
- If you have a business or home-business profit and loss statement for the most recent quarter and showing your year-to-date totals;
- Legal documents, if any, showing the amount, frequency and duration of child support or alimony;
- Provide copies of all rental or lease agreements and evidence of at least two months’ rent;
- If you pay property taxes and/or property insurance, and it is not part of your monthly mortgage payment, please provide a copy of your recent property tax statement and a copy of your homeowner’s policy’s declarations page;
- Copies of your most recent utility bills — with property address, showing your service address, billing address and account number.
Settling Before Trial
Sometimes even when they negotiate in good faith and provide all the relevant documentation, homeowners and lenders (or their agents) cannot settle the matter before going to trial.
- The litigation process
- Notice of default
- Right to cure
- Summons and complaint
- Motion for summary judgment
- Pretrial conference
- Judgment by court
- Right to redemption
Right To Cure
In Maine, a homeowner has a right to cure the deficiency of their mortgage arrears — in other words a right to pay what is owed to get back to being current with mortgage payments. In order for this right to be meaningfully exercised, lenders must tell you how much you owe and how to pay it. Often homeowners know they are in default on their payments but cannot cure the deficiency so the notice of a right to cure is merely a procedural hoop a lender must jump through.
Usually the path to foreclosure begins with a mortgage note’s “acceleration clause.” The initial agreement signed to secure the loan most likely required you to make a certain payment every month for a fixed period. When there is a default — a failure to pay as promised — lenders can seek to recover just the one missed payment or can activate an “acceleration clause” written into the note allowing it to seek the entire remaining loan balance (that is all the money you ever have to pay under the agreement). If the lender does not seek to activate the acceleration clause and have the entire amount due, it is usually impractical, or in some cases legally impossible, to seek foreclosure.
The Home Affordable Modification Program (often simply called “HAMP”) provides a mechanism for homeowners to have a “redo” of their mortgage in light of their current financial situation. Not all mortgages are eligible for HAMP but almost all lenders will consider a request for a modification similar to HAMP.
Often major lenders have official, though not required, processes to provide such relief. We can help you determine whether you qualify for a program and whether the lender has complied with the requirements.
Foreclosure Diversion Program
Maine’s Foreclosure Diversion Program (FDP) provides homeowners in foreclosure a chance to explore other options besides losing their homes. In mediation, both parties, with the help of a neutral mediator, talk about whether it is possible to avoid a foreclosure on the property.
When a homeowner lives in the home and the property has no more than four units, a homeowner in foreclosure can request mediation. All requests for mediation must be in writing and given or sent to the court clerk. A copy of the request must also be given or sent to the attorney for the lender. Homeowners can request mediation by using the one-page answer form attached to the foreclosure complaint, by filing an answer without the form, or by writing a letter to the court to ask for mediation.
Gather Your Paperwork
No matter where you find yourself in a possible foreclosure action, you will need to know the state of your financial affairs. And if you are dealing with an attorney, a lender or servicer, a court or a mediator, you will need to be able to show what your financial picture looks like. In most cases, your documents speak for themselves but if not, an attorney can help you explain what your real financial situation is.
Lenders must comply with Maine’s foreclosure statutes. Having an attorney involved gives a homeowner a chance to catch paperwork that was faulty and therefore will cause the lender to start over again or, in some cases, may prevent a foreclosure from ever being finalized.
The Foreclosure Process In Maine
Presumably, a homeowner has defaulted (failed to pay their mortgage as required) and hopefully is aware of the default.
A lender must offer the borrower an opportunity to cure the default (the failure to pay). Therefore, the process is usually begun with a letter that is a notice of default and right to cure to a homeowner providing the amount overdue and granting 35 days to pay that amount. This ability to cure is a statutory right for Mainers and must be strictly complied with before a lender may seek foreclosure
If the homeowner does not make the payments as required, the lender will likely file a complaint — the beginning of a lawsuit — with a court near the homeowner. The lender must serve this complaint, along with a summons (which is a command from a court to the homeowner to appear). Once served, a homeowner is on the clock and needs to determine how to defend the suit quickly. Usually some answer to the complaint is required within 20 days.
Routinely, the complaint is answered by a request for mediation. Mediation is a process of meeting with a person trained to streamline issues for court and to seek a resolution. While the mediation is ongoing, the trial is postponed. If the mediation does not achieve a solution, the case is scheduled for trial.
- Do you want to stay in the house?
- Do you have money to pay for it?
- What is the benefit of mediation?
These are just some of the questions we can answer for you. Call us today at 207-786-0311 for a free telephone consultation.