Can Lenders Foreclose When Payments Are Current?

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Florida is often one of the hardest-hit areas in the country for foreclosures and that held true this year, too. During the first three months of 2022, Florida was the eighth-highest state in the country for foreclosures. In total, one out of every 1,211 housing units was foreclosed on in Florida. That is a total of 8,147 units foreclosed on, for a total of 0.08 percent.

Many people understand that when homeowners do not make their mortgage payments, their lender may foreclose on their home. However, many do not understand that a foreclosure can happen even when the mortgage is current and has been paid regularly. Below, some of our best foreclosure attorneys explain when foreclosure could occur even when payments are current.

Property Taxes Have Not Been Paid

All municipalities throughout Florida collect property taxes on homes. Taxes are sometimes made as part of the mortgage payment, which is known as escrow. When taxes are not paid through a mortgage payment but are paid separately, the homeowner is responsible for paying the taxes directly to the government. When homeowners do not pay the taxes themselves, the lender may make up the payment. The homeowner is then responsible for paying the property taxes to the lender. If they fail to do that, the bank will likely foreclose on the property.

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Outdated Homeowners Insurance

Like property taxes, most mortgage contracts include a clause that requires homeowners to purchase homeowners insurance and to keep it up to date. Any homeowner who does not carry and maintain up-to-date insurance is in violation of their mortgage contract. Any violation of a mortgage contract can result in foreclosure, including violating the homeowner’s insurance clause.

The Property is Not in Good Condition

Many people understand that their mortgage contract requires them to pay property taxes and to maintain up-to-date homeowners insurance. However, some homeowners do not realize that their mortgage contract also requires them to keep the property in good condition. This typically means that the lawn needs to be cut regularly and that any part of the home that has fallen into disrepair must be corrected as soon as possible. Any time a homeowner fails to keep their premises in a safe and good condition, their lender may foreclose on the home.

Homeowner Association Fees Have Not Been Paid

Over the past several years, homeowners associations (HOAs) have become extremely popular. HOAs are community boards that outline regulations and rules all homeowners must comply with when they live in a specific neighborhood or in a multiple-unit building, such as a condominium. HOAs also maintain shared spaces, such as lobbies, courtyards, and other spaces open to anyone who lives within the HOA.

In exchange for their work, HOAs charge the homeowners they represent fees, also known as dues or assessments. HOA fees are typically paid every month, just like the mortgage. Also just like a mortgage, when HOA fees are not paid, the homeowners association can petition a court and obtain a judgment that allows them to sell the property to recover the debt, even if the mortgage is current.

Mortgage Payments were Made to the Incorrect Lender

It may seem like a mistake no one could ever make but sometimes, mortgage payments are not paid to the right lender. Unfortunately, it happens more often than people think. Lenders often bundle mortgages together and then sell them to another lender. Sometimes, homeowners do not even realize that their mortgage has been sold to another lender. As a result, they continue making their mortgage payments to the original lender. The entity that purchased the mortgage may then foreclose on the home because they have not been receiving their mortgage payments.

How to Avoid Foreclosure

Facing foreclosure is not only financially devastating, but it is also emotionally traumatizing. It will also damage your credit score for many years to come, making it a challenge to obtain any credit in the future. The good news is that even if your lender has already started the foreclosure process, there are ways to stop it so you can keep your home.

One of the most popular options for stopping foreclosure is a loan modification. A loan modification can change any part of the loan, including the interest rate, the duration of the loan, and more. To obtain a loan modification, you have to ask for one from your lender. There is no guarantee that any lender will approve a loan modification, but they are more common than people think.

Payment suspensions and repayment plans are other options for avoiding foreclosure. A payment suspension allows you to stop making payments for some time, which is a good option when people suddenly become unemployed or there is another situation that prevents them from making regular mortgage payments. A repayment plan will temporarily increase the number of your payments so that you can get caught up on your mortgage little by little.

For any of the above options to work, you must stay in contact with your lender. Even if you do not think those options will work for you, it is still critical that you do not ignore your lender. Simply staying in communication with them and keeping them updated about your situation can go a long way when you are trying to avoid foreclosure.

Call Our Foreclosure Defense Lawyers in Florida to Discuss Your Legal Options

If you have missed several mortgage payments, or your lender has notified you that they are starting the foreclosure process, it is important to remember that you do have options. At Loan Lawyers, our Florida foreclosure defense attorneys have helped thousands of people stay in their homes and we can put our experience to work for you, too. Our seasoned attorneys are skilled negotiators and can work with your lender on your behalf so you have the best chance of a favorable outcome. Call us now at (954) 523-4357 or contact us online to schedule a free consultation.