How do the new RESPA laws help avoid a foreclosure in Alabama?
RESPA is a Federal law that governs the relationship between you and the mortgage company
This is a very broad law that covers different aspects of foreclosure.
Right now we will focus on how it’s helpful in stopping a foreclosure.
Here are a few examples of how this law is helpful.
If you apply for loss mitigation more than 38 days from the foreclosure date, then that foreclosure disappears
There are plenty of exceptions for this, but this is the general rule.
And loss mitigation includes loan modifications.
The mortgage company is expected to follow through and make sure whether or not you qualify.
In the past, before this law was passed, mortgage companies were very proud of what they called dual tracking.
Think of this as two trains on train tracks.
One is loss mitigation.
The other one is foreclosure.
Both trains are chugging along.
It used to be that, while you’re applying for loss mitigation, if the foreclosure date hits first, then the mortgage company would foreclose on you.
The mortgage companies were so proud of this — “Well, we almost were able to consider your loss mitigation but we have no power to stop the foreclosure so ignore all those letters where we promised to try and help you save your home.”
Because on one hand they’re trying to help you by telling you that you can apply for something like a loan modification, but on the other hand they’re trying to foreclose on you.
They can’t do that anymore.
They can’t take you to a foreclosure sale until your payment is at least 120 days late
What does this mean?
It gets a little technical, however I will say this.
If the foreclosure sale is set 120 days or less from when you missed your last payment, that will be a huge problem for the mortgage company.
Let’s say that your payment is on January 1st, and you don’t make the payment.
Then February hits, which makes us 30 days behind.
March then hits us, and that makes us 60 days late.
Once we get to May 1st, we’re 120 days behind on payments.
That’s the earliest they can foreclose on you.
Technically, they have to wait a little longer than that 120 day mark.
The point is that they have to give you time to apply for loss mitigation
This includes loan modifications, short sales, deed in lieu, etc.
Some mortgage companies will say, “We’re going to foreclose in 90 days.”
They could, but we will have an incredible case against them in Federal Court.
Another example of how RESPA can help is Request For Information and Notice Of Error letters
We talk about these letters in another article, and we also have a long webinar that we did on this topic including sample letters you can download.
If they don’t fix it, you can sue them in Federal Court.
If you’re facing foreclosure, you need to find out your rights and options
The best place to start would be ForeclosureDVD.com.
There you will find a welcome video, and a sign up button for four videos.
We’ll also send you a free 20 page booklet that goes with the video series.
It’s an investment of time, but it’s free of charge.
We can also send you a DVD of those four videos if you prefer.
Feel free to contact us
We will be glad to help you in any way we can.
If you live in Alabama you can call us at 1-205-879-2447, or you can fill out a contact form and we will gladly get in touch with you.
I look forward to talking with you!
Have a great day.