Help! I Haven’t Made a Mortgage Payment for 5 Years!

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If you haven’t paid your mortgage bill in a long time, even years, it may be hard to believe that you’re not alone. Shockingly, stories of homeowners living in homes without making any payments aren’t hard to find at all. Commonly referred to as  ‘foreclosure limbo,’ ‘living rent-free,’ and ‘strategic default,’ what some people don’t realize is that there are often complex stories behind how this can happen.

The Adjustable Rate Mortgage/Loan: In this situation, a homeowner often purchases a home with what is known as an ARM (Adjustable Rate Mortgage). ARMs have interest rates that change according to the ‘index rate.’ This means that borrowers’ monthly payments will change as the interest rate goes up or down. Typically, ARM rates are low initially, to entice buyers into agreement. As index rates fluctuate, homeowners can be stuck with a mortgage payment that is more than they can handle – sometimes significantly more. When this happens, borrowers stop making payments because they simply can’t afford them any longer. While they wait for the lender to approve a modification, they often continue living in the home while not making any further payments.

The Financial Crisis/Housing Collapse: Prior to 2008 or so, many business owners were doing quite well for themselves, especially in the real estate industry. Owning multiple properties and collecting significant rent amounts each month, these so-called ‘real estate moguls’  could easily afford to purchase a luxurious home for themselves without worry. However, when the market began to collapse in 2008, property values tanked. Business owners in the real estate market took an extremely hard toll. For those who had purchased a personal home but were now left without any rental income, this meant their own mortgages went unpaid, often for years, as the housing crisis has only begun to right itself in the very recent past.

Judicial Foreclosure: In 23 states, the foreclosure process must move judiciously, or through the court system. What does this mean for homeowners who default on their mortgages? It means, quite frankly, that not much will happen at first. Although the number of new foreclosures in New Jersey is finally beginning to slow down since the market collapse of 2008, there is still a gigantic foreclosure backlog in the NJ court system. Therefore, even if a lender forecloses on a delinquent borrower, it can take years for the case to make its way to the end of the judicial foreclosure process, which culminates with the auction of the home at Sheriff’s Sale, thereby evicting the original ‘homeowners.’ Until the property is sold, homeowners are free to continue living in the home, due to lack of any other recourse.

Statute of Limitations: While rare, and only recently seen in New Jersey courts, the Statute of Limitations can be invoked if your last mortgage payment was made 6 or more years ago. Even if your lender filed for foreclosure in New Jersey within this time period, if they fail to move on the case within a 6 year period, you may be able to use the NJ Statute of Limitations on debt pursuant to N.J.S.A. § 2A:50-56.1(a).

Whatever the reason for your mortgage default, know this: Veitengruber Law has helped homeowners who have found themselves in the most dire situations imaginable. Five years with no mortgage payments? Let’s get you a loan modification so you can keep your home and your dignity can remain intact.

Call us today! We consult with you for ONE HOUR free of charge to help you determine if you think we can help you. We’re now providing consultations in Wall, Bordentown, and Marlton, New Jersey as well as over the phone when warranted.

Image credit: Sodanie Chea

Why is My Home Being Photographed?

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Assuming your last name isn’t Kardashian and you’re not a member of The Real Housewives of New Jersey, having your house photographed every day probably isn’t something you’re accustomed to. If you’ve recently felt like you’re being hounded by the paparazzi, there’s probably a very simply explanation.

Anytime you fall behind on their mortgage payments (even if only one or two payments have been missed), your mortgage lender or bank may start the process of filing for foreclosure. This is possible even if you haven’t caught wind of the news yet. While your lender is required to notify any homeowner on whom they plan to foreclose, you may not have gotten the notice yet if it’s very early in the process.

If you’re aware that you have indeed missed some mortgage loan payments, or if you have already received the foreclosure notice in the mail – you have the answer to why your home is being photographed.

When mortgagees start missing payments, lenders start losing money. As soon as one of their loans goes into default, lenders know that a foreclosure may be their only way to recoup any money out of the situation.

Lenders also know that some people are so fearful of the potential embarrassment of being forced out of their home that they voluntarily move out prematurely. In reality, homeowners who are behind on their mortgage payments are allowed to continue living in the home until the very end of the foreclosure process. In New Jersey, foreclosure timelines are still remarkably long because there are so many foreclosures clogging up the court system.

Although you have the right to remain in your home until it has been sold at Sheriff’s Sale (if you choose to go forward with foreclosure), your lender is acutely aware of the fact that you may abandon the home before then. Many people also leave their foreclosed homes prematurely due to divorce or other life circumstances that have changed. If your home is left vacant, your lender lawfully has the right to sell the property at any time.

Because lenders know that they legally have the rights to any vacant home that is in default, they regularly check to see if any of their defaulted mortgage properties have been abandoned. Thus, the photographer that has been giving you the creeps is simply making a photographic record of whether the home is still occupied or not.

Sadly, some mortgage companies will purposely photograph your home when they know you won’t be there. This gives them the ability to paint the picture of an empty home (no cars in the driveway, no lights on, etc). Although it may be clear that the home is still quite lived-in, some unscrupulous lenders will attempt to declare it as unoccupied so that they can attempt to take possession of the property early.

If you’re in a similar situation, your best move is to stay in contact with your lender even though you are in default on your loan. You can do this yourself or with the help of a real estate attorney, but keep record of your communications with your lender either way. A good way to avoid any miscommunication with your lender is to have your attorney draft a letter explaining that you will be living in the home throughout the duration of the foreclosure.

 

Image credit: Philip Male