Stopping a foreclosure involves much more than just throwing money at the problem. Knowing who to pay, how much to pay, and when to pay are three important questions to consider.
We have seen it happen far too many times where a person facing foreclosure panics and cobbles together all their current resources in a vain attempt to pay the arrears and get back on track with their lender. The amount is substantial to them but it still does not equal the total the lender is asking for. The owner deposits the money with the lender’s lawyer under the impression their foreclosure will cease, or at least they will get more time to pay the balance of arrears. Unknown to the owner is the fact there is a pecking order as to how the money is applied in a foreclosure. Arrears payments are first applied to legal fees, then to any municipal tax owing, then to condo arrears, etc. Whatever is left over at the end is then applied to the mortgage balance. Despite the initial large payment, the foreclosure continues as there are still arrears owing on the mortgage.
The important point here is that an owner must have a solid and forward thinking plan when dealing with a foreclosure. What is the point in paying a partial amount on the arrears, only to get foreclosed out and perhaps not have enough funds to pay the first month of rent and security deposit on a new location? Unless an owner can source the full amount of the arrears, including all legal fees, within a set time frame, they would be better to hold that money on the side and work to save the balance of payment.
Never deposit money to a foreclosing law office without a signed, bank accepted agreement. Please contact us if you need assistance with submitting a formal proposal to your lender’s lawyer. There is specific wording and additional documents you are required to provide in order to have the best shot at lender acceptance of your proposal. You often only have one shot a lender acceptance, so it is very important to have a well thought out plan.
