Myths and Truths Regarding Foreclosure: What Most Lawyers WON’T Tell You

Myth: If the bank cannot win I will get my house free.
Truth: There is no such thing as a “free house” as conspiracy theorists and lawyers who want to justify their exorbitant fees like to pitch.  Yes, there are circumstances where the bank voluntarily relinquishes its lien; usually on very low value properties not worth trying to foreclose upon again.  But there are far few in between.  I would say I have personally seen 1 or 2 that fit this situation total out of the thousands of foreclosures I have been a part of over many years to date.
Myth: The bank MUST “show me the wet ink Note to win”
Truth: Incorrect.  This seems to be a common misconception in Florida.  While the original note is typically produced to the Court and placed in the court file, Florida Statute 673.3091 allows a person claiming to be the holder of the Note to allege it was lost and still enforce its terms.  This means that the bank can claim the original Note is lost, produce the basic terms of the Note, or a copy, and still foreclose on you.  The “show me the note” defense no longer works, if it ever really did in practice.
Question: Should I pay my taxes, homeowner’s insurance, or condo/HOA fees?
Answer: I get this question all the time.  If you are in active foreclosure, your lender must pay the homeowner’s insurance on the property as it is protecting their own collateral (the house) from being damaged or destroyed.  The taxes are a little different.  Typically, 99% of the time, the lender pays the taxes because the $1,000-5,000 per year in taxes is worth paying to retain the home worth hundreds of thousands.  Sometimes, the bank will not pay the property taxes and a tax certificate will be issued and sold at a public auction.  This can result in you losing your home faster as well, although this is a rare situation.  I ALWAYS homeowners continue to pay their condo/HOA fees.  A condo or HOA can foreclosure much faster than the bank are there are little to no legal defenses to condo/HOA foreclosure.  You can lose you home to condo foreclosure before the bank every gets judgment against you.

Myth:  I didn’t bother hiring a lawyer, and the bank filed and got a default against me.  Lawyer X claims just to pay me $xxxx.xx and they will win my case.
Truth: Incorrect.  Under new case law, Florida trial courts must now follow the rule that mere failure to retain a lawyer until after default is no longer “excusable neglect” which is a required element to vacate a default.  So you can no longer merely do nothing until it is last minute if you never had a lawyer and were defaulted.  Once default is issued, it may be too late to properly defend your case.
Myth: The bank MUST give me a loan modification
Truth: Incorrect.  Loan modifications are given to certain borrowers who meet the criteria of the various programs- HAMP as well as various in-house bank programs.  They are never a guarantee. 
Question: Do you think I will get a loan modification?
Answer: I get this question on a nearly daily basis and my answer 100% of the time is “I don’t know.”  HAMP uses a mind-boggling calculation to determine eligibility.  Can I tell you if I think you are in the ballpark?  Yes.  But in the ballpark is about the best guess I can give you.  My answer is we will only know if we put your paperwork in for review.  There is no definitive answer or “pre-qualification” that many loan mod services want you to believe.
Question: My house is only worth $75,000, why should I modify my loan at the $200,000 I owe?
Answer: Not all lenders/servicers offer what is called principal reductions, or reducing what you owe on the loan to present value of the home.  For instance, loans owned by Freddie Mac and Fannie Mae typically are not eligible for principal reductions.  Principal reductions are actually farther and fewer between than regular loan modification.  Sometimes your only option to keep the home is accept the regular loan modification offered.  Be wary of any lawyer that promises to get what you owe reduced.

Question: My lawyer doing my foreclosure case wants $xxxx.xx up-front fee to do a loan modification, why should I pay them?
Answer: This is a lawyer’s personal choice to charge up-front fees for modifications, but at Klurfeld & Associates you ONLY pay us if we get you a loan modification.  We charge no up front fees for a loan modification if we are also representing you in your foreclosure case.  You owe us nothing if you are denied for a modification.
Question: Will I lose my house?
Answer: I don’t know.  There are too many factors to this question.  I can spend 3 hours explaining the legal argument in your case, but this will not determine if you will “win;” or the bank won’t be able to foreclose.  This is highly dependent on the court and judge who hears the case, as judges have tendencies in the way that they rule. 
Question: When will I lose my house?
Answer: Again, I don’t know.  This is highly dependent on too many factors to give an answer, including the actions and pace of the bank’s lawyers.  Yes, I can give you a ballpark estimate of events in the case, but I cannot give you anything near an exact time frame.   No one can do so.

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