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3 Things to Know If You Can’t Pay Your Mortgage

As part of our own Jonathan Garber’s webcast series, he continues to interview leaders in the community who share tips and strategies to help us all Thrive during the Coronavirus shutdown. Today, Jonathan is joined by David Strauss of the Strauss Law Group. David explains the Top Three Things you can do if you can’t pay your mortgage. This is critical information during this difficult time.

If you’re a leader and want to share your knowledge with the market, email Jonathan at [email protected]
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Transcript

Good morning everybody. Welcome back. I’m Jon Garber from Flying Chimp Media and I have a fantastic guest today. He is Broward attorney David Strauss from the Strauss Law Firm David. Good morning. Good morning, Jonathan. Good morning. So, any viewers David has a great subject. He’s going to dive into with us today, which is the top three things everyone needs to know if they’re having Trouble paying their mortgage or just flat-out can’t pay their mortgage. Some people are panicking. I think a lot of people are panicking if they’re not in crisis now David, they’re seeing a personal financial crisis like just over the hill. So, can you walk us through the three things that any homeowner condo Etc. a need to know if they’re having trouble paying that mortgage? Yes, very much very much. Love to help people with that problem because it’s a very common problem now. So many people furloughed so many people’s income has dropped to a fraction and a lot of people unfortunately. Sorry. Yeah first can you just take a second and give us a quick little bio background about the Strauss law firm and what more areas are so people know where this is coming from. Absolutely, you I’ve been practicing as a litigation attorney for over 25 years 10 years up in New York and just over 15 years in South Florida. My office is in Fort Lauderdale, but we serve the entire State of Florida mainly the Tri-County area but really anywhere in the State of Florida in the Foreclosure realm, that’s one of the things we do is defend people in foreclosure. We help them get loan modifications to keep their properties. We give them assistance to get short sales done if they decide they don’t want Keep their property and that’s the topic that really concerns this segment. But we also are commercial litigation firm which a much broader practice just for general knowledge. Right? So, you are seeing people with mortgage challenges. I’ll use that broad category. You’re seeing people with mortgage challenges almost every day. What are those top three things that they would need to know if they’re if they’re really facing trouble now during the covid shut down? Well, thank Number one and it’s a big one that has a lot of misconceptions out. There is the governor signed an order that effectively stays all foreclosures and evictions for 45 days. Now that’s going to run approximately a month from now on May 18th. The floodgates can open back up again, but the big misconception people don’t understand is just because your bank can’t sue you for foreclosure does not mean that they cannot hold you in default accelerate all of your future payments that would come due on the mortgage and then they’re not required to reinstate the loan. Which means They could sue you for foreclosure on May 18th. And unless they’re willing to reinstate the loan. And unless you also have the funds to reinstate the loan and most people who were in that position. Well, then they’re not going to have any defense to the foreclosure, and they’ll need the capable attorney who can help them drag it out, but ultimately, they might lose their property. So, the important number one important thing to know is that the governor’s moratorium on foreclosures does not in any way suspend anyone’s obligation to pay on their mortgages. Okay, the number two and this is really the most important thing to know for everyone and it’s a frustrating one and that is communication is the most important thing people need to understand and it’s hell now trying to get through to your lender on the phone is going to be extremely frustrating many of them have set up covid-19 relief hotlines. It doesn’t matter how they approach it. They’re going to be backed up. So, my recommendation is to call at different times of day be persistent and be patient. Nothing is going to change in the next 30 days. You’ll eventually get through and see what your lender is willing to consider. Some of them will tell you nothing many of them will tell you. Oh, don’t worry. We have a moratorium will find out what that means. Right? Because if they ever they’re going to kill forbearance for 90 days, but then on the 91st day, you will those three months of mortgage as a balloon on top of your regular monthly payment. You’re setting yourself up for closure. Sure. And if that’s your only option that’s your only option. I just want people to understand that that if they’re saying they’ll forbear for 90 days get the details. That’s where the devil sleeping know what that really means. That’s a question I have because I’ve seen people talking on social media saying, oh, I’ve got a forbearance and what and you’re like that becomes a Four month balloon payment how many people can make four months payments at one time if ever someone is really having trouble paying their mortgage. None of them are going anything. to be If you don’t have a problem paying for months at one time. This video probably isn’t about you. But so, watch out for that that a forbearance of six months 90 days whatever they’re giving you is not granting you’re going to have to pay the arrears. That’s what you need to know. It’s not there two other ways they can do I’m sorry Jonathan. Yeah, it’s not Grace. It’s not delaying. It and putting three months at the end of your term. It’s stacking it. There’s a big difference. Right. Now some lenders will agree to a forbearance plan where let’s say they’ll give you 90 days. You don’t have to pay and then over the following six months. You’ll pay the arrears off in six equal monthly installments that come do in addition to your regular monthly payment still not a great option for a lot of people not doable for a lot of people but some may be able to Avail themselves of that option. And again, if it’s your only option you might as well take because that’s timelier, you’ll be in possession of the property. More time to work things out with the lender another great way would be is if they would take that three months or two months or whatever. They’re going to forbear and put it on the back ends of the loan at the end of the 30 some odd year term as a balloon. Is that by the time you’re going to have to pay that off chances all you’ll have accumulated Equity. You can refinance it’s not work on to matter. It’s small potatoes at that point. Right but it pushes it off to time where at least you’d have it. breathing room to Right always put it’s like the old coffee can thing if you just put some money in a coffee can every month for the next 15 years. You could pay that off if you didn’t refinance at some point, so and is there a third tip right, right? You got tell very important tip very important tip and this is for people who feel they don’t have any option and the lenders not working with them and they’re scared. They’re going to lose their property is if it’s someone who it’s their home. It’s not an investment property and they really want to keep it then a loan modification could be an option for them and there a couple of ways to play that one if people need a lot of time before they have to start paying again. When they can do what’s sort of a strategic default and that would mean not paying and letting the bank Sue in foreclosure hiring an attorney to defend the Foreclosure which could drag it out for years at least a year in most cases if they have a capable attorney defending the case on its merits you know, not just for the sake of delaying the case, but if a case is properly defended they take between one and two years typically to wind down all that. Time, they don’t have to pay the mortgage. They’ll be much better suited to qualify for a modification toward the end of that process financially that makes a lot of sense because they’re going to pay a lot less money over. Years and actually end up in better shape what our credit rating their credit that’s if their credit rating is not something they can afford to sacrifice. It is not a good option Obama. lot of people will not see it affect their credit, but most people will You know, it’s not like not paying on a credit card. It doesn’t automatically get reported and lot of lenders don’t I myself personally did a strategic default for my own reasons back in the 2008 crash, right? And it worked out very well for all concerned the bank in the end got paid every penny there was Equity, but it gave me a really good break for three years that I didn’t have to pay that mortgage was phenomenal. But again, yeah not a great option for everyone. know and I wanted to note. Yeah, Mike. It’s back in the 700s now and that was only a few years ago that that wound down so it won’t kill everyone’s credit, but you should assume that it will and if that’s not an option as it isn’t for a lot of people than what you should be looking to do is get a loan modification as soon as possible. But as soon as you can establish didn’t come because if you apply for the loan modification before you have income coming in, you’re going to get denied. So for most people that’s going to mean waiting until they’re back at work again, or waiting till their income returns to normal levels, then reaching out to the bank and they would request something called a loss mitigation package that just a fancy term for a loan modification application. They call it a loss mitigation package and call the bank us for the loss mitigation department and they can send you that package to apply. It’s not a fun process. Requires a lot of paperwork to be submitted. you don’t have tax returns or pay stubs. They’re usually things you can substitute for the pay stubs. Not the tax returns, but that’s going to be a great option for people who don’t have any options now. So, one thing I’m taking away from this is there’s no free lunch. You have several paths, but at the end of the day the federal government isn’t bailing out your mortgage. You have three different paths you could go down, but the obligation is there, and you have to be aware of that that in order to stay in the house at some point. You got to pay for the house at some point for others. There’s actually a dark fourth option. And that is for people who are completely stuck can’t modify can’t reinstate their Loan in any way what they can do is their only choice and that is what the bank’s through them in foreclosure defend the case as long as they can they don’t qualify for a loan modification. Eventually, they can short sell the property the impact to their credit will be much lower if they short sell its short sale is much better on someone’s credit than foreclosure sale. For example. And that’s not a great option for a lot of people just the stress of being in foreclosure. It’s a lot to Bear even if someone like me can demystify the process it’s still scary stuff for anyone, you know one option you didn’t mention, and I think it’s interesting to point out. You haven’t used the B word. You know what? I mean? We weren’t bankruptcy things to be your bankruptcy used to be a good option for attaining a loan modification through the bankruptcy court through the trustee and it might still be a good option, but it used to be a better one. I used to be I’d see a lot of people get modifications in bankruptcy and I used to refer bankruptcy lawyers for that reason. I’m not seeing as many modifications come out of there, but that’s mainly an option now to delay a foreclosure sale for someone who wants to stay in As long as they can to wheels fall off that will further delay things another option to give people a way to reinstate their loan to get their Banks work with them and it’s a terrible option. It’s a last resort is Stand now you can take money out of a retirement account penalty-free and use that sword reinstating your loan. I don’t recommend that it’s you know, really all you have to fall back on when you retire but for people with no other option that’s something else to look at. All right. I have one last question and I don’t want to appreciate your time. I know you’re very busy. I’m worried that people David may say. I’m having trouble paying my mortgage. How the hell can I call a lawyer? And how do I meet with a lawyer and can you get into the accessibility of lawyer’s people in your business like you and you Yeah, absolutely. I can’t speak for everyone else. But I’m sure I have plenty of colleagues out there who like me because of the circumstances are giving people free consultations. And this is a valuable consultation. If someone has comparable knowledge to my knowledge and experience in the area. It’s worth paying a console fee if they’re not going to give him free consult my firm now. We are giving free consoles. I am busy but not as busy as I was before this lockdown, so I can afford to donate my time and I’ve been very happy to do so and I’m sure plenty of my colleagues are doing that as well on behalf of the community. I thank you and your colleagues. It is an honorable profession and most really every attorney that I know has switched to a format like this where they’re doing consultations remotely whether they’re using Skype or whatever product they’re using they’re still seeing people and people are able to take pictures of documents and send them if they don’t own a scanner. It’s just not been Problem. So yeah, everything is completely accessible. I’ve been filing new lawsuits during this lockdown and people don’t are comfortable with being on the phone. I do face-to-face by Zoom or more teams or any of the other video conferencing software lawyers are just as accessible now as they were before the lockdown. Absolutely. It’s important that people know that David our time is up. Thank you so much. I know you’re busy and I thank you very much for sharing those tips with us. I hope if you are in trouble out there concerned about the future of your mortgage review these three tips reviewing again to think about Consulting with an attorney. It’s not an option A lot of people thought they might have called a mortgage broker. They might call their bank, but don’t go into that kind of conversation unprepared. Right and if I could close with just one last tip, if anyone would like to take me up on a free consult the best way to reach me is by my email. That’s David at Strauss law dot net, David at Strauss law dot net. You will not be charged for the console up to an hour. Wow. All right, David. Thank you so much. That’s a terrific offer. I appreciate it. Thanks for being part of the community. Thanks for passing the hat and helping support local. Honest and business owners. I appreciate it. Thank you for helping people. Jonathan is very nice what you’re doing.

 

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