Do You Expect To See A Rise In Foreclosures During And After The COVID-19 Crisis Is Over?
I expect there to be an avalanche of foreclosures, worse than when the housing bubble burst in 2008. Most banks are telling people, “Don’t worry about it, you don’t have to make a payment. We’re going to give a forbearance for three months.” But if you don’t ask what happens in three months, you could be getting yourself into big trouble, especially if you spend the money that you would have paid on your mortgage. For example, I called my mortgage company servicer and asked if I have to pay my mortgage, to which they said, “No, you could take a three-month forbearance. You don’t have to do any paperwork. You just have to say you are affected by COVID-19.” When I asked, “What happens on month four?” They replied, “Well, the three months plus the fourth month’s payment will be due.” And so, if your mortgage payment is $3,000 a month, and you don’t pay the first month, second month, and third month, when the fourth month comes, you’re going to owe $9,000 for the three months missed, in addition to $3,000 for the fourth month, which equates to $12,000. However, there is a large misconception in which most people think that they’re going to only owe $3,000 for the fourth month. Unfortunately, if you don’t have an income for those months, or you spent the money on food for your family, you may find yourself in a position that you can’t get out of. And that’s what I’m afraid is going to happen in the near future. People are basically going to be facing their bank while they try to collect four months of mortgage payments at once.
Of course, things may change in four months from now. There may be government incentives or some sort of bailout for the banks to do the right thing, but absent government intervention, I’m not anticipating that the bank is going to do the right thing. I think that the most obvious thing to do, once this is all over and we’re back running, is for the bank to modify your mortgage and take the three months and make it due at the end of your mortgage, assuming you are three months behind. They could extend the mortgage for three months at the very end. Let’s say you have a 30-year mortgage, and it ends in 2040. If you took it in 2010, they might extend it in 2040 for three months. At that point, nobody is going to really care if the banks do that.
It may take a lot of legal work to get those things done. There is something called forbearance agreement, which means you don’t have to pay for a period of time. A repayment agreement is when you fall behind those three months, and they say, “We’re just going to add a portion of that on for the next six months,” so you have to pay more, say a payment valuing a month-and-a-half, starting four months down the road, for a duration of six months in order to get caught back up. So, there are forbearance agreements, repayment plans, and modifications. A modification is when the banks say, “We’re going to take the amount that you’re behind and just give you a modification.” Maybe you get a new rate, perhaps better or worse, but it remains to be seen, as we simply don’t know. Nevertheless, I anticipate a rise in foreclosures. Let’s call it a Guaranteed Rise in defaults when the time comes.
I think we are in for a very rocky road ahead. I went through with my bank just to see what would happen, and they told me, “Don’t worry about it. We’re not going to try to collect on it. We’re not going to report it to the credit agencies.” All of a sudden, my phone’s ringing with collection calls, and I’m getting letters in the mail saying that I’m behind on the mortgage when they told me I had a forbearance agreement. Another major problem that we have with the banks is that one hand doesn’t know what the other hand’s doing. One department doesn’t know what the other department is doing. Many times, there is a collection department, who are the ones that call you when you don’t make a payment, and they don’t know that you have an agreement with the loss mitigation department, the other department that works out a deal with you that you don’t have to pay. Consequently, you’ll get letters in the mail saying that this is an attempt to collect the debt. Meanwhile, they told you didn’t have to pay. Thus, I think we’re in for a rough road ahead.
Should I Wait To Hire A Foreclosure Attorney Until The COVID Crisis Is Over Or Should I Hire Someone Now If I Can?
I understand that money is tight everywhere right now, and many times, people will call me up early and say, “Hey, I want to hire you because I’m in default,” and I tell them, “You don’t have to hire me yet. Wait until you get served with papers, and then, you can hire me.” I don’t handle loan modifications outside of the foreclosure contact. So, if you are current on your loan, and you called me up and said, “I’m paying a high percentage, I want to get a better rate, can you do a loan modification for me and represent me with the bank?” I won’t take those cases because I wouldn’t add value. The same applies in a pre-foreclosure setting, I won’t take a case because I wouldn’t add value.
In three months from when the banks stop telling people that they have to pay, we’re going to get into a position where people are going to need professional help dealing with the banks. People are going to want to make sure that they don’t wind up in foreclosure. They may want to look into entering a forbearance agreement, getting a loan modification, or entering into a repayment plan to avoid finding themselves in foreclosure. I anticipate that when everything starts to get back to normal, and the banks don’t do the right thing, there’s going to be a flood of defaults. At that point, I can help people negotiate with the banks in order to secure a repayment plan, forbearance agreement, or loan modification.
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Can My Lenders Start A Foreclosure Proceeding Against Me In New York State During The COVID-19 Pandemic?
Your lenders cannot start a foreclosure proceeding against you in New York during the COVID-19 Pandemic. Lenders cannot start a foreclosure until the courts reopen, which may reopen any day now.
Generally, in order for a lender to start an action in New York, it is an involved process. They have to give you a 90-day pre-foreclosure notice, and they have to give you a notice accelerating your debt, which is usually contained in your mortgage contract with them. But they can’t do any of those things right now because everything is on hold due to the closure of the courts. That’s not say, however, that in a week from now, things aren’t going to change. I believe new filings will open back up. And, once they do, the lender can start a foreclosure proceeding. Right now, all foreclosure auctions are on hold, and all new filings are on hold. But, for the foreclosure actions that are pending, nothing is stopping those motions from moving forward, so those cases can move forward. At this point, the only thing that’s not happening are new filings, which is curtailing foreclosure proceedings.
Did Governor Cuomo Suspend The Obligation To Make Mortgage Payments For Everyone During the COVID-19 Pandemic?
I don’t think that Governor Cuomo suspended the obligation to make mortgage payment during the COVID-19 pandemic. In the most general terms, I think that he said that he’s encouraging a foreclosure moratorium. But, to my knowledge, there is no executive order that suspends a person’s obligation to pay rent or pay their mortgage during the pandemic. One thing I haven’t mentioned before is that if you can pay your mortgage, you should pay your mortgage. If you enter into a forbearance agreement, and you’re not paying your mortgage, even if it’s a verbal one, keep that money on the side because as said before, they may call you to pay all of it in one lump sum in just a few months from now.
I Was Already Behind On My Mortgage. Can My Lender Start A Foreclosure Action Against Me During The Pandemic?
Currently, your lender cannot start a foreclosure action against you during the pandemic. There are no new filings in New York as of mid-May. But that could change at any time. If you’re behind on your mortgage, I suggest that you call your servicer—the company that sends you your monthly bill—and tell them that you’re behind because of COVID related issues. Tell them that you need help and can’t pay. That could slow things down. But I do anticipate that they’re going to open new filings shortly. They could open in early June. When they do open, your lender will be able to start a foreclosure action against you, unless the governor issues a new executive order stopping them from doing so, but I don’t see that happening.
I Was In The Middle Of A Foreclosure Action When The COVID-19 Pandemic Began, Am I In Danger Of Losing My Home In The Middle Of This Pandemic?
If you were in the middle of a foreclosure action when the COVID-19 pandemic began, you are not in danger of losing your home in the middle of the pandemic. But the pandemic may be over sooner than you think, maybe within a month or so. I anticipate courts are going to open back up sometime in June. So, if you were in a foreclosure action, things will start moving again. Now, they may move slower than they were moving, as the court system doesn’t move very quickly in general, but they will be moving forward.
Do I Need To Attend A Previously Scheduled Settlement Conference?
You do not need to attend a previously scheduled settlement conference. As of now, there are no live conferences going on anywhere in New York state. Occasionally, judges will have video conferences with the lawyers. Right now, however, there are no settlement conferences in foreclosures happening anywhere. There’s absolutely no need for you to go down to court because the courthouses are open for emergencies only. Fortunately, from a foreclosure defense standpoint of representing homeowners, it’s not an emergency for the bank to move forward with a foreclosure action. Therefore, there are no in-person settlement conferences going on anywhere in New York state right now.
Do I Need To Meet Any Filing Or Other Deadlines?
You do not need to meet any filings or other deadlines right now. All filing deadlines and all statutes of limitations are on hold and have been for about six weeks. But those can be lifted at any time. So, you have to pay attention to it. There’s a way of tracking your case. You can Google the word “e-courts,” and search for your case by your name or the index number. You can see that the courts are taking adjourning schedule conferences for two months. The things that are scheduled for now in May are being adjourned out until July.
My Home Was Already Sold At Auction, But I’m Still Living In It. Can I Be Evicted At This Time?
At the moment, in New York State, there is a moratorium on evictions. Therefore, you cannot be evicted at this time. However, that could be lifted at any time, so you have to pay careful attention to it. I’m currently representing one family in that very position right now. Their house was sold at auction, and the bank is now the owner. The bank started the eviction proceeding and it’s on hold. I’ve been able to bring an emergency order in the foreclosure action to stop the bank from moving forward with the eviction action. Right now, that’s filed, and it’s pending, but we’re waiting for a judge to take a look at it. And as I said before, things are moving very slowly. So, in the short-term, the answer is no, you cannot be evicted.
However, if you’re in that position and your house is already sold, and you’re still living in it, then you should talk to a lawyer right away to start working on this matter because as soon as the courts open, you’ll want to seek the court’s help. The court can make sure that the bank doesn’t move forward with evicting you. If your home is sold to a private party, they can start an eviction proceeding against you called a Holdover Proceeding. Since they’re the new owner, and it’s not a regular tenant relationship, they can move a lot faster. If you’re in that position, get help right away because once it reopens, that can move quickly.
What Happens If I Was In A Trial Loan Modification?
If you are in a trial loan modification, you should continue to make your trial payments. If you can’t because you’ve been impacted by COVID-19, you should call your servicer and inform them. Ask them for direction and help. Tell them that you have a trial modification and that you were making payments, but due to COVID-19, you lost your job or are unemployed and cannot make the payments. Ask them what kind of help they can offer you. If you have a problem like that and are on a trial modification, by all means, give us a call. We’ll see if we could give you some advice and steer you in the right direction.
What If I’m In A Chapter 13 Bankruptcy To Save My Home? Do I Have To Continue Making Plan Payments? And What If I Can’t Because Of Lost Income Due To The COVID Pandemic?
I don’t handle bankruptcy cases. I suggest you talk to your bankruptcy lawyer and have them guide and help you.
What If There Is A Pending Tax Foreclosure Against My Home?
Similar to a mortgage foreclosure, a tax foreclosure is most likely on hold right now and moving slowly. But, the ability for the tax lien plaintiff to move forward and file a motion against you is now lifted, so they can do that. If you have a tax lien foreclosure, they move very quickly. You need professional help fighting a taxing foreclosure because without it, they’re going to sell your house. Many times, I’ve seen them sell houses worth $700,000 for a $20,000 tax lien. The people that generally get into tax lien problems are people that don’t have a mortgage because if they had a mortgage, their mortgage would pay the taxes. And, if there were a tax lien, the mortgage would satisfy it, and add it to the amount that the homeowners owe.
Generally, people that get into tax lien problems tend to be older people who have already paid off their mortgage. If you are involved in a tax lien foreclosure, call us because you definitely need help. They can sell your house for a small amount of a tax lien. For instance, if they sell your house for $20,000 at auction, but your house is worth $700,000, you lose all of that equity. You get nothing. Therefore, you can’t sit back on a tax lien foreclosure. You must act quickly.
Is There Any Government Relief Being Offered During the Coronavirus Pandemic To Homeowners?
To my knowledge, there is no specific government relief being issued to homeowners right now during the coronavirus. We’ve all heard of other things like stimulus checks, small business loans, or grants, but there’s no other government relief. As I said before, there are basic sweeping statements, such as a moratorium without any details. There’s no money coming to help homeowners.
Now, I’ve seen some local politicians argue that the federal government should pay everybody’s mortgage, but as of right now, I haven’t seen anything to that effect enacted. So, if you can afford to pay your mortgage, my advice is to pay your mortgage. If you can’t afford to pay your mortgage, my advice is to make sure you call your servicer and address it. The biggest issue that I have with people that are in foreclosure is that they stick their head in the sand and think that everything’s going to be okay. But that’s not something you can ignore. It’s something you have to address head-on. And so, it’s best for everybody in that situation to call their servicer and ask, “I need help, what is available to me?”
Two months from now, however, there could be government programs. From my experience, the government never takes care of the homeowner, they take care of the banks. There may be some government incentives for the bank to say, “Hey, if you issue homeowners a modification, we’re going to give you money to help underwrite it.” But the money goes from the government to the bank, never from the government to the homeowner.
Either way, when that does happen, people will need professional help. They won’t be able to do it alone. Between filling out the loan modification package and knowing what to say on their hardship letters, that’s an area in which we can really add value and help people out. Therefore, if you find yourself in trouble, especially in a couple of months from now when the banks have their hands out expecting all the money that you owe them in one lump sum, give us a call.
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