Buying a home is one of the biggest decisions that an individual can make. This makes the inability to pay the mortgage even more difficult. When a homeowner is unable to repay the mortgage, they may find themselves in the legalities of foreclosure.
Foreclosure involves the homeowner forfeiting their rights to the property. The property is reclaimed by the mortgage holder and the proceeds are used to pay off the debt. The legal process of foreclosure can be draining – both financially and emotionally – and hiring a foreclosure attorney who understands how to streamline the process can be your biggest asset.
There are different types of foreclosure defenses available which correlate to the two main types of foreclosure available, namely judicial sale and power of sale.
Foreclosure Law in Florida
While the concept of foreclosure has been around for centuries, today there are numerous laws and regulations governing foreclosure. These laws exist to protect both parties from any unfairness or fraud.
The legalities of foreclosure vary depending on the state. Florida has a few key foreclosure laws and processes that are worth noting.
- Foreclosures in Florida are “judicial” meaning that they go through the state court system.
- The borrower receives 20 days to file an answer to the complaint once the summons is issued.
- If court determines that the borrower has defaulted on the mortgage, a final judgement of foreclosure will be entered, and this will be issued to the borrower.
- Unless otherwise stated, the foreclosure sale usually occurs 45 – 60 days after the judgement date.
- Certain protections against foreclosure are provided for military service members.
- Borrowers do not have the right to reinstate before the sale, however most mortgages do allow the borrower a certain amount of time to reinstate the loan by bringing the payments current.
- The borrower can redeem the home any time before the court clerk files the certificate of sale or the time specified in the foreclosure judgement (whichever is later).
- The foreclosing party may obtain a deficiency judgement as part of the foreclosure action or in a separate lawsuit. This request must be made within one year after the certificate of title for the new owner after the foreclosure sale.
Legalities of Asset Protection
It is important to get professional advice from an attorney so that you understand what assets are protected from creditors and so that you understand how foreclosure can negatively affect credit and one’s chances of buying another home in the future, as well as understand the different options instead of foreclosure such as a short sale.
During the pre-foreclosure time period, between the Notice of Default and repossession, the borrower has a few options to get up to date on their loan namely, applying for a loan modification, trying to sell the property to a third party,(short sale) or allowing the property to be sold at a pre-foreclosure public auction.
In the event of a foreclosure, it is important that one protects their assets. If there is a deficiency judgement, meaning that the money made from the foreclosure sale does not cover the full mortgage outstanding, then your personal assets may be seized.
The following steps should be considered before or during a foreclosure to assist with protecting your assets.
- Create an irrevocable trust fund to protect your assets for beneficiaries.
- Increase your assets in exempt assets or accounts, but make sure that you get legal advice on this process from an attorney.
- Set up new exempt investments.
If you or a loved one are falling behind on mortgage repayments and looking to avoid foreclosure, or are already in the foreclosure process, you do not need to navigate the legalities alone. Hiring a trusted foreclosure defense attorney can make the process not only more bearable, but also reduce the negative impact of stress.