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Kohl & Cook Law Firm LLC
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How To Stop Foreclosures

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The traditional ways to avoid foreclosure include: loan payoff, loan reinstatement, and in certain instances bankruptcy. This blog post will explore how to avoid foreclosure and stop the sale from occurring using federal law and submitting a loan modification or loss mitigation application.

Stop Foreclosure Before It Is Filed.

  • Are you behind on your mortgage loan and a foreclosure case is yet to be filed? Do you want to keep your home?

The first step to stop a foreclosure lawsuit from being filed or slow it down is to submit a loan modification packet or what is referred to by mortgage servicers and banks as a ”loss mitigation application.” These modification packets are often confusing and sometimes not clear as to what documents need to be submitted by the consumer to be considered for a loan modification or loss mitigation options. Ideally, a homeowner should hire an attorney with experience applying for loss mitigation options and also a litigation track record of successfully suing mortgage servicers for mishandling consumers loss mitigation applications. If a consumer submits a complete application before a foreclosure is filed, the bank is prohibited under federal law from filing the foreclosure complaint under federal law until it properly resolves the borrower’s complete application. The relevant law is found at 12 C.F.R. §1024.41(f) and states:

(f) Prohibition on foreclosure referral

(1) Pre-foreclosure review period. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless:

(i) A borrower’s mortgage loan obligation is more than 120 days delinquent;
(ii) The foreclosure is based on a borrower’s violation of a due-on-sale clause; or
(iii) The servicer is joining the foreclosure action of a superior or subordinate lienholder.

(2) Application received before foreclosure referral. If a borrower submits a complete loss mitigation application during the pre-foreclosure review period set forth in paragraph (f)(1) of this section or before a servicer has made the first notice or filing …, a servicer shall not make the first notice or filing … unless:

(i) The servicer has sent the borrower a notice pursuant to paragraph (c)(1)(ii) of this section that the borrower is not eligible for any loss mitigation option and the appeal process in paragraph (h) of this section is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower’s appeal has been denied;
(ii) The borrower rejects all loss mitigation options offered by the servicer; or
(iii) The borrower fails to perform under an agreement on a loss mitigation option.

https://www.consumerfinance.gov/policy-compliance/rulemaking/regulations/1024/41/

If the servicer or bank files foreclosure after a loss mitigation application is complete and has not given the borrower an opportunity to accept or reject all available loss mitigation options following the receipt of a complete loss mitigation application, then the servicer or bank may be held liable for lost equity in the home, attorneys fees incurred defensing the foreclosure, emotional distress, and the consumers attorney fees incurred in pursuing the claims in federal court. See 12 U.S. C. 2605(f) and 12 C.F.R. 1024.41. If you or your client are either in the process of submitting a loss mitigation application or submitted a loss mitigation/ loan modification application prior to foreclosure, please contact the experienced attorneys at Kohl & Cook Law Firm. See the notable decisions our lawyers have helped consumers obtain concerning their loan modification applications under this federal law here.

A Foreclosure Case Is Active, but You Need to Stop the Foreclosure Before the Sale Is Scheduled.

Has a foreclosure case been filed against your home? Is there an upcoming sale or is the sale not scheduled yet? Do you want to stop a foreclosure sale?

If a foreclosure case is active and you want to save your home it is important that you start the loss mitigation or loan modification application process immediately. In order to get the servicer or bank to take your application seriously it is best to involve an experienced foreclosure defense and consumer protection attorney. Federal law states that if a complete loss mitigation/loan modification application is received more than 37 days before a foreclosure sale, then the servicer/bank is prohibited from moving forward with the sale. Section 12 C.F.R. §1024.41(g) states:

(1) The servicer has sent the borrower a notice pursuant to paragraph (c)(1)(ii) of this section that the borrower is not eligible for any loss mitigation option and the appeal process in paragraph (h) of this section is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower’s appeal has been denied;

(2) The borrower rejects all loss mitigation options offered by the servicer; or

(3) The borrower fails to perform under an agreement on a loss mitigation option.

(g) Prohibition on foreclosure sale. If a borrower submits a complete loss mitigation application after a servicer has made the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process but more than 37 days before a foreclosure sale, a servicer shall not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, unless:

(1) The servicer has sent the borrower a notice pursuant to paragraph (c)(1)(ii) of this section that the borrower is not eligible for any loss mitigation option and the appeal process in paragraph (h) of this section is not applicable, the borrower has not requested an appeal within the applicable time period for requesting an appeal, or the borrower’s appeal has been denied;

(2) The borrower rejects all loss mitigation options offered by the servicer; or

(3) The borrower fails to perform under an agreement on a loss mitigation option.

If the servicer or bank moves forward with the sale after a loss mitigation application is complete and has not given the borrower an opportunity to accept or reject all available loss mitigation options, then the servicer or bank may be held liable for lost equity, attorneys fees incurred defending the foreclosure, emotional distress, and the consumer’s attorney fees incurred in pursuing the claims in federal court. See 12 U.S. C. 2605(f) and 12 C.F.R. 1024.41. If you or your client are either in the process of submitting a loss mitigation application or submitted a loss mitigation/ loan modification application prior to foreclosure, please contact the experienced attorneys at Kohl & Cook Law Firm. See the notable decisions our lawyers have helped consumers obtain concerning their loan modification applications under this federal law here.

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