Foreclosure - how can I stop it?

December 9, 2006 11:42 PM

Please help! I received a foreclosure notice. I have the money, but have been having a difficult time with the lender. How do I prevent a foreclosure on my house?

I purchased my house about 5 years ago, and set up my mortage to be paid with an automatic bank draft. Last May, I fell for a phishing scam and had to close my checking account immediately. I called the morgage company, and they said I was in a "window" during which they were billing, so I would need to pay by check, then set up the automatic draft with the new account later. I did that, and then set up the draft. They claim they did not get the authorization form, and I believed they were drafting the money. Several months later, I discovered they were not.

Again at that time, I paid the full amount due, and also asked them to send more forms. I didn't get the forms...

Once again in October, I faced the exact same issue. This time I spoke with a representative via online chat, and saved a screenshot of the chat session. That afternoon, I completed a new form and stapled it to another check that paid in full.

This weekend, I check my mail. I have dozens of letters from lawyers, saying that my house "is advertised in the legal notices that your lender is planning to sell your home at public auction, scheduled for sale on December 5 (four days ago). I am in tears. The mortgage company's office is closed for the weekend. I have no idea how to stop this. Or is it too late? What can I do?

If anyone needs to email me for more information, I have an account at [e-mail].

I am in Texas.

posted by anonymous to work & money (15 comments total)

Foreclosure occurs first in court, then auction. Did you ignore some legal looking documents ordering you to court? I think you already know you need a lawyer to help you with this. If you have the money, the chances of losing your house are quite low given what you have described, but you must act promptly.
posted by caddis at 12:09 AM on December 10, 2006

anonymous, hire a lawyer. you are going to have to deal with courts and you need help from someone who knows what they are doing.
posted by krautland at 12:15 AM on December 10, 2006

Thirding the lawyer advice. But also be careful - there are foreclosure scams out there and the notices you've received from these lawyers may not be the best place to find your lawyer.
posted by marylynn at 12:24 AM on December 10, 2006

Well, perhaps Texas allows foreclosure without first getting judicial review. Here is a pamphlet with some info on homeowner's rights in Texas.
posted by caddis at 12:25 AM on December 10, 2006

You need to get a good lawyer who knows real estate law in your jurisdiction. It seems based on the above linked pamphlet that you have some options (up to and including possibly filing for bankruptcy) that could keep you in your house.

It seems like your lender is not playing straight with you, if the situation is really as you are describing it; you need someone with experience and that you trust (meaning, they're working on your dime and nobody else's) to advise you.

Also, though it sounds like you're doing this already, document, document, document. Try to do all communication with the lender in writing, and keep copies of everything sent and received. Once you get a lawyer, they'll probably recommend that all the communication go through them, which is probably a good idea as well.
posted by Kadin2048 at 12:53 AM on December 10, 2006

Get a lawyer ASAP. There are a LOT of foreclosure scams that can rob homeowners of their equity or worse. If you don't think you can afford a lawyer, try contacting the closest law school to you to see if they have a free legal clinic. I know my law school clinic is getting into the equity theft area.

And I know you don't need to hear this advice now, but be sure to verify that money is going out of your account every month for each of your automatic payments. Our mortgage company changed our payment by a few dollars one month, and wouldn't accept our automatic payment for a few dollars less. I have all my automatic payments set to pay over a week before the payment is due, so that if the auto payment doesn't go through for some reason, I still have time to send a check.
posted by gokart4xmas at 5:50 AM on December 10, 2006

Oh, also, I hope this goes without saying, but be very wary of going with any of the lawyers who sent you one of those letters. Your state bar association can give you a list of lawyers working in the area you need.
posted by gokart4xmas at 5:52 AM on December 10, 2006

IANAL, the above is not legal advice. Good luck!
posted by gokart4xmas at 5:54 AM on December 10, 2006

Another note: foreclosure requires that your lender sue you in court for defaulting on your loan or breech of your loan contract. You should have been served, by an actual process serving person, with a notice to appear at a hearing in the case of your lender vs. you. They will come to your house at all hours of the day, or come to your place of work if your lender knows what it is (and of course they probably do) and will persist in trying to serve you, both because it's imperative that you receive service and because the process server doesn't get paid until they put that piece of paper in your hand. Be prepared for that.

Meanwhile, you should definitely retain a lawyer, however, you may need someone whose practice area is less about real estate and more about financial matters including bankruptcy. (Not saying that you're going to file bankruptcy, but this isn't a land dispute, it's a money dispute, and some real estate lawyers don't do the financial stuff on this end.) Call your local bar association office; they may have a listing in your yellow pages for a lawyer referral service. (They don't recommend anyone in terms of quality, but in terms of service area and perhaps geographic proximity to you.)

You're likely going to need to spend some time on the phone, continue your practice of documenting everything. Keep a notepad next to your phone in case you should receive a call from your lender or an attorney representing your lender, so that you can take copious notes on what they tell you. You're probably best off to refer them to your lawyer rather than answering any of their questions yourself, so get a lawyer sooner rather than later. [IANYL, this is not legal advice, please contact an attorney in your area who is able to provide definitive information regarding the specifics of your case.]
posted by Dreama at 7:20 AM on December 10, 2006

Dreama's right on. I went through this exact same thing over a couple of years ago. Write down everything everyone says to you, dates, times, etc. Get full names. Get a lawyer.

My personal experience was that I had just gotten served. I had to speak to a supervisor at my mortgage lender, where I worked out a deal. I actually had less than what they wanted to the tune of about 4 payments, but we agreed to work out the details and tack this on to the end of the loan.

If your credit is good and it turns out this lender is trying to screw you, you should consider sending an explanatory statement to the credit agencies detailing your payment history and what dates or approximate dates you can remember. I would be looking at another lender to refinance your home as well. Regardless of what's happened to date (assuming the auction took place and your house apparently "got sold"), evictions can happen unexpectedly and sometimes without your knowledge & consent (just like car financers take your car without your knowledge in the event of a payment dispute).

Some states have a legal advice hotline that you can use even if you can't afford a lawyer, Google around for this and see if you can find some weekend help in order to understand the process in your state. Also, your public records may be online, I would spend time looking around and see if you can find any process notice.

In most states you are required to have been served by a process server, in Georgia, the process server that visited me was the county law enforcement. Sometimes these notices can just be posted in the paper, but I really doubt that applies here.

I don't think you are in any danger today but first thing tomorrow, call a lawyer and get someone on retainer. The specifics are usually that it's your responsibility to ensure your payments go through, but I think you have some extenuating circumstances and if the 2nd check cleared in October you should be off the hook. However, I would send an immediately letter explaining the circumstances certified mail on Monday.

Also, if this is an FHA loan, different rules may apply and you want to look into that as well.
posted by arimathea at 8:19 AM on December 10, 2006

And Texas Foreclosure Law.
posted by arimathea at 8:19 AM on December 10, 2006

You got caught by a phishing scam? Ouch.

You may have thwarted them by closing your bank account, but that doesn't mean they're finished with you yet. They might figure, "Fooled him once, let's try to fool him again."

The most important thing you can do right now is verify exactly who you are working with at all times. If your lender calls you, ask for an extension and call them back at a number you know is good (from a phone book, web page, etc). If they ask why, tell them the truth: you were a victim of a phishing scam and you need to be extra careful.

This doesn't have anything to do with lending and foreclosures specifically, it's just a basic security practice. You're in a tight spot right now, you want to get it resolved quickly, but even more important is getting it resolved correctly. So take some extra time, dot all your i's, cross all your t's.

And get a lawyer!
posted by sbutler at 8:20 AM on December 10, 2006

Have you checked local papers and real estate papers to see if it is, in fact, up for sale? Some of those "dozens of letters" likely lead to phone numbers where they claim to help you prevent foreclosure.

If your house is up for sale and is being advertised, see if you can find the advertisement. This whole thing sounds like a scam to me, and a lawyer will be your best protection.
posted by Salmonberry at 11:03 AM on December 10, 2006

I am a housing counselor and work for a municipal housing agency in Texas that specializes in foreclosure prevention.

The first thing you have to do is verify if in fact a foreclosure sale occured. There is a big difference between an "Intent to Foreclose" notice and an actual sale notice. Texas is a non-judicial foreclosure state, meaning that you don't have to be served by a process-server, as noted in some of the above responses. In Texas, all you have to receive is a certified notice from an attorney regarding the sale at least 21 days prior to the sale date, and prior to this you should have received demand letters from the mortgage company. Foreclosures do occur the first Tuesday of every month at the county courthouse, however, so it is possible that a sale of your home occured on the 5th.

The best way to find out if a sale occurred is by calling the mortgage company Monday and asking them if an actual sale occurred.

If not, you have time to make the full payment plus fees and resolve the billing problem. You might consider contacting a certified housing counselor in your area to assist you with this. Sometimes having a third party on the line will get much better results. You can find a certified HUD counselor by calling 800-569-4287.

If a foreclosure sale did occur, I have a few suggestions. First off, Texas does not have a "redemption period", like some other states have. It's a period during which one can reinstate the loan by paying the full delinquent balance plus fees. Even so, it is possible to sometimes reverse a foreclosure sale, depending on circumstances. I would contact the foreclosure attorneys (the mortgage company can give you their name) and also speak to the foreclosure or loss mitigation department at your mortgage company to discuss this option. Loss mitigation is the industry term for the department that can authorize payment plans. It is easier to reverse a foreclosure sale if during the auction your home was purchased by the mortgage company or lender itself rather than a third-party investor.

Again, a persisitent housing counselor can help with this or an attorney (one that you get a referral for, rather than responding to any of the notices you've received in the mail).

It is important to act quickly, however, because if your home was sold you are now considered a renter and most likely will be served with eviction papers within the month.

The key is to be persistent and talk to supervisors. In my experience, it's very important to ask a lot of questions about when the mortgage company's records indicate notices required by Texas law were sent out, to have someone review your account (specifically referencing the date in October when this online chat occurred) to point out their own responsibilities in the payment issue, and to very clearly state your interest in reversing the foreclosure sale.
posted by megancita at 11:24 AM on December 10, 2006 [1 favorite has favorites]

megancity gave you a very great opinion and advice. I doubt you will ever receive better. Please do as was stated in her reply. Good luck. Please post back when you know more. Thanks.
posted by JayRwv at 2:31 PM on December 10, 2006