5 Common Myths About Foreclosure

Foreclosure is a frightening word. The chance that you can lose your home can put you on edge and make you more likely to believe many common myths about foreclosure. If you are falling behind on your payments, or are worried about losing your home, here are some facts that may ease your mind and help you make the right choice for you and your family.

Myth #1: Foreclosure is Always the Borrower’s Fault

When you start to fall behind on your mortgage or have received a Notice of Foreclosure from the bank, you may feel a lot of shame about not being able to pay your debts. But contrary to popular belief, foreclosure is not always the borrower’s fault. Sometimes, a foreclosure may be a consequence of poor financial decisions. However, to obtain a mortgage, you already had to demonstrate your financial responsibility. More often, a foreclosure may result from events outside your control such as:

• Layoffs or unexpected loss of employment
• Sickness causing a loss of income
• Accidents or injury resulting in unexpected medical expenses
• Divorce affecting household income or ability to make payments

Myth #2: Connecticut Foreclosure Process Starts After One Missed Payment

Just because you miss a payment doesn’t mean you will immediately be put into foreclosure. If you fall behind on payments, you may enter a “preforeclosure” stage in which the bank will contact you warning that you are at risk of foreclosure. This preforeclosure stage may provide an opportunity to apply for loss mitigation, as well as some time to investigate your financial options, and get the advice of an attorney. If you are able to catch up on your payments, you may be able to avoid foreclosure altogether.

Myth #3: Borrowers Should Take Extreme Steps to Avoid Foreclosure

Responding to the possibility of foreclosure should be a top priority. But it is a common misconception that borrowers should always avoid foreclosure by taking extreme steps like putting their home up for sale or withdrawing funds from their retirement account to make their mortgage payments. There may be better alternatives to avoid foreclosure.

For example, while bankruptcy will not discharge your mortgage obligation, filing a bankruptcy petition will trigger an automatic stay on foreclosure proceedings. This will give you a chance to discharge or pay off other obligations, freeing up more funds to put toward your mortgage. It may also provide the means for you to catch up by including the mortgage arrearage in your Chapter 13 bankruptcy repayment plan.

Myth #4: Nothing Can Stop the Foreclosure Process in Connecticut

You might think that nothing can stop the foreclosure process once it starts. But lenders are motivated by profit. They benefit more from you paying interest on your loan than engaging in an expensive process to add to their “real estate owned” portfolio of houses to sell. Because of this, your lender may actually prefer to work with you to find a mortgage modification or other solution that will allow you to keep your home and catch up on your payments.

This is where the Connecticut foreclosure mediation process can help. If you make a timely request for foreclosure mediation, your bank is required to participate. It gives you and your attorney time to negotiate with your lender and modify your mortgage, with the help of a neutral third party mediator. That way, you can create a realistic repayment plan or explore other strategies to resolve your debt. It is important to act quickly on this, however. Once a foreclosure starts you will have a very short period of time to elect the court’s mediation process as of right. And it is important to have an attorney who is familiar with the process to help you navigate it.

Myth #5: Borrowers Don’t Need a Connecticut Foreclosure Mediation Attorney

Many borrowers believe that they don’t need a lawyer to negotiate with their mortgage lender or defend against foreclosure. However, hiring an attorney to guide you through the mediation process can help you consider options you may not have known existed. Your attorney can ensure you preserve your right to foreclosure mediation, and other defenses, and can negotiate with the lender on your behalf. Hiring a lawyer also shows your lender that you are serious about saving your home, and that you won’t be taken in by empty promises.

At Lawrence & Jurkiewicz, we can help you see through the common myths and make the most of negotiations with your bank. Through preparation, advocacy, and diligence, we help clients in Hartford and Litchfield Counties find resolutions to their unpaid mortgage balances and avoid unwanted foreclosure. We will work with you to reach an outcome that aligns with your priorities and protects your property. Please call (860) 264-1551 or contact us for a consultation.