Foreclosure mediation is a court-sanctioned program wherein Connecticut law provides homeowners an opportunity to request a modification of their mortgage during the pendency of a foreclosure action. This provides homeowners a chance to meet with their bank’s representatives (who are usually attorneys) and present their case for a resolution of the foreclosure problem and a temporary or permanent plan for solving it through a court-ordered solution.
This is a great option if you’re properly prepared with a good plan and proper documentation of how and why you can save your home. It’s a court process, so you should have an attorney, preferably one with the knowledge and experience to present a winning case. At The Law Offices of Neil Crane, LLC, our attorneys are experienced with various banks in the numerous foreclosure courts throughout Connecticut. There are thousands of foreclosures pending in Connecticut and you need to stand out from the crowd. Our attorneys know how to get your case noticed. We know what the banks want and need to hear.
Be careful and be prepared, because:
- Mediation has strict time limits
- Mediation takes preparedness
- Mediation requires persistence
- Avoid common pitfalls
- Your first chance is your best chance
- Get professional assistance from experienced attorneys
Step #1: Analysis of your Full Financial situation
We will carefully analyze your full financial picture and determine the best options available to you, so that you can make the most informed decision possible. You do not have to allow your home to go into foreclosure, and you should only consider a short sale if you understand all the alternatives that fit your best interests; including:
- Deed-in-Lieu of Foreclosure: A homeowner not wishing to keep their home may have no other debt problems other than a difficult first mortgage. In this case, a return of the property to the bank without further obligation for the mortgage can be the best option available.
- Chapter 7 Bankruptcy: Chapter 7 relief provides for the elimination of mortgage obligations and other unsecured debt. After Chapter 7 debt relief, you may be able to become current on monthly mortgage payments or negotiate a mortgage modification you can afford.
- Chapter 13 Bankruptcy: If a short sale isn’t right for you, a Chapter 13, can help you completely restructure all types of debt, stop foreclosure, and eliminate or modify unsecured debts, a second mortgage, credit lines or tax debts.
- Foreclosure defense: We can fight on your behalf to prevent improper and illegal foreclosure actions. With our specialized knowledge and experience, we can save your home from foreclosure.
- Foreclosure mediation: Foreclosure mediation is mandatory in Connecticut. Comprehensive financial documentation, a convincing hardship letter, a thorough understanding of what your lender wants out of the deal and specialized legal counsel is essential in achieving a modified mortgage with lower interest rates and the re-working of past-due balances.
- Mortgage modification: If you don’t want to short sell your home but need to solve back-due payments or obtain a lower interest rate, we can help you negotiate with your lender to rework the interest rate and terms of your mortgage. A comprehensive, well-prepared mortgage modification can lower your monthly payments and cure past due mortgage payments.
Step #2: Follow Connecticut Law On Foreclosure
Successful mediation requires prompt legal representation, comprehensive financial documentation and strong legal advocacy. Connecticut has provided mandatory mediation if promptly requested within fifteen (15) days of the Return Date. Despite promises under the national settlement with big banks, false promises of bank help and mortgage modifications cause hundreds of homeowners to lose their houses in Connecticut every year.
Step #3: Create a Mediation Plan
Foreclosure mediation has options. Determine what you would really like to do first. Banks will try to sway you in a direction that is either easy or good for them. You should decide what you want to do if it’s keeping your house or moving on.
Step #4: Determine a Timeline
Make sure you are aware of deadlines and build out a timeline of when information needs to be delivered. The foreclosure process can take as little as 3 months. Foreclosures generally take three to four months, most commonly ending with a law day or a foreclosure sale.
Step #5: Get your financial documents prepared
Follow the plan and timeline that your attorney has set for you and be sure to get your financial and mortgage documents filled out and returned in a timely manner.
Before requesting your loan modification from the lender make sure to have these documents available:
- Two months of bank statements for all open bank accounts
- Signed and dated current Federal Tax Return
- Current Utility Bill
- Hardship Letter detailing why you need the loan modification and why your finances have decreased
- Filled out and executed IRS Form 4506T
- General Financial Worksheet from your lender (most refer to them as modification application, and there is a good example of one on the Making Home Affordable Program website)
- Two months of proof of income
- Pay stubs if you are a W-2 employee, operating reports if self-employed
- Please note that if you are self-employed, it is likely that you will have to provide additional documentation of your income other than the operating reports
In almost every instance it has been required that these documents be updated and resubmitted on multiple occasions. Be prepared to send and resend these documents as your lender requests. No matter how daunting a task it may be, the success to a loan modification is never giving up and always providing the documents as requested.
Step #6: Prioritize your Resources and save your mortgage money
With a plan and timeline in place, you need to prioritize your resources. Carefully analyze your monthly income and expenses. Take into account all other debts. No expense should have priority over your home.
Save your mortgage money. It is essential that you save as much of your back-due mortgage payments as possible. This financial “cushion” can be the key to your successful future. After going through Foreclosure, read about what to expect after foreclosure