LONG ISLAND REAL ESTATE LAWYER

FORBEARANCE AGREEMENTS: A forbearance agreement is an negotiated contract between you and the bank. Where you owe arrears, banks will allow you pay off the arrears over time, sometimes years. The bank agrees not to foreclose, if you keep up the payments under the forbearance agreement. The home owner pays the arrears in monthly installments. It is important to note that the home owner is paying part of the arrears each month, but must also pay the normal mortgage payment each month as well. We can help your negotiate a forbearance agreement with your bank.

FORECLOSURE PROCEDURE: A foreclosure is a type of lawsuit. If you are behind on your mortgage, the bank may sue you for the amount of mortgage arrears you owe, plus all future principle payments you would owe. This is called "accelerating" the mortgage. For example: if you borrowed $300,000 to purchase your home, have fallen behind and now have $15,000 in arrears, and still owe $280,000 remaining into the future, the bank accelerates the $280,000, and sues you for $295,000 (plus their costs and attorney fees). The court appoints a "referee", whose job is to calculate the amount owed on the mortgage, and to sell your house. The referee advertises and conducts a public auction. At the auction any one can bid on the house. Often, the bank itself bids, and often buys the house. The house goes to the highest bidder. If the house sells for more than the amount owed the bank, the referee pays of any non bank liens on the property, and if there is still surplus funds, pays them to the homeowner. If the house sells for less than the amount owed the bank, the homeowner still owes the difference, called a "deficiency." The bank many still come after you for a deficiency, even after they have foreclosed and sold your home.

SHORT SALES: In a "short sale" the home owner sells the house to someone who is paying less than the amount the homeowner owes to the bank under their mortgage. A short sale must be approved by the seller's bank, as the bank is agreeing to take less on the mortgage than they are owed. Short sales are occurring when real estate values are falling. For example, if you paid $450,000 for your house, and still owe $420,000 to the bank, but the value of the house has gone down to $380,000, you can not sell the house unless the bank agrees to take less then the $420,000 they are owed. Short sales are very complicated transaction, which require reaching a three way agreement between buyer, seller and the seller's bank. We can help you reach a deal with your bank and assist you in a short sale.

DEED IN LIEU OF FORECLOSURE: Sometimes, when homeowners are faced with a foreclosure, the bank will agree to take the house, and not foreclose. This may be an advantage to the homeowner, as they will not have a foreclosure on their record, and the bank waives any rights to a deficiency judgment. The bank accepts the deed in lieu of proceeding with a foreclosure action. This requires reaching an agreement with the bank.

REFINANCE: Refinancing a mortgage allows you to pay off any arrears and escape foreclosure, by obtaining a new mortgage, which pays off the mortgage and arrears. Of course this may be difficult has the existing arrears may be damaging the homeowners credit rating, making it difficult to obtain the refinance.

BANKRUPTCY: If you are behind on your mortgage, and you can not reach some type of agreement with your bank, you can seek the protection of the bankruptcy court. Homeowners faced with foreclosure have two possibilities under the bankruptcy law: Chapter 7, where the homeowner liquidates his debts, including the mortgage, and the house is sold; Chapter 13 in which the homeowner keeps the house, and pays off the arrears over five years (plus additional amounts) and is required to pay the normal monthly mortgage. You must have enough monthly income to pay the monthly mortgage plus the monthly amount under the Chapter 13 plan, or the plan will not be approved.