Lighthouse

Frequently Asked Questions

What is foreclosure?
How long does the foreclosure process take?
How does Connecticut law govern the foreclosure process?
How do I avoid foreclosure?
What is loss mitigation and how can it help me?
Should I negotiate with the lender myself?
Several companies have contacted me recently offering to help. What's different about Lighthouse Real Estate Solutions?
How long does it take for you to complete the case once we fill out all of the paperwork?
How much do you charge to stop home foreclosure?
What if I can no longer afford my home? Can Lighthouse Real Estate Solutions still help me?
What does "Short Sale" mean?
Why would a bank agree to sell my house for less than what I owe?

1. What is foreclosure?

Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Notice of Default or Lis Pendens. The foreclosure process can end one of four ways:

  1. The borrower/owner reinstates the loan by paying off the default amount within a certain grace period determined by state law. This grace period is also known as pre-foreclosure.
  2. The borrower/owner sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.
  3. A third party buys the property at a public auction at the end of the pre-foreclosure period.
  4. The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction. These are also known as bank-owned or REO properties (Real Estate Owned by the lender).

2. How long does the foreclosure process take?

Each state governs the foreclosure process differently and it can take anywhere from a few weeks to many months, depending on the method of foreclosure your lender chooses to implement. At a minimum, the law requires that the borrower receive sufficient warning or notice before the foreclosure can take place. Other rights and responsibilities may be outlined in the mortgage or loan documents you signed when you purchased the home.

Until the foreclosure sale occurs, you still have options. If a sale date for your house has been set, you should take action immediately. While it is possible to prevent foreclosure at any point prior to the sale, it becomes increasingly difficult as time passes.

3. How does Connecticut law govern the foreclosure process?

Connecticut law mandates that lenders utilize the judicial foreclosure process when initiating foreclosure on a property. The judicial foreclosure process involves either strict foreclosure or a decree of sale.

Strict foreclosure is a proceeding in which the lender has the right to possess the mortgaged property directly upon default of the mortgage agreement. If successful, the title transfers to the lender immediately. However, the court sets an established amount of time in which the borrower may redeem the property. If the borrower fails to do so, the title becomes absolute to the lender and the borrower no longer has any claim to the property.

Decree of sale is an announcement by the court that establishes the amount of outstanding mortgage and requires the property to be sold to pay off the debt. In this case, the court establishes the time and manner of the sale, appoints a committee to sell the property, and appoints three appraisers to determine the value of the property. The borrower may stop the foreclosure proceedings at any time before the sale by paying the balance due on the mortgage. If no such payment is made, the committee will go forward with the sale.

4. How do I avoid foreclosure?

You have several options available to you as long as you own your home. Once your house is sold, whether by you or through foreclosure, many of your options disappear.

Knowing all of your options puts you in a much stronger position to deal effectively with the foreclosure process. Armed with the right information, you may be able to save your home from foreclosure and, in some instances, avoid the foreclosure process altogether.
Please contact us for a free initial consultation...you may qualify for several of the following options:

Special forbearance: Your lender may be able to arrange a repayment plan based on your financial situation. Your lender may even allow a temporary reduction or suspension of your payments. You may qualify for this if you have recently lost your job or your source of income or if you had an unexpected increase in living expenses. You must furnish information to your lender to show that you would be able to meet the requirements of the new payment plan.

Mortgage modification: You may be able to refinance the debt and/or extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem but your net income is less than it was before the default (failure to pay).

Partial claim: Your lender may be able to work with you to obtain an interest-free loan from HUD to bring your mortgage current. You may qualify if your loan is at least 4 months delinquent but no more than 12 months delinquent; your mortgage is not in foreclosure; and you are able to begin making full mortgage payments. When your lender files a Partial claim, HUD will pay your lender the amount necessary to bring your mortgage current. You must execute a promissory note, and a Lien will be placed on your property until the promissory note is paid in full. The promissory note is interest-free and will be due if you sell or leave your property, or when your mortgage matures.

Pre-foreclosure sale: This will allow you to sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating. You may qualify if the "as is" appraised value is at least 70% of the amount you owe and the sale price is 95% of the appraised value; the loan is at least 2 months delinquent prior to the pre-foreclosure sale closing date; and you are able to sell your house within 3 to 5 months (depending on what your lender agrees to). An additional benefit to this option is the assistance you will receive with the Seller-paid closing costs.

Deed-in-lieu of foreclosure: As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but it will help your chances of getting another mortgage loan in the future.

5. What is loss mitigation and how can it help me?

Loss mitigation is the process in which lenders agree to work with homeowners who have defaulted on their mortgage payments by finding alternatives to home foreclosure. The goal is to structure an agreement that stops foreclosure proceedings permanently, allowing homeowners to stay in their homes while protecting their credit.

6. Should I negotiate with the lender myself?

If you are only a payment or two behind and your lender has not hired an attorney to begin foreclosure proceedings, you may be able to negotiate a work out agreement yourself. Just remember, time is not on your side. If you do not have something worked out within a few weeks, it is probably unlikely that your lender is willing to work with you directly. At this point, you may want to seek professional representation that can utilize formal business and legal protocols to your advantage. Lighthouse Real Estate Solutions delivers the critical information and professional representation that you need to get the best possible work out agreement with your lender.

7. Several companies have contacted me recently offering to help. What's different about Lighthouse Real Estate Solutions?

What's different about Lighthouse Real Estate Solutions?
Our organization is dedicated to providing superior real estate solutions and the highest quality client service to each and every customer. Our primary goal is to structure an arrangement with your lender that makes the most sense for you and your family.

Remember, we do not receive a fee unless you keep your home. Unfortunately, there are unethical people in the world willing to take advantage of those experiencing financial difficulties. These predatory individuals appear to operate legitimate businesses.

Beware of companies that offer solutions too simple or too good to be true because they usually are. If you are selling your home without professional guidance, beware of buyers who rush you through the process.

Below are several precautions that you should take to protect yourself:

  • Do not sign any papers you do not fully understand.
  • Make sure you get all "promises" in writing.
  • Beware of any loan assumption in which you are not formally released from liability of your mortgage debt and contracts of sale.
  • Contact an attorney or your mortgage company before entering into any deal involving your home.
  • If you are selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. Contact your state and local government agencies for any available information.

8. How long does it take for you to complete the case once we fill out all of the paperwork?

The timeframe is anywhere from a few days to several months. Every situation is different, so it depends on the stage of foreclosure and your financial position. Typically, it takes several weeks to complete a work out agreement and stop foreclosure proceedings.

9. How much do you charge to stop home foreclosure?

We do not receive a fee unless you keep your home. After successfully negotiating an arrangement with your lender that is acceptable to you, we collect a flat fee of $950. Please contact us for more information.

10. What if I can no longer afford my home? Can Lighthouse Real Estate Solutions still help me?

Yes. If you are certain that you cannot afford your home and wish to sell, we may be able to negotiate a short sale payoff or a deed-in lieu of foreclosure agreement with your lender. A short sale, or pre-foreclosure sale, allows you to sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating. Either way, these agreements can be arranged at low or no cost to you. Please contact us for a free initial consultation.

11. What does "Short Sale" mean?

Your lender agrees to accept less than the outstanding loan balance in exchange for releasing the mortgage as a lien on the property (also referred to as pre-foreclosure sale, short sale, pre-sale and compromise sale). There may be tax consequences associated with any short payoff or foreclosure; therefore, we recommend you contact your tax advisor for details.

12. Why would a bank agree to sell my house for less than what I owe?

Banks are not in the business of owning or selling real estate and they do not like to foreclose on homes because it costs them money. Some of the expenses banks incur while trying to sell a property include taxes, maintenance costs, legal fees, and brokerage commissions. In addition, until the property is sold it remains a non-performing asset on their balance sheet which is not in the best interest of the bank.


Flash Fact

Lighthouse Real Estate Solutions, LLC is a Connecticut real estate services firm dedicated to assisting financially distressed homeowners within the state. More Info



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