You could give up.
That’s understandable, right? You missed your payments and you deserve to lose your house. Those are the rules society accepts. Just go away quietly.
You could stall.
Wait until you’re forced to be evicted and plead with the judge for a little more time. The extra thirty days you may get will give you a chance to save up that little bit of extra money for the security deposit on your new place.
You could negotiate with your lender.
Go ahead. When you sign the modification agreement be sure to look for the parts that tell you by signing you waive any defenses you may have against prior fraudulent actions by the lender. Or that you agree to pay any attorney fees and other related costs without being told how much those are going to be up front. Or that if you sign you agree that they can begin the foreclosure process against you a second time by your being late on just one payment.
These are the easier routes to take, but let’s look what happens if you decide to assert your rights in addition to the above options.
Give up – If you don’t care about losing the house, why not at least look into the possibility that you are entitled to damages. All the parties have been payed in full, and you are just going to let them have your house too? Why let them off the hook? It only costs you $350 to file suit in Federal Court here in Michigan (you may file for pauper status if you can’t afford to pay), and you don’t even have to decide to pay that until you’ve seen that they’ve violated some Federal laws that would entitle you to damages. Send out the RESPA request letter. Check your loan documents for Truth in Lending violations. Has everyone complied with the Fair Debt Collection Practices Act? You can do this for the cost of postage.
Stall for more time – I helped my landlord sue his servicer, the mortgage broker and their attorneys. He began missing payments in September of 2007. We filed suit at the end of January 2008. We are close to settling now around Christmas of 2008 and he’ll probably have to begin making his new super-low house payments again in February 2009. That’s 18 months without making a payment, and he get’s to still keep his house! Fighting in court got him an extra seven months to live rent free. The courts are overflowing with foreclosure cases, and the more people who challenge in court, the longer the court proceedings will drag out for everyone.
Negotiate – You strengthen your negotiating position when you catch the parties involved in fraudulent activities. Most of the big players in the mortgage industry have actions brought against them in class action suits and attorney generals from around the country. They don’t want these cases going to trial. If you truly want to work out some type of agreement with your lender, best to do it through court and not directly. You can use your case against them as leverage and get a much better deal. My landlord had $100k taken off the principal of his loan balance, reducing his payments by almost $900 a month.
You have a constitutional right to due process of law. Make the foreclosing party prove they have the authority to foreclose. They don’t. Make them prove you are in default. They can’t. Hold them accountable for their fraudulent actions and see if you are entitled to refunds and damages. You are.
Make your stand.
