Category Archives: Real Estate Law

Timeline Of An Eviction

Timeline Of An Eviction

There are good tenants and bad ones, just as there’re good landlords and bad ones. In Utah, the legal term for an eviction is an unlawful detainer suit. Landlords wishing to evict a tenant must go through a formal process and obtain a court order before they can have a tenant evicted. Any attempts to evict a tenant without a court order are illegal. Actions like turning off utilities or changing the locks without a court order are known as self-help evictions, and they could result in a lawsuit being successfully filed against you. Before landlords can file an eviction suit, the law requires you to provide 3-days notice to tenants to correct a deficiency or leave the premises.

Generally, the eviction process in Utah takes just a matter of days or weeks from the time the landlord files the lawsuit to the time the tenant is out of the property. 11 to 28 days is common, provided that the process has been followed correctly. If the tenant contests the eviction, it could take longer.

Utah is among the more landlord-friendly states. Courts in Utah normally award triple damages (minus attorney’s fees) to landlords in the event of an eviction especially for past due rent payments. However, it can be very difficult to actually collect on a judgment from an evicted tenant if they have few assets in their name to collect against.

Reasons to evict a tenant

 Common reasons for evictions in Utah include non-payment of rent and material violation of lease terms.

 Landlords can also file nuisance evictions due to suspected criminal activity on the premises, loud parties, rowdy behavior, gambling, and the like. The landlord must sufficiently demonstrate to the courts that the tenant has been causing a nuisance.

 You cannot evict unless you have a court order authorizing you to take possession of the property. You can’t evict if you are illegally discriminating against a protected class. The Fair Housing Act prohibits housing discrimination on the basis of race, religion, sex, national origin, familial status, and pregnancy. If you evict someone for a lease violation, the tenant may challenge the eviction and present evidence that they were, in fact, in compliance with the lease, or that they corrected the deficiency within 3-days. As a landlord, it is important to make sure there’s nothing that can be used against you in court. The eviction case could fail if the judge finds you in violation of the landlord-tenant lease. Before proceeding with the eviction process, ensure you were acting in accordance with the following laws:

According to the Law, Landlords should
• Maintain a habitable living space, by conducting all feasible and relevant repairs
• Maintain common areas, in a manner that guarantees safety and sanitary conditions
• Maintain electrical systems, plumbing, heating, and hot and cold water
• Follow the applicable local eviction procedures
• Maintain any air conditioning system in an operable condition
• Comply with all relevant building, safety, health, and housing codes

In some cases, the Law also allows tenants to repair any problems and deduct the cost of the repair from their rent. Remember, the renter will also be given a chance to present their case during the eviction proceedings.

Eviction Process

Every part of the eviction process must be followed exactly or a landlord risks delaying the process, potentially allowing a renter to continue living on his property rent free. If, a landlord takes any illegal eviction steps, he could end up owing his renters money. Illegal eviction tactics include changing the locks or raising the rent with the intent of pricing them out of the rent and making them move.

Notice Period

Before filing an eviction a landlord needs to provide notice to his tenants regarding the reason a lease agreement has been terminated and the tenant needs to move. These notices include a Pay Rent or Quit, Cure or Quit Notice, or an Unconditional Quit Notice. Typically the reason for the notice dictates how much time you must give the tenant to correct the situation or vacate the property before filing for eviction. Some notices can provide as little as 3 business days for the tenant to pay rent or vacate, while other notices may require more than two weeks.

Filing The Eviction Lawsuit

If your tenant fails to vacate the property after having provided them with proper notice, the next step is to file an eviction lawsuit. Once eviction paperwork is drafted according to your state’s guidelines, the eviction lawsuit is filed with the court and the clerk of the court must issue a summons for each of the defendants.

Serving The Eviction Lawsuit

A notice for eviction must be served according to state laws. Some states allow a landlord to serve the eviction paperwork directly to the tenant. Alternatively you can hire a professional process server to serve the tenant their eviction paperwork if your state allows it. Some states allow you to post an eviction notice to the premise and mail a copy to the renters as a last resort if all other service attempts have failed. An eviction lawsuit usually has two main purposes:

 To obtain a judgment for any amounts owed under the contract, and;
 To regain physical possession of the property

Tenant’s Opportunity To Respond

After being notified of the pending court case, the tenant has the right to challenge the eviction. While that commonly consists of a sweeping denial of whatever they are accused of doing, the tenant also can raise defenses at this time. That means challenges to the habitability of the unit, failure to make repairs or unfair treatment. If the tenant has made a reasonable sounding denial, the landlord must then go to court and prove each aspect of the eviction claim. A landlord should have excellent records and support to disprove any claims made by the renter.

Setting A Court Date

Consider working with an attorney familiar with your local landlord tenant laws. They can review the pleadings and determine whether you might have a defense and advise you accordingly. If you have sufficient evidence of a breach of contract by the tenant and that all tenant claims are false or unsubstantial it is highly likely that the Court will sign a judgment and issue an order for a writ. The Writ of Possession is the court order executed by a law to remove a tenant and their belongings on a set date.

Delivering And Executing The Writ Of Possession

Assuming that the court found in the landlord’s favor, the court will issue a document called a Writ of Possession, which provides that the landlord now has the right to possession and directs the county sheriff to evict the tenant from the premises. The landlord must deliver the writ to the Officer, who then posts a notice to vacate on the premises.

After the applicable period, the Officer will come back, and this time he’ll do a civil standby while your landlord and helpers actually move your stuff out. If you tell them they have to transport and store your personal property somewhere safe and secure. They can make you pay to get your stuff back from storage, so this is not a great option.

The Timeline

From the day the tenant receives a notice to quit to the day they are removed from the property anywhere from 3 to 9 months may elapse. So much of eviction process depends on how aggressively the landlord pushes the matter and how vigorously the tenant defends it. When the landlord charges ahead and the tenant puts up no resistance the whole process may only take a couple months. On the other hand when a tenant digs in their heels and the landlord does not force the issue the case may linger for much longer. Failing to provide the correct eviction notice may lead to dismissal of your case. Ignorance of the tenant/landlord law is not a defense, and many local judges have a zero tolerance approach to infringements.

Dealing with an Evicted Tenant’s Property in Utah

You should have a crew of people ready when the sheriff arrives to carry out the eviction process. Have tarps, boxes, and bags on hand. Sometimes the tenant leaves some personal property behind in the rental unit. If that happens, the law enforcement officer should put the property in a safe location or storage. The officer will then notify the tenant of the property.

The tenant has 5-days to retrieve the property without paying anything. Otherwise, the landlord is allowed to donate or sell the property after 15 days. The period can however, be extended for further 15 days in certain conditions.

Rights and Responsibilities of Tenants When Signing a Lease Agreement
Lease is a legally binding contract between you and your landlord. Under a typical lease, a landlord can’t force you to move out of your rental apartment, unless you repeatedly violate any of the lease terms. The landlord must take specific procedures to bring to an end the tenancy. Should a tenant cause substantial damage to the property, landlords may give them an unconditional quit notice.

When a tenant breaks a lease, the law obligates them to continue paying the rent for the full lease term, regardless of whether they continue to live in the rental unit. In some cases, you are no longer obligated to pay rent, even if the lease term hasn’t expired yet. For example:

 The Rental Unit is Unfit: If your landlord fails to adhere to the requirements of the local and state housing codes, it’s considered a violation of your rights under laws. In court, a judge may rule in your favor by declaring that you have been constructively evicted from the property.
 Military Deployment: You also have the right to break a signed lease if you enter active military service afterward.
 Your Landlord Violates Your Privacy Rights or Harasses You: In Utah, it’s illegal for the landlord to alter the terms of the lease agreement before the end of the existing lease term unless it’s explicitly permitted in the lease. If the landlord harasses you, attempts to enter the rental unit, or makes attempts to access the rental unit for reasons which aren’t legal, you can break the lease. Before you do so, get a restraining order against the landlord first. Should the landlord continue with their attempts to access your rental unit even after that, you’re free to provide a notice to break the lease.

 The Apartment is Illegal: If you find out that the apartment you’re renting is, in fact, illegal, you won’t face any penalty for breaking your lease agreement. You may be entitled to a portion of the total rent you’ve paid during the course of your tenancy. The landlord may also be compelled to help you get a new rental property.

 You are a Victim of Domestic Violence: Under state law, tenants who have been victims of domestic violence have the right to end their tenancy without facing any financial or legal repercussions. Specific conditions must be met, however, such as proof of the act of domestic violence, police report and copy of an order of protection.

If you’re leaving the unit for any reason, your landlord is required to find a replacement tenant as soon as possible. This means that you may end up paying only a portion of the rent due for the remaining lease term. In re-renting the unit, the landlord cannot relax standards for accepting tenants. However, the landlord can add legitimate expenses to your bills, such as the costs of screening a new tenant, advertising the property and the like.

If the landlord is unable to re-rent the unit quickly, you will be liable to pay the due rent for the remainder of the lease term. That’s why it’s important that you also help your landlord find a new tenant.

How to Minimize Your Financial Liability

Assuming you don’t have any legal justification to break the lease but you still want to, it’s important to consider your options carefully, as follows.
• Check if your landlord or property management company has another property available in the area where you can move.
• Check if it’s possible to move into another property within the same building. This can be an easy and attractive option if your reason for moving is the need to get more room, or conversely you need to downsize.
• Talk to the landlord about your situation. Be concise and clear about your circumstances. Sometimes the reason for leaving could be an issue with your neighbor.
• Offer the landlord a qualified replacement tenant.

Many times, doing your homework to select and properly qualified renter will help you avoid an eviction down the road. If the unfortunate ultimately happens, be sure to follow all rules and procedures. The rules may appear burdensome to you but they’re there for a reason.

Eviction Lawyer Free Consultation

When you need legal help with an eviction in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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Complex Lender Liability Issues In Foreclosure

Complex Lender Liability Issues In Foreclosure

Lender liability is an area of law that protects borrowers who have been wronged by lenders that failed to uphold their contractual obligations or treat them fairly in regard to loans and loan agreements. Whether borrowers have contractual relationships with lenders for small operational expansions or to fund multi-million dollar projects, financial service providers must treat them fairly. When they don’t, borrowers have a right to take action.

When determining whether it is time to pursue legal action against a lender, and involve an experienced attorney to guide you through the process, consider the following:

• Breach of contract: Lenders have long used civil lawsuits to sue borrowers who breached loan agreements. With the rise of lender liability, borrowers now also have a right to sue lenders who breach contractual obligations established in a loan agreement, such as failing to honor a loan commitment. By working with attorneys who have experience in this area of law, borrowers can position themselves to bring effective claims and seek recoveries of their damages.

• Fraudulent conduct: Lender liability may arise from the fraudulent conduct of lenders, such as fraudulently induced agreements, misrepresentation, predatory lending, or other violations of state or federal laws, including the False Claims Act. While fraud may result in criminal investigations and criminal penalties or civil sanctions, borrowers will need to take legal action in civil court to recover their own damages.

• Breach of fiduciary duty: Fiduciary duty refers to the obligation one party (the fiduciary) has to act in the best interest of another. Depending on the circumstances, lenders may argue to limit borrowers in bringing claims that the lender-borrower relationship was fiduciary in nature. However, borrowers can work with attorneys to explore their options in determining whether a fiduciary duty may have arisen in regard to carrying out loan agreement terms or was assumed by a lender due the scope of their control over a borrower.

• Bad faith: Lenders have an obligation to deal fairly with borrowers and handle loan agreements and relationships in good faith. There are many ways they may fail to do this that can be grounds for lender liability claims, including improper default or foreclosure notices, improperly enforcing personal guarantees, wrongfully interfering with third party contractual relationships or a borrower’s daily activities, wrongfully failing to honor or renew loans, and more.

Lawyer objective in lender liability cases is to ensure banks, financial services, and other lenders treat their customers and borrowers fairly. Because these financial institutions have considerable power and deep resources, working with an attorney becomes critical to leveling the playing field. As such, borrowers who have been wronged by lenders that violate a duty of fair dealing or good faith should take initiative to involve a lawyer as soon as they can. Doing so can make the difference in one’s legal journey, and can help ensure the correct steps are taken at every phase. Lender liability is a complex and evolving area of law, and it is not one all attorneys are equipped to handle.

Avoid Legal Liabilities In Bank Foreclosures

The involuntary sale of real estate properties by banks or other note holders can expose the latter entities to lender liability suits and/or liabilities or liens that pass with the property if either proper procedure is not followed. Avoid additional legal trouble by working with an experienced lender’s lawyer.

Our mortgage lender foreclosure team manages the entire process including:
• Ensuring the chain of paperwork is complete
• Establishing the note holder’s right to commence foreclosure action
• Providing notice prior to sale of foreclosed property
• Attending mediations as required by court rules
• Spotting potential liability issues that the lender could face upon assuming title to real estate owned properties
• Advising on title insurance issues and asserting title insurance claims when appropriate
• Obtaining required ratification orders
• Drafting audits
• Closing on the passage of title instruments
• Determining the costs and benefits of pursuing a deficiency judgment after a loss

Managing Lender-Owned Property

As the economic and real estate landscape evolves, so do the legal implications of handling foreclosed property and bank owned homes. For this reason, it is crucial to remain up to date on jurisdictional and statutory requirements such as whether “as-is” clauses in legal ads are effective in the jurisdiction or if an affirmative obligation to make disclosures concerning the real estate is required. Similarly, the Uniform Commercial Code carries its own strict set of statutory rules that must be complied with in order to pass good title to the property acquired by a lender in the event of a UCC foreclosure and avoid jeopardizing the ability to obtain a deficiency judgment, which rules are especially sophisticated when intangible property changes hands. In addition to overseeing the foreclosure process in court, Ascent Law LLC has bank lawyers can also help parties avoid liabilities associated with the sale of the foreclosed property.

Attorneys should consult with you on all relevant points including:
• the cost/benefit of promotional advertising
• appropriate auctioneers
• bidding strategy and terms of sale

Avoiding Foreclosure Auctions

In some cases, foreclosure may not be the best course of action for asset protection. With advice of legal counsel, a “deed in lieu of foreclosure” solution may be possible. Furthermore, lenders may opt instead to work with the property owner, bringing payments up to date, or working out other more cost effective alternatives. Whatever course of action is ultimately chosen, compliance with all applicable state and federal laws are mandatory. Working with an experienced mortgage lending law firm is the best way to ensure that the chosen course of action meets all legal requirements.

Lender Liability Defenses

Common types of lender liability defenses – An attorney represents financial institutions involved in commercial litigation over the following types of lender liability allegations:
• Commercial foreclosure issues
• Bank or mortgage fraud
• Predatory lending
• Misrepresentation
• Breach of contract
• Breach of fiduciary duty
• Bad faith claims
• Usury

Understanding Lender Liability Lawsuits

Lender liability lawsuits borrow from two areas of law: Tort claims and contract law. Contract claims involve a breach of contract or breach of a loan agreement. Tort claims allege that some financial injury occurred to the borrower due to:
• Fraud,
• Negligence,
• Breach of fiduciary duty,
• Fraudulent concealment, or
• Breach of the implied covenant of good faith.
In tort cases, a borrower typically alleges that the lender is guilty of some kind of malfeasance and that the initial contract is unenforceable. For example, if a borrower alleges that a lender agreed to extend the maturity date of a loan upon request and then refuses when the time comes, the borrower can bring a lender liability suit against the lender. Key to cases alleging negligence is the extent to which a lender owes a borrower a duty of care. A possible defense to a tort claim is that the lender owed the borrower no such duty and fulfilled their end of the loan contract that the borrower agreed to. However, this would not insulate a lender from a claim of fraud or fraudulent concealment. Even in cases where a duty of care can be established, the lender can argue that the borrower was also negligent. A lender can also blame a third party for contributing negligence to the borrower’s damages. Lastly, a suit against a lender must be brought within the statute of limitations.

Litigating Lender Liability Lawsuits

To avoid lender liability lawsuits in the first place, lenders should require that borrowers sign a forbearance agreement as a contingency to negotiating a settlement. The agreement should contain standard releases and waivers as well as an alternative dispute resolution requiring mediation prior arbitration or lawsuit. This ensures the borrower cannot file any action in a court of law against the lender. However, in certain cases, the borrower will still be entitled to a jury trial.

What To Do After A Lawsuit Has Been Filed

After the borrower has filed a lender liability suit, the lender is tasked with examining the merits of the case against them. The lender will need to:
• Be responsible for gathering facts and evidence,
• Place an internal hold and preserve all documents related to the borrower
• Investigate the terms of the agreement to determine whether or not an arbitration clause exists. If it does, the case can be moved out of the courts.
Mediation is not outside the realm of possibility, and the lender should also analyze whether or not the borrower can file for bankruptcy.

Responding To a Lender Liability Lawsuit

After the lender has determined that there are no grounds on which to compel arbitration, the first move in a lender liability suit is to find any grounds on which to dismiss the case. The lender may also want to move the case from state to federal court. The most aggressive response at the lender’s disposal is to file a cross-complaint or an anti-SLAPP motion.

Anti-SLAPP Motions In Lender Liability Lawsuits

SLAPP suits (known as strategic lawsuits against public participation) allege that the plaintiff in a suit is attempting to silence or intimidate the defendant by burdening them with the cost of a lawsuit. The defendant must prove that the lawsuit lacks even a modicum of merit. If a defendant files an anti-SLAPP motion, the court will determine, based on the merits of the case, whether or not the lawsuit should move forward. To determine whether or not a lawsuit has merit, the court will use a two-factor test. First, the court will decide whether the suit hinders the exercise of the defendant’s constitutional rights. If the court determines that the suit does impede the exercise of the defendant’s rights, the court will then determine whether or not the lawsuit has a probability of prevailing based on the merits of the claim. If the court believes the case has no merit, or is unlikely to prevail based on the evidence presented, the anti-SLAPP motion will be granted and the case will be dismissed. Anti-SLAPP motions are best employed if a defendant files a lawsuit in retaliation after a lender has exercised their rights to collect a debt.

Advantages of Borrower Representation

Due to the knowledge and insight into the strategy of a lender liability defense, a lawyer who represents lenders may have a slight advantage should he or she come to represent a borrower. In these cases, the attorney will need to determine what duties the lender owed to the borrower. He will also need to determine whether the lender broke or breached the trust or contract.

Bank and Lender Liability

Lender liability litigation typically includes claims for breach of fiduciary duty, promissory estoppels, breach of contract, or related statutory violations. The claims typically allege that the lender engaged in conduct that resulted in the failure of a project or undertaking by the borrower. Lender liability claims are oftentimes complex, both in terms of developing the facts and applying the relevant law. We have experience with these claims. Foreclosure litigation proceedings require a firm with a particular understanding of Utah foreclosure law, as well as experience with the types of complicated legal issues that these cases typically pose. Attorneys have experience in the various types of legal issues facing the mortgage lending and servicing industry. Attorneys possess the skills to manage complex foreclosures involving residential homes, condominium projects, office buildings, apartment complexes and other commercial properties. Real Property Litigation practice includes foreclosure on defaulted mortgage loans, deeds in lieu of foreclosure and the sale of REO properties for our mortgage lenders. In addition, the practice encompasses trial and appellate representation before federal and state courts. Attorneys counsel and defend clients on matters involving the Truth-in-Lending Act (TILA), the Fair Credit Reporting Act (along with state credit reporting acts), Fair Debt Collection Practices Act (FDCPA), Fair and Accurate Credit Transactions (FACTA), Real Estate Settlement Procedures Act (RESPA and the Consumer Protection Act Equal Credit Opportunity Act (ECOA). Working closely with Bankruptcy and Restructuring Department, representation of lenders and loan servicers extends to serving as counsel in connection with the purchase or sale of debt, restructuring, and the enforcement of the rights of lenders, including commercial mortgage foreclosure proceedings and bankruptcy lift-stay proceedings.

Foreclosure Attorney Free Consultation

When you need legal help with real estate law and foreclosures in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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Home Buying Agent Vs. Real Estate Attorney

Home Buying Agent Vs Real Estate Attorney

Purchasing a home will likely be the largest and most significant transaction of your life, which is why many people choose to hire a real estate agent to assist in the search and negotiate on their behalf. Real estate agents generally fall into two categories: home buying agents and home selling agents. Home buying agents aim to level the playing field a bit for homebuyers (almost all sellers have seller’s agents, whose job is to get the very highest price for the property) through the agents’ knowledge of the industry and familiarity with the particulars of a neighborhood, sellers, contractors, etc. Some states require the use of buying agents to ensure fair dealing between buyers and sellers.

In addition to, and perhaps in place of, buying agents, homebuyers may also employ real estate attorneys to represent their interests in the purchase of a home. Attorneys are experts in real estate law and can provide counsel on legal issues which may arise. Whether you hire a buying agent or a lawyer, you’ll be paying them for their services (more on agent commissions below), so the question is: which is preferable?

State Laws

Some states require buying agents while other states stipulate that only attorneys can prepare home purchase agreements. You’ll have to investigate to determine the laws in your state. This article will assume that there is no law requiring either a home buying agent or a real estate attorney.

Hiring a Buying Agent

The primary reasons to hire a buying agent are obvious–home purchases are significant and the process of finding a home is burdensome, therefore it’s a relief and an assurance to have an agent who will walk you through the process and look out for your interests. Buying agents can be very helpful in hiring inspectors, negotiating over who will pay for repairs, finding listings, and other matters which are everyday activities for agents, but may be foreign to most homebuyers.

Choosing an Agent

Home sales have traditionally favored sellers. Sellers have selling agents, who sometimes aim to become buying agents as well. Be wary of so called dual representation, because in the end you can’t be sure whose best interest the seller has in mind. Don’t be shy about asking potential buying agents if they are seller’s agents. You should be positive about whom the agent is representing.

When searching for a buying agent, keep in mind that they are in high demand during housing booms. In a depressed market, the demand for buying agents is quite low. You can use this fact to negotiate a lower commission and take your time in finding the right house.

How Buying Agents Are Paid

In a typical arrangement, real estate agents are paid through commission–generally around 5% of the home’s purchase price. In the common two agent situation (the seller’s agent and the buyer’s agent), the agents split the 5% and the commission is paid by the seller.

Some buyers prefer to pay commission to the buying agent in order to retain the complete loyalty of the agent, however, because of the inherent conflict of interest when the buying agent, who is purportedly representing the homebuyer, is being paid by the seller. Whether or not you choose to pay the buying agent yourself, you shouldn’t be shy in asking them directly who the agent really represents.

Keep in mind that during strong homebuyer’s markets you can try to negotiate a lower commission for the agent if you so desire. Just remember that you’ll already be getting an excellent value on your home due to the depressed prices. Driving a very hard bargain with the person whose job it is to find the perfect home for you may discourage them from zealously pursuing the purchase of your home.

Keep Informed and Stay in Control

No matter who you hire, you should stay in control of the process. Don’t let the agent pressure you when it comes to homes, neighborhoods, or home attributes that you don’t feel comfortable with or don’t want. Particularly in down markets, the buyer reigns supreme and you should make sure that your buying agent knows exactly what you want.

Additionally, you should stay proactive in your search. There are plenty of commercial websites which not only provide listings of homes for sale, but give detailed information such as the market value of the home and the date and price of its last sale. Check out www.zillow.com or www.trulia.com and you will have a better idea of what a reasonable bid looks like and may even find listings which your agent may not know about or may not want to show you. Letting your agent know about what you’ve found will not only increase your options, but will keep the agents on their toes with the knowledge that their buyer has the ability to find a home on their own.

Reasons to Hire an Attorney

In most states, real estate attorneys are not required by law for the purchase of a home. While a home purchase is a significant investment, the actual sale is fairly standardized, with boilerplate clauses and lots of filling in blanks.

In the event of a legal problem related to the purchase of a home, however, only a licensed attorney may provide legal counsel and represent you in court (although you can, of course, always represent yourself). For example, if there are liens or other legal encumbrances on the property or there is a tenant who you want to evict in order to rent to another person–an experienced real estate lawyer can investigate and analyze the facts and then guide you on how, or even if, you should proceed.

Legal Review and Confidentiality

Attorneys can also be very useful in reviewing contracts. Particularly if you are purchasing a home without a buying agent, you should have an attorney review the contract to make sure that you will not be subject to terms which unfairly favor the seller.

In addition, attorneys are bound by strict professional rules of confidentiality. In the event that you wish to keep your cards very close to the vest, your attorney is prohibited from exposing information which you do not wish to make known. You can speak to an attorney with complete candor without worrying that the information will be released in any fashion.

How Attorneys Are Paid

Unlike real estate agents, most lawyers are paid on an hourly basis, and therein lies the biggest drawback of hiring a real estate lawyer in the purchase of your home–attorney’s fees range from $175-$400 per hour. However, there are attorneys who charge flat fees for certain services such as preparing or reviewing closing documents, and you can also tell an attorney upfront that you can only afford a specific number of hours. Communication with an attorney about payment should be clear from the beginning so that there are no misunderstandings, and it should always be put in writing.

Whether you choose to hire a buying agent, a real estate attorney, or both, remember that you are in charge of the process and they are there to provide you with a service. Be clear in communicating your needs and desires, get agreements in writing, and stay active in the process.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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The CFPB’s Effect On Foreclosures

The CFPBs Effect On Foreclosures

Consumer Financial Protection Bureau (CFPB) issued rules to establish new, strong protections for struggling homeowners facing foreclosure. The rules also protect mortgage borrowers from costly surprises and runarounds by their servicers. “For many borrowers, dealing with mortgage servicers has meant unwelcome surprises and constantly getting the runaround. In too many cases, it has led to unnecessary foreclosures.” Mortgage servicers are responsible for collecting payments from mortgage borrowers on behalf of loan owners. They also typically handle customer service, escrow accounts, collections, loan modifications, and foreclosures. Generally, borrowers have no say in choosing their mortgage servicers. Lenders frequently sell loans to investors after the mortgage deal is signed, and the investors, not the consumers, often choose the servicers. Even before the financial crisis, the mortgage servicing industry at times experienced problems with bad practices and sloppy recordkeeping.

As millions of borrowers fell behind on their loans as a result of the crisis, many servicers were unable to provide the level of service necessary to meet homeowners’ needs. Many simply had not made the investments in resources and infrastructure to service large numbers of delinquent loans. Consumers complained about getting the runaround and being hit with costly surprises. Now, with millions of homeowners in distress, many borrowers are continuing to experience serious problems seeking loan modifications or other alternatives to avoid foreclosure.

Strong Protections for Struggling Borrowers

The CFPB’s mortgage servicing rules ensure that borrowers in trouble get a fair process to avoid foreclosure. Borrowers shouldn’t have to worry about mortgage servicers cutting corners or losing applications for relief. They should be told about their options and given time to apply and be considered for loan modifications and other alternatives. Most of all, they shouldn’t be surprised by the start of a foreclosure proceeding until they have had time to explore all available options. If they act diligently to seek alternatives, they should not face a foreclosure sale before their applications have been evaluated. The new protections for struggling borrowers include:

• Restricted Dual Tracking: Under the CFPB’s new rules, dual-tracking when the servicer moves forward with foreclosure while simultaneously working with the borrower to avoid foreclosure is restricted. Servicers cannot start a foreclosure proceeding if a borrower has already submitted a complete application for a loan modification or other alternative to foreclosure and that application is still pending review. To give borrowers reasonable time to submit such applications, servicers cannot make the first notice or filing required for the foreclosure process until a mortgage loan account is more than 120 days delinquent.

• Notification of Foreclosure Alternatives: Servicers must let borrowers know about their “loss mitigation options” to retain their home after borrowers have missed two consecutive payments. They must provide them a written notice that includes examples of options that might be available to them as alternatives to foreclosure and instructions for how to obtain more information.

• Direct and Ongoing Access to Servicing Personnel: Servicers must have policies and procedures in place to provide delinquent borrowers with direct, easy, ongoing access to employees responsible for helping them. These personnel are responsible for alerting borrowers to any missing information on their applications, telling borrowers about the status of any loss mitigation application, and making sure documents get to the right servicing personnel for processing.

• Fair Review Process: The servicer must consider all foreclosure alternatives available from the mortgage owners or investors those with decision-making power over the loan to help the borrower retain the home. These options can range from deferment of payments to loan modifications. And servicers can no longer steer borrowers to those options that are most financially favorable for the servicer.

• No Foreclosure Sale Until All Other Alternatives Considered: Servicers must consider and respond to a borrower’s application for a loan modification if it arrives at least 37 days before a scheduled foreclosure sale. If the servicer offers an alternative to foreclosure, they must give the borrower time to accept the offer before moving for foreclosure judgment or conducting a foreclosure sale. Servicers cannot foreclose on a property if the borrower and servicer have come to a loss mitigation agreement, unless the borrower fails to perform under that agreement.
Mortgage borrowers should not be surprised about where their money is going, when interest rates adjust, or when they get charged fees. The CFPB’s rules help every borrower, whether struggling or not, by bringing greater transparency to the market with clear and timely information about mortgages. These rules include:

• Clear Monthly Mortgage Statements: Servicers must provide regular statements which include: the amount and due date of the next payment; a breakdown of payments by principal, interest, fees, and escrow; and recent transaction activity.

• Early Warning before Interest Rate Adjusts: Servicers must provide a disclosure before the first time the interest rate adjusts for most adjustable-rate mortgages. And they must provide disclosures before interest rate adjustments that result in a different payment amount.

• Options for Avoiding Costly “Force-Placed” Insurance: Servicers typically must make sure borrowers maintain property insurance and if the borrower does not, the servicer generally has the right to purchase it. The CFPB’s rules ensure consumers will not be surprised by this insurance, which often can be more expensive than the insurance borrowers buy on their own. The rules say servicers must provide more transparency in this process, including advance notice and pricing information before charging consumers. Servicers must also have a reasonable basis for concluding that a borrower lacks such insurance before purchasing a new policy. If servicers buy the insurance but receive evidence that it was not needed, they must terminate it within fifteen days and refund the premiums. When mortgage servicers make mistakes, records get lost, payments are processed too slowly, or servicer personnel do not have the latest information about a consumer’s account, the consumer suffers the consequences. The CFPB’s rules will require common-sense policies and procedures for handling consumer accounts and preventing runarounds. These rules include:

• Payments Promptly Credited: Servicers must credit a consumer’s account the date a payment is received. If the servicer places partial payments in a “suspense account,” once the amount in such an account equals a full payment, the servicer must credit it to the borrower’s account.

• Prompt Response to Requests for Payoff Balances: Servicers must generally provide a response to consumer requests for the payoff balances of their mortgage loans within seven business days of receiving a written request.

• Errors Corrected and Information Provided Quickly: Servicers must generally acknowledge receipt of written notices from consumers regarding certain errors or requesting information about their mortgage loans. Generally, within 30 days, the servicer must: correct the error and provide the information requested; conduct a reasonable investigation and inform the borrower why the error did not occur; or inform the borrower that the information requested is unavailable.

• Maintain Accurate and Accessible Documents and Information: Servicers must store borrower information in a way that allows it to be easily accessible. Servicers must also have policies and procedures in place to ensure that they can provide timely and accurate information to borrowers, investors, and in any foreclosure proceeding, the courts.
Recognizing that small servicers approach servicing quite differently, the CFPB made certain exemptions to today’s mortgage servicing rules for small servicers that service 5,000 or fewer mortgage loans that they or an affiliate either own or originated. These servicers are mostly community banks and credit unions servicing mortgages for their customers or members. The mortgage servicing rules take effect in January 2014. The CFPB plans to work with mortgage servicers to ensure an easy transition to implementation. To help with compliance, the CFPB will, among other things, be issuing plain language implementation guides and, in coordination with other agencies, releasing materials that help servicers understand supervisory expectations. For many of the new rules that require specific notifications, the rule contains model and sample forms. As the effective date approaches, the CFPB will also give consumers information about their new rights under these rules.

Consumer Financial Protection Bureau Expands Foreclosure Protections
The changes also help ensure that surviving family members and others who inherit or receive property generally have the same protections under the CFPB’s mortgage servicing rules as the original borrower. “The Consumer Bureau is committed to ensuring that homeowners and struggling borrowers are treated fairly by mortgage servicers and that no one is wrongly foreclosed upon.” “These updates to the rule will give greater protections to mortgage borrowers, particularly surviving family members and other successors in interest, who often are especially vulnerable.” Mortgage servicers are responsible for collecting payments from the mortgage borrower and forwarding those payments to the owner of the loan. They typically handle customer service, collections, loan modifications, and foreclosures. To address widespread mortgage servicing problems, the CFPB established common-sense rules for servicers that went into effect on January 10, 2014. The CFPB issued proposed amendments to those rules in November 2014, and the final rule issued today adopts many of the proposed provisions. However, the Bureau made a number of changes in the final rule after considering comments received from the public. The rule issued today establishes new protections for consumers, including:

• Requiring servicers to provide certain borrowers with foreclosure protections more than once over the life of the loan: Under the CFPB’s existing rules, a mortgage servicer must give borrowers certain foreclosure protections, including the right to be evaluated under the CFPB’s requirements for options to avoid foreclosure, only once during the life of the loan. Today’s final rule will require that servicers give those protections again for borrowers who have brought their loans current at any time since submitting the prior complete loss mitigation application. This change will be particularly helpful for borrowers who obtain a permanent loan modification and later suffer an unrelated hardship such as the loss of a job or the death of a family member that could otherwise cause them to face foreclosure.

• Expanding consumer protections to surviving family members and other homeowners: If a borrower dies, existing CFPB rules require that servicers have policies and procedures in place to promptly identify and communicate with family members, heirs, or other parties, known as “successors in interest,” who have a legal interest in the home. Today’s final rule establishes a broad definition of successor in interest that generally includes persons who receive property upon the death of a relative or joint tenant; as a result of a divorce or legal separation; through certain trusts; or from a spouse or parent. The final rule ensures that those confirmed as successors in interest will generally receive the same protections under the CFPB’s mortgage servicing rules as the original borrower.

• Providing more information to borrowers in bankruptcy: Under the CFPB’s existing mortgage rules, servicers do not have to provide periodic statements or early intervention loss mitigation information to borrowers in bankruptcy. Today’s final rule generally requires, subject to certain exemptions, that servicers provide those borrowers periodic statements with specific information tailored for bankruptcy, as well as a modified written early intervention notice to let those borrowers know about loss mitigation options. Servicers also currently do not have to provide early intervention loss mitigation information to borrowers who have told the servicer to stop contacting them under the Fair Debt Collection Practices Act. Today’s final rule generally requires servicers to provide modified written early intervention notices to let those borrowers also know about loss mitigation options.

• Requiring servicers to notify borrowers when loss mitigation applications are complete: Whether a borrower is entitled to key foreclosure protections depends in part on the date a borrower completes a loss mitigation application. If consumers do not know the status of their application, they cannot know the status of those foreclosure protections. Today’s final rule requires servicers to notify borrowers promptly and in writing that the application is complete, so that borrowers know the status of the application and have more information about their protections.

• Protecting struggling borrowers during servicing transfers: When mortgages are transferred from one servicer to another, borrowers who had applied to the prior servicer for loss mitigation may not know where they stand with the new servicer. Today’s final rule clarifies that generally the new servicer must comply with the loss mitigation requirements within the same timeframes that applied to the transferor servicer, but provides limited extensions to these timeframes under certain circumstances. If a borrower submits an application shortly before transfer, the new servicer must send an acknowledgment notice within 10 business days of the transfer date. If the borrower’s application was complete prior to transfer, the new servicer must evaluate it within 30 days of the transfer date. If the new servicer needs more information to evaluate the application, the borrower would retain some foreclosure protections in the meantime. If the borrower submits an appeal, the new servicer has 30 days to make a determination on the appeal.

• Clarifying servicers’ obligations to avoid dual-tracking and prevent wrongful foreclosures: The CFPB’s existing rules prohibit servicers from taking certain actions in foreclosure once they receive a complete loss mitigation application from a borrower more than 37 days prior to a scheduled sale. However, in some cases, borrowers are not receiving this protection, and servicers’ foreclosure counsel may not be taking adequate steps to delay foreclosure proceedings or sales. The CFPB’s new rule clarifies that, if a servicer has already made the first foreclosure notice or filing and receives a timely complete application, servicers and their foreclosure counsel must not move for a foreclosure judgment or order of sale, or conduct a foreclosure sale, even if a third party conducts the sale proceedings, unless the borrower’s loss mitigation application is properly denied, withdrawn, or the borrower fails to perform on a loss mitigation agreement. The clarifications will aid servicers in complying with, and assist courts in applying, the dual-tracking prohibitions in foreclosure proceedings to prevent wrongful foreclosures.

• Clarifying when a borrower becomes delinquent: Several of the consumer protections under the CFPB’s existing rules depend upon how long a consumer has been delinquent on a mortgage. Today’s final rule clarifies that delinquency, for purposes of the servicing rules, begins on the date a borrower’s periodic payment becomes due and unpaid. When a borrower misses a periodic payment but later makes it up, if the servicer applies that payment to the oldest outstanding periodic payment, the date the borrower’s delinquency began advances. The final rule also allows servicers the discretion, under certain circumstances, to consider a borrower as having made a timely payment even if the borrower’s payment falls short of a full periodic payment. The increased clarity will help ensure borrowers are treated uniformly and fairly.

CFPB Attorney Free Consultation

When you need legal help with the CFPB in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

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Notice Of Lien And Interest Holders

Notice Of Lien And Interest Holders

A lien is a legal claim or a right against property. Liens provide security, allowing a person or organization to take property or take other legal action to satisfy debts and obligations. Liens are often part of the public record, informing potential creditors and others about existing debts. The debt is now secured, and the lender has a better chance of getting repaid. Liens are possible anytime somebody has a legal right to somebody else’s property.

They’re typically part of an agreement to purchase real or personal property (home and auto loans, for example). Liens can also exist as a result of legal action. When you borrow to buy a home, the property serves as collateral. In your loan agreement, you agree to allow the lender to foreclose on your home if you fail to meet certain requirements. For example, you need to make monthly payments, insure the property, possibly live in it as your primary residence for several years, and more. Auto loans are similar to home loans. One difference is that instead of forcing you out of your home (which doesn’t go anywhere), your auto lender can take your vehicle from you through repossession. You won’t necessarily know when or where this happens ahead of time—it can happen while you’re at home, at work, or while you’re out-and-about. Car title loans can also result in liens filed with your local Department of Motor Vehicles (DMV).

Local governments and the IRS sometimes collect unpaid taxes with liens. Tax liens are particularly troublesome—taxing authorities can attach liens to current and future assets, they can collect from bank accounts relatively easily, and they might even be able to jump to the front of the line and collect before other creditors. The IRS generally gets to collect before your lender, for example, and bankruptcy might not be sufficient to discharge unpaid taxes. Local governments in need of funding can be especially eager to collect, but the IRS sometimes moves slower. A mechanic’s lien is a formal notice, filed with a court of appropriate jurisdiction, indicating a financial interest in property. Sometimes referred to as a contractor’s lien or a construction lien, this form details money owed to the contractor for either services rendered or materials provided on a construction or home or building improvement project. Without one, a contractor runs the risk of not being paid for work performed or services provided. When a property owner doesn’t pay a bill for work done on the property, the mechanic’s lien gives the contractor a security interest in the property and preserves the claim for payment.

Contractors should be cautious not to fall into a false sense of security about a mechanic’s lien. For a lien to be legal, it must be perfected. Each state has their own requirements for how to perfect a construction lien. This form is designed to protect contractors who, by their products or services, enhance the value of property. Consequently, they are most commonly used in new construction or improvements to property. However, the cost of the rental of a portable latrine, or the installation and removal of a security fence, while perhaps necessary for the comfort and safety of the workers, may not be subjected to a mechanic’s lien. This is because the latter does not increase the value of the property, while the new roof does. There is a priority to liens against the property. Generally speaking, liens take priority based on the order they are filed. Consequently, a first mortgage takes priority over this form, as the mortgage was filed first. However, this form may take priority over a second mortgage, depending on when the mechanic’s lien and the second mortgage were filed. Most unsecured creditors, such as the holders of credit card debt, medical bills, and personal loans, must first file a lawsuit, win the action, and get a money judgment before obtaining lien rights. With the judgment in hand, a judgment creditor can place a judgment lien on your real estate and occasionally on personal property depending on the state in which you live. Usually, a property tax lien takes priority over all other mortgages or liens on the property, even if the property tax lien was placed on the property after the other liens. If the taxes are not paid, the government can have your property sold to pay the property taxes. The government must follow whatever procedure the state prescribes, and you may have the opportunity to pay the taxes and costs and get your property back even after the “sale.” If you don’t pay your taxes, to protect its mortgage, the lender will usually pay the taxes and add that to your mortgage debt. Liens are also “perfected” or “unperfected”.

Perfected liens are those liens for which a creditor has established a priority right in the encumbered property with respect to third party creditors. Perfection is generally accomplished by taking steps required by law to give third party creditors notice of the lien. The fact that an item of property is in the hands of the creditor usually constitutes perfection. Where the property remains in the hands of the debtor, some further step must be taken, like recording a notice of the security interest with the appropriate office. Perfecting a lien is an important part of the task of protecting the secured creditor’s interest in the property. A perfected lien is valid against bona fide purchasers of property, and even against a trustee in bankruptcy; an unperfected lien may not be. Movers are typically entitled to a mover’s lien under UCC § 7-307/308, to withhold a customer’s goods to secure payment. This is a possessory lien, and is the non-consensual type of lien (because it exists automatically under a statute instead of being affirmatively agreed upon). However, the concept of a mover’s lien is often abused in a moving scam known as a hostage load, whereby the moving company will fraudulently extort money not owed by the customer by refusing to deliver the goods unless the customer pays money inflated beyond the contractual estimate. Because the customer has an interest in obtaining their own goods, they are under duress to pay the ransom. Hostage loads in at least the interstate context are illegal under 49 U.S.C. 13905. The FMCSA regulates the moving industry and sometimes takes enforcement action by fining and/or deli censure of offending moving companies. Moving companies that deliberately engage in hostage-loading may also be considered to be engaging in racketeering in violation of the Racketeer Influenced and Corrupt Organizations Act. Disputes between legitimate lien holding of chattels vs. hostage-loading can sometimes be averted by the customer including an advanced (before-the-fact) consensual waiver of the mover’s right to a lien in the written contract, obligating the moving company to deliver the goods with reasonable dispatch regardless of disputes over payment, and failure to do so would constitute conversion or trespass to chattels.

Common-law liens are divided into special liens and general liens. A special lien, the more common kind, requires a close connection between the property and the service rendered. A special lien can only be exercised in respect of fees relating to the instant transaction; the lienor cannot use the property held as security for past debts as well. A general lien affects all of the property of the lienee in the possession of the lienor, and stands as security for all of the debts of the lienee to the lienor. A special lien can be extended to a general lien by contract, and this is commonly done in the case of carriers. A common-law lien only gives a passive right to retain; there is no power of sale which arises at common law, although some statutes have also conferred an additional power of sale, and it is possible to confer a separate power of sale by contract. A common-law lien is a very limited type of security interest. Apart from the fact that it only amounts to a passive right to retain, a lien cannot be transferred; it cannot be asserted by a third party to whom possession of the goods is given to perform the same services that the original party should have performed; and if the chattel is surrendered to the lienor, the lien entitlement is lost forever (except for where the parties agree that the lien shall survive a temporary re-possession by the lienor). A lienee who sells the chattel unlawfully may be liable in conversion as well as surrendering the lien. In common-law countries, equitable liens give rise to unique and difficult issues. An equitable lien is a no possessory security right conferred by operation of law, which is similar in effect to an equitable charge. It differs from a charge in that it is non-consensual. It is conferred only in very limited circumstances, the most common (and least ambiguous) of which is in relation to the sale of land; an unpaid vendor has an equitable lien over the land for the purchase price, notwithstanding that the purchaser has gone into occupation of the property. It is seen as a counterweight to the equitable rule which confers a beneficial interest in the land on the purchaser once contracts are exchanged for purchase. The maritime lien has been described as one of the most striking peculiarities of Admiralty law.

A maritime lien constitutes a security interest upon ships of a nature otherwise unknown to the common law or equity. It arises purely by operation of law and exists as a claim upon the property concerned, both secret and invisible, often given priority by statute over other forms of registered security interest. Although characteristics vary under the laws of different countries, it can be described as: a privileged claim, upon maritime property, for service to it or damage done by it, accruing from the moment that the claim attaches, Travelling with the property unconditionally, Enforced by an action in rem. manufacturer’s lien a statutory lien that secures payment for labour or materials expended in producing goods for another. Mechanic’s lien (also sometimes referred to as an artisan’s lien, chattel lien, construction lien, labourer’s lien, in various jurisdictions). Municipal lien (United States) a lien by a municipal corporation against a property owner for the owner’s proportional share of a public improvement that specifically and individually benefits the owner. Notice of Lien means any “notice of lien” or similar document intended to be filed or recorded with any court, registry, recorder’s office, central filing office or other Governmental Authority for the purpose of evidencing, creating, perfecting or preserving the priority of a Lien securing obligations owing to a Governmental Authority. Notice of Lien means a record filed in the office of the secretary of state pursuant to this article that identifies one or more claimants with respect to a designated statutory lien; identifies, to the extent required by the applicable substantive statute, the property asserted to be subject to the lien; identifies the owner or owners of the property; and otherwise complies with the requirements of this article.

Notice of Lien means a notice that: a political subdivision records in the office of the recorder of the county in which a property. A lien is a notice attached to your property telling the world that a creditor claims you owe it some money. A lien is typically a public record. It is generally filed with a county records office (for real property) or with a state agency, such as the secretary of state (for cars, boats, office equipment, and the like). Liens on real estate are a common way for creditors to collect what they are owed. Liens on personal property, such as motor vehicles, are less frequently used but can be an effective way for someone to collect. To sell or refinance property, you must have clear title. A lien on your house, mobile home, car, or other property makes your title unclear. To clear up the title, you must pay off the lien. Thus, creditors know that putting a lien on property is a cheap and almost guaranteed way of collecting what they are owed sooner or later. Generally, creditors have the right to have real property sold to pay off the lien, usually by way of a foreclosure sale. But except for mortgage liens and tax liens, they rarely do so. This is because in most cases your mortgage was placed on the property before the liens and so must be paid off before any liens are paid. If the creditor forecloses on the lien, it has to keep up the payments on the mortgage or lose the property.

Lien Attorney Free Consultation

When you have a notice of interest or are a lien holder in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

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Mortgage Servicing Rules And Foreclosure

Sometimes a homeowner can make a defense to a foreclosure based on a mortgage servicer’s violation of rules governing this industry. They also may have rights that they can assert under the federal Fair Debt Collection Practices Act (FDCPA). These defenses may not defeat the foreclosure entirely, but they may delay it or give you some leverage in negotiations. They also provide requirements for communications between the lender and the homeowner. If the lender fails to give you proper notice of the foreclosure under the rules, you may be able to delay the foreclosure until you receive notice. Also, if you submit your loss mitigation application 38 days or more before the foreclosure sale, this will trigger additional steps that the lender must take before proceeding with the sale. If it proceeds with the sale anyway, you can ask a court to cancel the sale, which will delay the process and give you more time to move or explore alternatives. You can also report a mortgage servicer to the Consumer Financial Protection Bureau (CFPB) if it violates these rules. People usually think of the FDCPA as a debt collection law, but it can be relevant to foreclosures in some cases. The language of the law is ambiguous, but some courts have ruled that a person or entity that tries to collect a payment on a mortgage or pursue a foreclosure can be defined as a debt collector within the meaning of the law. (Often, this will be the attorney of the foreclosing party.) On the other hand, some courts believe that the FDCPA does not cover foreclosures because collecting a debt is a different activity from enforcing a security interest. The U.S. Supreme Court will decide a case in the 2018-19 terms that will address whether the FDCPA applies to a non-judicial foreclosure, so this area of the law may change dramatically. Even if the FDCPA does not cover foreclosures, debt collection laws in your state may cover foreclosures. You can consult an attorney to determine whether your state’s law may extend further than the federal law.

Asserting Your Rights Under the FDCPA

The impact of the FDCPA on foreclosures often relates to the notice requirements under the law. A foreclosing entity that meets the definition of a debt collector must provide written notice within five days of first communicating with the debtor. This notice will identify the creditor, state the amount of the debt, and tell the consumer that they have 30 days to verify the debt. As a result, if you are at risk of foreclosure, you can dispute the existence or amount of the debt within 30 days of getting the notice. Continuing collection efforts before the debt is verified violates the FDCPA. Inappropriate charges that form part of the debt also violate the FDCPA, as does a failure to provide the homeowner with a verification of the debt. Moreover, failing to provide the homeowner with the required notice violates federal law. While identifying an FDCPA violation may not necessarily save your home, you can recover any monetary damages resulting from the violation, in addition to statutory damages up to $1,000. The Consumer Financial Protection Bureau is seeking comments through November 22, 2013 on an Interim Final Rule to address a small number of issues raised by mortgage servicers and others regarding the mortgage servicing and Home Owners Equity Protection Act (HOEPA) rules set to take effect January 2014. An Interim Final Rule is one that has already been approved and in this case, is scheduled to take effect January 10, 2014. However, the Bureau is nonetheless seeking comments on how stakeholders think they will be affected by the changes and further changes could be adopted to the Interim Final Rule before January.

The Interim Final Rule would amend:
• The Mortgage Servicing Rules under the Real Estate Settlement Procedures Act (Regulation X) (2013 RESPA Servicing Final Rule);
• The Mortgage Servicing Rules under the Truth in Lending Act (Regulation Z) (2013 TILA Servicing Final Rule); and
• The High-Cost Mortgage and Homeownership Counseling Amendments to the Truth in Lending Act (Regulation Z) and Homeownership Counseling Amendments to the Real Estate Settlement Procedures Act (Regulation X) (2013 HOEPA Final Rule).
The Interim Final Rule addresses these areas:
• How the certain issues regarding communications with borrowers under the servicing rules should be addressed in light of bankruptcy law and the Fair Debt Collections Practices Act (FDCPA); and
• Issues relating to communications with delinquent borrowers for early intervention.

Mortgage Servicing Rules for “Successors in Interest”

Effective as of April 19, 2018, successors in interest to property secured by mortgage loans that are covered by the Real Estate Settlement Procedures Act (“RESPA”) and Truth in Lending Act (“TILA”) now have certain rights under those acts. These amendments are part of the Consumer Financial Protection Bureau’s 2016 Mortgage Servicing Rule amendments to RESPA and TILA. The CFPB issued the new rules because “it had received reports of servicers either refusing to speak to a successor in interest or demanding documents to prove the successor in interest’s claim to the property that either did not exist or were not reasonably available.” The rules are therefore designed to make it easier for potential successors in interest to communicate with servicers and establish that they are successors in interest. At the outset, the new rules define a “successor in interest” as anyone who obtains an ownership interest in a property secured by a mortgage loan, provided that the transfer occurs under one of the scenarios listed in the new rule. The scenarios range from a transfer resulting from the death of the borrower to a transfer from the borrower to a spouse or child. The person does not have to assume the loan in order to be a successor in interest. The amendments create several potential pitfalls for servicers because certain obligations are triggered when a servicer receives actual or inquiry notices that someone might be a successor in interest. The amendments require servicers to “promptly” communicate with anyone who may be a successor in interest. Servicers must also only request documents “reasonably” required to confirm whether that person is in fact a successor in interest. And a “confirmed” successor in interest now has the same rights as the original borrower under RESPA and TILA mortgage servicing rules. Litigation is also inevitable because the amendments contain broad and imprecise language – such as “reasonably” and “promptly” that opens the door for lawsuits and cries for judicial interpretation.

A “successor in interest” is defined as “a person to whom an ownership interest in a property securing a mortgage loan subject to this subpart is transferred from a borrower, provided that the transfer is:
• A transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;
• A transfer to a relative resulting from the death of a borrower;
• A transfer where the spouse or children of the borrower become an owner of the property;
• A transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; or
• A transfer into an inter vivo trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property.”

What should a servicer do when it receives correspondence from a potential successor in interest?

• Promptly respond and request documents: An aspect of the amendments that is bound to create headaches (and litigation) for servicers is that they have an obligation to respond when they receive correspondence providing actual notice that someone might be a successor in interest and when they receive a written request that puts them on inquiry notice that someone might be a successor in interest.

• Actual notice: Servicers must have policies and procedures to ensure that they “promptly facilitate communication with any potential or confirmed successors in interest” upon receiving “notice of the death of a borrower or of any transfer of the property.” Upon receiving the foregoing notice, servicers must then “promptly” request documents, determine the status of the person, and notify the person “that the servicer has confirmed the person’s status, has determined that additional documents are required (and what those documents are), or has determined that the person is not a successor in interest.” While it is unclear what constitutes a “prompt” determination, a determination is not prompt “if it unreasonably interferes with a successor in interest’s ability to apply for loss mitigation options according to the procedures provided in § 1024.41.”
• Inquiry notice: If a servicer receives any written request “that indicates that the person may be a successor in interest” and “includes the name of the transferor borrower” and “information that enables the servicer to identify the mortgage loan account,” a servicer shall respond by requesting, in writing, the documents the servicer reasonably requires to confirm whether the person is a successor in interest. The types of request that “indicate” the person may be a successor in interest are broad. For example, a written loss mitigation application from a person other than a borrower is a written request that indicates the person may be a successor in interest.

If the written request from the potential successor in interest does not have the required information, the servicer “may” respond by requesting more information. Servicers should also be mindful of the deadlines for responding to written requests for information under 12 C.F.R. § 1024.36(c) and 1024.36(d), which require acknowledging receipt within five business days and a substantive response within thirty business days.

• Request documents “reasonably” required to confirm the person is a successor in interest.

A “potential” successor in interest becomes a “confirmed” successor in interest if the servicer confirms “the successor in interest’s identity and ownership interest in a property.” But a servicer may only request “documents the servicer reasonably requires to confirm that person’s identity and ownership interest in the property.” The requested documents “must be reasonable in light of the laws of the relevant jurisdiction, the specific situation of the potential successor in interest, and the documents already in the servicer’s possession.” The servicer can also require documents it believes are necessary to prevent fraud or other criminal activity, e.g. if the servicer believes that the documents are forged. Subject to the foregoing, requesting a death certificate, executed will or court order might be reasonable. But it would be unreasonable to request certain probate documents when “the applicable law of the relevant jurisdiction does not require a probate proceeding to establish that the potential successor in interest has sole interest in the property.” Because the reasonableness requirement depends heavily on the relevant jurisdiction, servicers must take into account local laws when requesting documents.

How Do These Changes Impact RESPA And TILA?

A “confirmed successor in interest” is now a “borrower” for purposes of RESPA’s mortgage servicing rules and 12 C.F.R. § 1024.17 and a “consumer” for TILA’s mortgage servicing rules. 12 C.F.R §§ 1024.30(d) and 1026.2(11). Thus, a confirmed successor in interest is entitled to the same rights as the original borrower or consumer. For reverse mortgages, the changes only impact the rules that apply to reverse mortgages. See 12 C.F.R. § 1024.30(b). For example, a confirmed successor in interest is still not subject to the loss mitigation procedures in 12 C.F.R. § 1024.41, but a confirmed successor in interest is now entitled to a payoff statement under 12 C.F.R. 1026.36(c). There is no private right of action for claims by potential successors. While confirmed successors in interest have the same private right of action to enforce the rules as borrowers and consumers, the rules do not “provide potential successors in interest a private right of action or a notice of error procedure for claims that a servicer made an inaccurate determination about successorship status or failed to comply with § 1024.36(i) or § 1024.38(b)(1)(vi).” This, however, will likely not deter potential successors in interest from trying to assert such claims. Moreover, a confirmed successor in interest who has allegedly been damaged by a servicer’s failure to request documents “reasonably” required for the determination or a determination that was not “promptly” made might be able to assert claims under the new rules.
Coordination of Certain Mortgage Servicing, Bankruptcy and FDCPA Requirements.

The Bureau is clarifying compliance requirements in relation to bankruptcy law and the Fair Debt Collection Practices Act (FDCPA) through this rule and through a compliance bulletin the Bureau has issued. According to the CFPB, it has received a large number of questions from servicers about how the servicing rules relate to bankruptcy law and the FDCPA for example on issues such as how to communicate effectively with borrowers in light of their status in bankruptcy. The Bureau believes further analysis is needed to resolve some issues and may be issuing further amendments. In the meantime, the CFPB has addressed several issues in its new bulletin and interested parties are encouraged to read the bulletin. More specifically the bulletin:

• Confirms that servicers must comply with certain requirements of the Dodd-Frank Act and respond to certain borrower communications in accordance with the Bureau’s servicing rules even after a borrower has sent a cease communication request under the FDCPA.

• Provides a safe harbor from liability under the FDCPA with regard to such communications.

• In conjunction with the issuance of the bulletin, the Bureau is providing exemptions for other servicing communications that are not specifically required by the Dodd-Frank Act or other statutes. The exemptions will provide some relief for servicers in connection with the FDCPA and when the borrower has filed for bankruptcy. The exemptions are from:
• The requirement in § 1026.20(c) for a notice of rate change for adjustable-rate mortgages (ARMs) and the early intervention requirements in § 1024.39(d)(II) when a borrower has properly invoked the FDCPA’s cease communication protections.
• The early intervention requirements in § 1024.39(d)(II) and from the periodic statement requirements under 12 CFR 1026.41(e)(5) for borrowers while they are in bankruptcy.

Who Regulates Mortgage Lenders?

Mortgage lenders have to follow certain rules set forth by the federal government. These rules make sure lenders do everything they can to employ service that’s both fair and legal, and that they don’t take advantage of the general public. So, put simply, the federal government regulates the mortgage industry. It does this through a variety of agencies and a host of Congressional acts. The federal Truth in Lending Act (TILA) was designed to help protect consumers in their relationships with lenders. Regulation Z is the Federal Reserve Board regulation that implemented TILA. The act requires lenders to disclose information about their products and services to consumers, and aims to protect consumers from misleading practices by lenders. Another key component to mortgage regulation is the Real Estate Settlement Procedures Act (RESPA).

This act was enacted by Congress so buyers and sellers are given disclosures about the full settlement costs related to home buying. Mortgage lending came under heavy scrutiny following the 2008 financial crisis. Prior to the housing market crash, demand for mortgage-backed securities (MBSs) rose as investors became hungry for higher returns from their investments. Hedge Banks began relaxing their lending requirements, advancing mortgages to people with low credit scores often without any down payments at high interest rates. When values peaked, rates began to increase, making payments more expensive. Many homeowners were unable to afford their homes, and ended up defaulting, causing the market to crash. Because of the problems after the 2008 financial crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act piled on additional mortgage industry regulations to protect consumers, making regulations tougher against predatory lending and mortgage qualifying standards. Under changes signed into law in 2018, the act, escrow requirements for residential mortgages held by a depository institution or credit union are exempt under some conditions.

Mortgage Foreclosure Lawyer In Utah

When you need legal help with a mortgage or a foreclosure in Utah, call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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Post-Foreclosure Liability For Taxes

Post-Foreclosure Liability For Taxes

Utah foreclosures tend to be non-judicial, which means they happen outside of court. Judicial foreclosures, which go through the court system, are also possible. Because foreclosures in Utah are typically non-judicial, this article focuses on that process. Before the bank or servicer (the company that handles mortgage accounts on behalf of the bank) can officially start the foreclosure, it must mail the borrower a notice of intent to file a notice of default. In most cases, under federal law, a servicer must wait until the borrower is over 120 days’ delinquent before officially starting the foreclosure process. To officially start the foreclosure, the trustee (the third party that administers non judicial foreclosures) records a notice of default in the county recorder’s office at least three months before giving a notice of sale. The trustee mails a copy of the notice of default within ten days after the recording date to anyone who requested a copy. (Most deeds of trust in Utah include a request for notice, so borrowers typically get this notification.)

“Reinstating” is when the borrower catches up on the defaulted mortgage’s missed payments, plus fees and costs, to stop a foreclosure. Utah law provides the borrower with a three-month reinstatement period after the bank or trustee records the notice of default. Also, the loan contract might give you more time for completing a reinstatement. Check the paperwork you signed when you took out the loan to find out if you get more time to bring the loan current and if so, the deadline to reinstate. When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the foreclosing bank to seek a personal judgment, which is called a “deficiency judgment,” against the borrower for this amount. Other states prohibit deficiency judgments with what are called anti-deficiency laws. In Utah, the foreclosing bank may obtain a deficiency judgment following a non-judicial foreclosure by filing a lawsuit within three months after the foreclosure sale. In order to fully grasp the information in this post, it’s important to understand the basics of a mortgage. Most people say “I’m paying my mortgage.” What they actually mean is that they’re paying their note.

The mortgage is the legal instrument that gives your lender the right to foreclose when you don’t pay the note, which is the instrument that evidences the debt. Mortgage and note are two separate things. This is an important distinction because in many jurisdictions, lenders have two ways of getting their money back from a homeowner who has fallen behind: they can either foreclose and sell the property OR try to enforce the note by suing the borrower personally. Sometimes they’ll try doing both at the same time, but not in Utah thanks to the one action rule. In Utah, lenders are prohibited from simultaneously suing for the outstanding mortgage balance and foreclosing at the same time. A judicial foreclosure must take place in the same action as the pursuit of a deficiency judgment. Only after the proceeds from the foreclosure sale have been applied to what owed can a lender is seeking a judgment on the remaining debt. To put it in plain English, when you get behind on your mortgage, your lender must foreclose first; they cannot sue you personally or attach money in your bank accounts before they have foreclosed on your home. Known as the “security first” rule, the law is intended to shield Utahans from multiple harassing lawsuits by lenders. Be aware that the one action rule does not apply in cases where a second mortgage lender’s security interest has been wiped out due to the first mortgage lender foreclosing. The first requirement, that you live in your home, is easy to understand and satisfy. The Utah anti-deficiency law is meant to shield homeowners from deficiency judgments, not investors. If you are the owner of a 100 unit apartment building and live in one of the units, your lender will still be able to seek a deficiency after foreclosure. In this example, you’re obviously a real estate investor.

If, on the other hand, you live in your home and rent out an apartment upstairs, your lender cannot seek a deficiency because your home only constitutes two units. The mortgage is the legal instrument that gives your lender the right to foreclose when you don’t pay the note, which is the instrument that evidences the debt. Mortgage and note are two separate things. This is an important distinction because in many jurisdictions, lenders have two ways of getting their money back from a homeowner who has fallen behind: they can either foreclose and sell the property or try to enforce the note by suing the borrower personally. Sometimes they’ll try do both at the same time, but not in Utah thanks to the one action rule. First and foremost, a lender cannot sue a borrower for a deficiency judgment where the foreclosure sale price is high enough to satisfy the outstanding mortgage balance.

By definition, a deficiency judgment arises when a home is underwater, the bank forecloses and the sale price is insufficient to pay back the mortgage balance. If your home sells at foreclosure for more than what you owe, there is no deficiency and can therefore be no deficiency judgment. As a practical matter, the scenario where a foreclosure sale completely satisfies the mortgage debt simply won’t apply to most Utah homeowners who are underwater on their property thanks to the national housing downturn. Assuming your home is underwater and you’re facing foreclosure in Utah, we’ll move on to the next important set of facts, which deal with the type of mortgage you have and the size of your property. If a mortgage is given to secure the payment of the balance of the purchase price, or to secure a loan to pay all or part of the purchase price, of a parcel of real property of two and one-half acres or less which is limited to and utilized for either a single one-family or single two-family dwelling, the lien of judgment in an action to foreclose such mortgage shall not extend to any other property of the judgment debtor, nor may general execution be issued against the judgment debtor to enforce such judgment, and if the proceeds of the mortgaged real property sold under special execution are insufficient to satisfy the judgment, the judgment may not otherwise be satisfied out of other property of the judgment debtor, notwithstanding any agreement to the contrary.

What does this legalese mean? Well, a mortgage is given to “secure the balance of the purchase price” of a home when you take out a mortgage to finance your property. If you’re like most of us and couldn’t afford to buy your home in cash, you relied on mortgage financing to buy your house. If you did, the Utah legislature believes that your lender shouldn’t be permitted to sue you for a deficiency and come after your personal assets after they’ve foreclosed on you. As long as your property is 2.5 acres or less in size and you used mortgage financing to purchase the property, you’re protected from a deficiency judgment. This provision adds an additional layer to the Utah anti-deficiency laws. Foreclosure by power of sale is a quick, inexpensive way for lenders to take back property; however, because there is no judicial oversight, the process is more highly scrutinized by the court. In this regard, Utah law says that a bank can foreclose by power of sale, but if they do they will not be permitted to seek a deficiency judgment. How do you know whether your home is subject to power-of-sale foreclosure? Although Utah allows both judicial foreclosure and power of sale foreclosure, power of sale is the most common. Look at your mortgage documents: If you have a Deed of Trust, your lender is entitled to foreclose by power of sale. It should be noted that the 2.5-acre requirement applies in the power of sale legislation just as it does in other areas. It is important to keep in mind that while Utah’s anti-deficiency laws are consumer-friendly, they are not uniform in application. There are limits to the protections from deficiency a judgment not only to purchase money mortgages and properties that are smaller than 2.5 acres in size, but also requires that the number of dwelling units not exceed two.

This limitation was put in place to protect homeowners from deficiency judgments while classifying real estate investors separately from homeowners. A non-recourse loan is one where the borrower isn’t personally liable for repayment of the loan. In other words, the loan is considered satisfied and the lender can’t pursue the borrower for further repayment if and when it repossesses the property. The figure used as the sales price is the outstanding loan balance immediately before the foreclosure of a non-recourse loan. The IRS takes the position that you’re effectively selling the house back to the lender for full consideration of the outstanding debt, so there’s generally no capital gain. The Mortgage Forgiveness Debt Relief Act of 2007 (MFDRA) provided that taxpayers could exclude from their taxable incomes up to $2 million in discharged mortgage debt due to foreclosure a nice tax break indeed. Prior to 2007, discharged debt was included in taxable income. Then the MFDRA expired at the end of 2017, so discharged debt was once again considered to be taxable income by the IRS. Fortunately, this provision of the tax code is back again, at least for foreclosures that occur from Jan. 1, 2018 through Dec. 31, 2020. Title I, Subtitle A, Section 101 of the Further Consolidation Appropriations Act of 2020, signed into law by President Trump in December 2019, extends this provision through the end of 2020.5. If you’ve lost your home through foreclosure, you may still be on the hook for taxes. This can happen if the foreclosure sale price is less than the amount you owed on your mortgage or other liens against your home. The extra amount you owe is called the deficiency. If the deficiency amount is forgiven or cancelled by the mortgage lender, then the IRS or state taxing authority might treat the forgiven debt as income, and then you’ll have to pay taxes on it. The same principles apply with short sales. Fortunately, at least through 2013, most people who lost their homes through foreclosure will not face income tax liability. This is thanks to the federal Mortgage Forgiveness Debt Relief Act of 2007. But there are some exceptions, and some people might face capital gains tax. When your foreclosure includes a cancellation of debt, you only have an obligation to report it as ordinary income if you were personally liable for the entire mortgage, despite the security interest your lender takes in the home. This amount will be reported in Box 2 of a 1099-C that the lender will send you.

You also need to calculate the capital gain that results from the foreclosure. To calculate the gain, subtract your tax basis in the home generally the purchase price plus the cost of home improvements you make from the home’s fair market value. However, if you’re not personally liable for debt that remains, use the outstanding mortgage balance at the time of foreclosure instead of the home’s fair market value. Similar to a foreclosure, any debt that your mortgage lender cancels because of a short sale is taxable only if the terms of your mortgage hold you personally liable for the full amount of the loan. Regardless of the tax consequences, your lender will report the debt cancellation on a 1099-C form. Through the end of 2019 you may have been eligible to exclude canceled debt from your tax return if it related to qualified principal residence indebtedness and met the requirements of the Mortgage Forgiveness Debt Relief Act. This could have also been applicable to debt that was discharged in 2020 provided that there was a written agreement entered into in 2019. Mortgages include those you obtained to buy, build or substantially improve a home and for which the lender retains an interest in the home until it’s paid off. A longstanding principle of tax law treats any type of debt forgiveness as a financial benefit, even if it comes at the expense of your home. This means that even if you are facing foreclosure you may incur an additional debt to the government, either in the form of Cancellation of Debt Income, or in the form of Gain from Foreclosure.

It is up to you to know what exceptions can eliminate the burden of Cancellation of Debt income. For example, debt forgiveness is not taxable if you’re insolvent. If you’re filing for bankruptcy and going through home foreclosure at the same time, you may not need to worry about additional tax liability. There is a distinction between those who can’t avoid foreclosure and those who choose foreclosure as an escape from a bad investment. “The only people I see getting burned by this have significant other investments “They are making a decision to let it go instead of paying for a bad asset.” Goold says there is another, lesser-known exception. The reason it is lesser known, perhaps, is that it is hard to take advantage of. In some circumstances, your bank may be willing to restructure your loan to reduce the principal. The government does not consider this taxable debt forgiveness, and it may just allow you to keep your home. The problem, of course, is that banks might have difficulty seeing the benefit of writing off part of your debt. You may be in a good position to enter this kind of negotiation if your mortgage is with a local community bank where you have personal relationships. If you choose to “short sell” for less than your home is worth, you should be aware that banks will not likely process the transaction immediately.

Foreclosure Lawyer Free Consultation

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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Closing A Foreclosure Sale With Third Party Bidders

Closing A Foreclosure Sale With Third Party Bidders

After a borrower defaults on mortgage payments, the lender (or the subsequent loan owner) will likely foreclose. Most foreclosures end in an auction where the property is sold to a new owner. During the foreclosure crisis, foreclosure sales frequently resulted in a deficiency, which means the property sold for less than the borrower owed the lender. But now that the real estate market has mostly recovered, foreclosure sales often bring in more money than the borrower owes.

How Foreclosure Sales Work

Depending on state law and the circumstances, a foreclosure is either judicial or non-judicial. At the end of the process, a trustee or an officer of the court, like the sheriff, will typically conduct a foreclosure sale. In the past, foreclosure sales almost always involved an auctioneer selling the property from the courthouse steps or another public area. Now, the auction can either be live (in-person) or online. Online foreclosure sales are becoming more and more common. At the foreclosure sale, the high bidder might be the foreclosing lender or a third party. If the lender makes a credit bid and no one else makes a higher offer, then the lender gets the property, and it becomes REO. If a third party makes the highest bid, that person or entity must then pay for the property with a money order, cashier’s check, or cash to become the new owner of the home. During the Great Recession, the purchase price at most foreclosure sales was either the loan balance or a lesser amount. Now, though, foreclosure properties often sell for prices that are more than what the borrower owes the foreclosing lender. The amount by which the purchase price exceeds the loan balance is called “excess proceeds.”

If a foreclosure sale results in excess proceeds, the lender doesn’t get to keep that money. The lender is entitled to an amount that’s sufficient to pay off the outstanding balance of the loan plus the costs associated with the foreclosure and sale but no more. Generally, the foreclosed borrower is entitled to the extra money; but, if there were any junior liens on the home, like a second mortgage or HELOC, or if a creditor recorded a judgment lien against the property, those parties get the first crack at the funds. Then, any proceeds left over after paying off these liens belong to the former homeowner.

What Happens If the Sale Amount Is Less Than the Total Debt

If the property sells for less than the borrower owes the lender, the sale results in a deficiency. Then, depending on state law, the lender might be able to get a deficiency judgment against the foreclosed borrower.

How to Find Out If Excess Proceeds Are Available

Typically, if a sale has excess proceeds, the trustee or other sale officer has to send a notice to the foreclosed homeowner’s last known address. But the last known address is usually the foreclosed property. Because most people don’t realize they’re due any excess proceeds, they tend to vacate a foreclosed property without leaving a forwarding address. So, it’s difficult for a trustee or other sale officer to find foreclosed homeowners after a sale. Because a sale might generate excess proceeds, it’s a good idea to track the process.

You should take note of the sale date, which will be included in the foreclosure documents you receive. After the auction, contact the trustee or officer that sold the property. (This information, including the trustee or officer’s name and phone number, should also be in the paperwork you received during the foreclosure, as well as in your local newspaper’s legal section where the sale notice was published. If you can’t figure out who conducted the sale or how to contact that person, call your loan servicer.) Ask if the auction generated excess proceeds. If so, be sure to give the trustee or officer your new address and follow up with a letter sent by both certified mail/return receipt requested and regular mail with your new address and contact information. Also, ask what you need to do to claim your share, if any, of the proceeds.

Credit Bid in a Foreclosure

At a foreclosure sale, the foreclosing lender usually makes a bid on the property using what’s called a “credit bid.” People sometimes think that the lender (or subsequent loan owner) will “repossess” their home in a foreclosure. But this description of the process that a lender uses to get ownership of the property isn’t accurate a foreclosure is different than a repossession. Repossession is a self-help remedy that allows a creditor to simply take possession of an item; the creditor doesn’t have to sue you first. In a car repossession, for example, the lender simply takes the vehicle back. With a foreclosure, however, the lender can’t just take your home. Instead, it must go through a specific process (a foreclosure) and hold a sale, which is typically a public auction. Anyone, including the foreclosing lender, can bid on the home at the sale. Normally, the lender will bid on the property using what’s called a “credit bid.” If the lender is the high bidder at the foreclosure sale, it then gets ownership of the home.

How Foreclosures Work

People who take out a home loan usually sign a security instrument, either a mortgage or deed of trust. This document gives the lender the right to sell the property through a process called foreclosure if the borrowers don’t make the payments or violate the agreement in some other manner. The foreclosure process will be governed, in large part, by state law and will be either judicial or non-judicial.

Judicial Foreclosures Go Through Court

The lender starts a judicial foreclosure by filing a lawsuit in court. If the court agrees that the borrowers have breached the loan agreement, the court orders the home to be sold at a foreclosure sale. (In two states, Connecticut and Vermont, the court may give the home’s title directly to the lender. This process is called a strict foreclosure.)

Non-judicial Foreclosures: No Court Action

In a non-judicial foreclosure, the lender follows particular out-of-court steps to foreclose. State law spells out exactly what the lender must do to complete the process. While the exact steps vary among states, the lender might have to do one or more of the following:
• mail the borrowers a notice of default or notice of sale
• record a foreclosure notice in the land records
• post a notice about the foreclosure sale on the property, or
• publish information about the foreclosure sale in the newspaper.
Once the lender completes the state-specific process, a foreclosure sale will take place.

How Credit Bids Work

At the foreclosure sale, which is an auction, the lender will usually make a credit bid. With a credit bid, the lender bids the debt that the borrower owes. Basically, the lender gets a credit in this amount. The lender can bid the full amount of the debt, including foreclosure fees and costs, or it might bid less. If the lender is the highest bidder at the sale and becomes the new owner of the property, but bids less than the total debt, it might be able to seek a deficiency judgment against the borrower. Whether or not the lender can get a deficiency judgment depends on state law. Other parties who bid on a property at a foreclosure sale must bid cash or a cash equivalent, like a cashier’s check. If a third party is the high bidder at the sale, the proceeds from the sale are used to repay the borrowers’ debt. (If the proceeds aren’t sufficient to pay off the full amount of the debt, the lender can, if state law allows it, get a deficiency judgment.) Often, though, the foreclosing lender is the high bidder at the foreclosure sale. After the lender buys the property at the sale and gets title to the home, the property is considered “Real Estate Owned” (REO).

Can Anyone Show Up at a Foreclosure Auction to Bid?

Foreclosure usually ends with the sale of the property at an auction. The highest bidder is the new owner of the property, but if no one shows up or bids high enough, the foreclosing bank becomes the owner. A foreclosure auction is usually completely open to the public, so anyone can show up, but some types of bidders are more common than others.

Lender Representatives

An agent or representative of the lender usually attends foreclosure auctions to protect their interests. The home needs to sell for an amount the lender deems acceptable, usually the total left on the mortgage plus the lender’s legal fees related to the foreclosure. The lender may send an agent to the sale even if state laws allow the lender to set a minimum bid ahead of the time. Some states let the lender set a minimum bidding amount before the sale, so the auction starts at that bid amount.

Homeowner

A homeowner can bid on their own property at the foreclosure auction. Although it’s not very common, as you need a cash deposit if you’re the winning bidder and must be able to finance the sale, it’s not illegal for a person to bid on their own property at a public foreclosure auction. However, while a third-party bidder isn’t on the hook for your loan debt, you may be, depending on your state’s laws. So, if you buy your home back at auction for less than what was owed, your lender may take you to court for the difference, which is known as a deficiency judgment. If your lender foreclosed, your state may give you a specific amount of time after the auction known as a redemption period to buy your home back, even if another person won it.

Investors

Investors often attend foreclosure auctions as a means to buy property at prices below the market value. Investors, especially those involved in the construction industries who don’t mind a house that needs work, may join forces and use pooled money to bid aggressively at auctions. Foreclosed homes are sold “as-is” and may have damage from the homeowner or as a result of the home staying vacant for weeks or months before the sale.

Auction Considerations

Each state has its own rules regarding the foreclosure auction process and money required if you’re the winning bidder. For example, in Arizona, you only need an earnest cash deposit at the auction, but you’ll have only a day to get the full bid amount. If you can’t get it together, the trustee can cancel the sale and you’ll lose you cash. In other states, you need the full amount upfront and must pay immediately after your win.
How to Recover a Bid Deposit When a High Bidder Defaults on a Foreclosure

Bid

Recently, in Utah Court of Appeals issued an opinion that provides a blueprint for a lender to pocket a cash recovery if it is outbid at a foreclosure sale but the high bidder subsequently defaults on its bid. If a foreclosure goes to resale because a high bidder defaults, a lender can reduce its original bid by the high bidder’s deposit and then recover those funds from the Clerk of Superior Court. In other words, the lender can acquire the property for less money (and less credit on the secured debt) and recover cash in the process. A foreclosure sale is a public event in which anyone can bid on the property being foreclosed. Usually the trustee conducting the foreclosure is the only person who attends the sale and, upon instructions from the lender, he places a credit bid for the lender. But sometimes the borrower, an associate of the borrower, or some other third party will out-bid the lender, either on the courthouse steps or by filing a higher “upset bid” during the 10-day period that follows the public sale.

While a lender exercising its foreclosure rights may submit a credit bid, any other high bidder must secure its bid with a cash deposit equal to 5% of the bid. The high bidder then typically has 30 days to pay the balance of the purchase price to the trustee. If the third-party bidder fails to close on the purchase, the trustee may move the Clerk of Superior Court to allow a resale of the property. Utah law imposes liability on a defaulting high bidder to the extent of the total if the amount of the final sale price is less than the high bidder’s original bid plus all costs of resale. The 5% deposit secures payment of this amount.
If you’ve defaulted on your mortgage loan, consider talking to a lawyer to learn about the foreclosure procedures in your state and find out whether you have any potential defenses to the action. You can also ask a lawyer for information about loss mitigation options, like a mortgage modification or short sale.

Foreclosure Lawyer Free Consultation

When you need legal help with a foreclosure in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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Post Foreclosure Property Preservation

Post Foreclosure Property Preservation

When a bank or loan servicer takes possession of a home that has been through foreclosure, property preservation efforts are made to get the home prepared for potential buyers. Often, foreclosed homes are run down and need considerable renovation work before it’s possible to sell them. The sooner a bank or loan servicer sells the foreclosed property, the less money is lost. Therefore, property preservation efforts need to be handled quickly so that the bank or loan servicer recovers any lost funds as soon as possible. While a bank may prefer to sell a property without having to invest in property preservation, this is not often possible. Foreclosed homes are often left in such poor condition that banks cannot sell them even by reducing the asking price significantly. Usually, a property management or property preservation company needs to come in to perform any, several, or all of the following tasks:

• Boarding or securing: A vacant property needs to be secured to prevent thieves and vandals from damaging the property or carrying off appliances and equipment. Usually, a property’s lock is changed immediately after it is foreclosed on. Then, windows and doors may be boarded up while the home is cleaned and renovated. The home will be opened up again after it goes on the market and buyers begin to visit the property for viewings.

• Winterizing: Properties located in cold climates often need to be winterized so that cold weather doesn’t cause damage like frozen pipes or appliance malfunctions. Winterizing a vacant property typically involves draining the water lines and hot water tanks. Also, antifreeze is used in toilets and other plumbing fixtures. All the utilities in a vacant home are usually turned off as part of winterization efforts.

• Removing debris: Foreclosed homes are often in a state of disrepair. They are often littered with debris that could cause safety code violations or risks of infestation by pests. After foreclosure, a home is inspected and cleaned out.

• General cleaning: A major function of a property preservation company is to perform general housekeeping around the property. A dirty property will be unappealing to potential buyers, so contractors come in to vacuum, sweep, shampoo, dust, and mop until the property is presentable.

• Handling conveys maintenance orders: Putting a property in “convey condition” involves detailing information pertinent to ownership issues and mortgage issues regarding the home. Contractors need to verify that the priority is vacant and then detail all the maintenance that needs to be performed on the property.

• Maintaining a property’s lawn: A property’s value could drop if its lawn becomes overgrown. Also, an overgrown lawn can create a public nuisance and violate building or health codes. The bank or loan servicer currently in possession of the property will be held responsible for any code violations, so maintaining a property’s lawn is important.

• Removing snow: Some communities require property owners to keep sidewalks and driveways free of snow. Therefore property preservation companies have to come out to bank or loan servicer-owned properties to clear away snow build-up as necessary to address the property owner’s liabilities.

Buyers of properties that have previously been foreclosed on should be aware of any property preservation efforts that have been made to ensure that a home on the market has maintained its condition despite being vacant for an extended period of time. If preservation efforts are not made, it could cause damage that affects the home’s plumbing fixtures, appliances, and structural stability. When viewing homes, buyers should ask questions regarding what preservation efforts are being made so that they gain an understanding of the actual value and condition of the home. Banks sometimes foreclose on so many buildings it’s impossible to dispose of them quickly.

Offering to preserve and maintain foreclosed property requires actively marketing yourself to the banks and property management firms in your area. You and your teams also need the skills and licenses to do the job. The more services you offer, the more jobs you can take. Depending on your skill set, broadening your scope may require hiring employees or contractors, not to mention buying more equipment. When you’re just starting out, you can keep costs low by only taking jobs you can handle in-house with minimal equipment. Market research may tell you which services are most needed in your community. Property preservation is the process of caring for the inside and outside of a foreclosed property, be it vacant or occupied. Property preservation businesses work with banks and asset management companies to provide services such as repair, inspection, insurance claim management, and maintenance. Property preservation is also called “mortgage field services,” and getting involved with completing REO rehabs and property preservation repairs directly for national servicing companies will help your business succeed. Another great option is to work as a subcontractor for a company who also works with national servicing companies. In order to do this, you should become a Property Preservation Repair Vendor or an REO (real estate owned) Repair Vendor. REO, as you may know, stands for “real estate owned,” and is a real estate and property preservation term that organizations in the United States use to describe a certain class of real estate, or property. These properties are usually bank-owned properties that have been seized by the banks or lenders from residents who were unable to pay their mortgages. Once you’ve educated yourself about the property preservation business enough that you know what you’re doing, it’s time to find a few companies in your state, and fill out their online vendor applications. Keep in mind that banks are serious businesses you want your company to appear steady and reliable, so take all the usual precautions and they will want to work with you. You have to register online with the banks and other companies as they will not work with companies who have not. In order to get this work from banks, your company will have to actively market itself to the banks and the local property preservation companies in your state or area. This requires that your company and employees have all the skills and licenses necessary to perform property preservation so make sure you get those. In general, if you have more skills and more licenses stating that your are qualified to perform those skills, banks will be more interested in you, and send more work your way.

If you’re not comfortable calling people or speaking to them about your business, get comfortable. Some of the best recommendations in this business can come from word-of-mouth. If you’re already in the construction or repair business, you probably have some connections that can help you get started; if not, the banks and property preservation companies in your area can help you get started. When you first start out in the property preservation business, you should only take the jobs you can handle with limited personnel, doing them well and rapidly to make a name for yourself. As your business grows, and word-of-mouth or marketing does its job, you may want to take on larger job. HUD handles property preservation for properties that have been foreclosed on and will soon be foreclosed on – they also handle the property inspections, renovation permit, and access restrictions that they will pass on to you if you work with them. Always keep in mind while you are performing your work that part of your job is to make the properties look attractive to prospective buyers once the bank or management company is ready to resell them. Some people call this “curb-appeal,” and it’s a basic tenet of this business. HUD guidelines include property “accessories,” meaning swimming pools and spas and outbuildings like garages and sheds that may be on the property. There is also a registration fee that property preservation companies must pay on each property they want to care for – this fee may be reimbursed if the company owner completes the proper forms and submits to them HUD. Next, you need to meet at the property with your contractors (if you have them) and determine which repairs are necessary, and that the property can sit without much maintenance for a long period of time. Preparation for inclement weather is a large part of this step. While it’s true that many small property preservation businesses have a hard time getting off the ground and staying afloat, my best advice to you is to treat your business like your lifeblood, not like your side job. When you start a business, you want it to succeed, so it should be one of the most important things in your life. Don’t give up just because the going gets rough, and always provide the absolute best service to your clients and companies that you are capable of. Complete the work the way you were asked to, and take photos or write down issues you have for proof later. Remember, your clients need you, and your business will provide years of stability if you run it correctly.

If a homeowner is unable to complete repayments on their mortgage, they may be forced to default on the loan. If the owner defaults on the mortgage for a given number of months, the bank that originally loaned the homeowner the money to purchase the property can legally repossess it and take ownership of it. At this point, the property is referred to as a foreclosure or real estate owned (REO) home. The bank’s primary objective at this point is to recover as much cash from the loan as they can as opposed to accumulating real estate assets. As such, they will be motivated to sell the property as quickly as possible. Some homeowners take out a Federal Housing Association (FHA) insured mortgage. If the owner of a property that is backed by an FHA-insured mortgage defaults on loan repayments, he or she exchanges the property for an insurance claim payment through the Secretary of the Department of Housing and Urban Development (HUD), the Federal agents that manages national policy in this domain. Properties that have been traded in this manner are referred to as HUD homes. Both banks and the HUD will use the services of a private operative to sell the property on their behalf. The HUD refers to these contractors as management and marketing (M&M) contractors or asset management companies. These companies will also subsequently subcontract the sale and maintenance of the property to a third party, usually a realtor or local service provider. During this program, the companies that sell properties on behalf of the banks and HUD will be referred to as asset management companies (AMCs) or M&M contractors. As this program progresses, you will be taught the methods you can use to identify key AMCs, form productive relationships with them and position yourself as a key contact with whom they trade business opportunities. In addition, you will also learn how to identify and develop a network with the realtors who are awarded the REO listings. Forming effective relationships with such realtors will provide you with a further opportunity to secure profitable work. A foreclosure auction is just what it sounds like — an auction to sell a house that has been foreclosed on. You may have seen people on the HGTV channel who flip houses going to these auctions and bidding on foreclosed properties. Well, property preservation and REO businesses also deal directly with these foreclosed houses. At a foreclosure auction, the bank or lender who owns the property is not allowed to profit from the auction, and the properties are often sold at a loss. Any profit goes to the homeowner and any other liens that are present on the property. If the foreclosure auction doesn’t work, and the property doesn’t sell for any reason, it automatically becomes an REO property. Most of the properties you work on will be headed for foreclosure or may have already been foreclosed. Unfortunately (or fortunately depending on how you look at it), the majority will fall into the latter category. Luckily, this can mean big bucks for you. After the clean comes the makeover and, here too, you can offer your services and run a tidy profit in the process. Your customers will typically be banks, the HUD, realtors, and even investors. In many cities, local governments operate bylaws that specify that REO properties must be kept in a secure and good condition, both inside and out, at all times. Failure to do so can incur penalties of up to $1000.

As such, it’s in a lender’s/bank’s best interests to make sure the properties they own are kept in good condition at all times. The organization or entity that initially loaned the buyer the money to buy the home (the mortgagee) will be held responsible for maintaining it, regardless of whether the property was FHA-insured or not. In the case of an FHA-insured property, the mortgagees will have been pre-authorized by the HUD to spend a given amount of money on such maintenance work. We’ll talk about this in more detail on Day 5. If no FHA insurance was in place, the mortgagee or the people they appoint to manage the property on their behalf will set their own budget. Responsibility for preserving and securing REO properties is commonly allocated to an asset manager who works at the bank or is sub-contracted out to an asset management company (AMC) or M&M contractor. These groups or individuals will be tasked with reviewing the initial inspection report that the realtor or the realtor’s preservation company has published, and making the decision as to what aspects of the property should be restored and repaired and what should be replaced completely. They will also set a budget for the work and manage the tender process by which interested contractors bid for the opportunity to complete the project. Once the work is complete, they will also inspect it to ensure it is of an acceptable standard and will, ultimately, pay any invoices (we’ll discuss the important aspect of payment in a later session). In times of recession and downtown, there are a large amount of homes available for sale on the market and very few buyers. This makes property difficult to sell and means that foreclosed homes will be on the market for longer periods of time. To stand half a chance of selling them, banks and the HUD need to ensure that they are kept in good condition and maintained on a regular basis.

This is where you come in. Maintenance services involve a large number of tasks but typically include ensuring the interior and exterior of a property is kept clean and in good condition, maintaining any pool and outside areas and generally keeping everything in good shape. Providing these services can be lucrative because they are required on a monthly basis, giving you a steady stream of income. What’s more, if you were awarded the services to do the initial clean up and fix up, and you did a great job, you’ll have more of a chance of winning this ongoing business too. For this reason, when you prepare any quotation or bid for cleaning and/or transformation services, ensure you also include a section entitled “Optional ongoing maintenance services” in which you list tasks you are able to complete on an ongoing basis. Another top tip is to list “Optional decorating services,” “Optional repair services,” or similar. Sometimes an REO property can be on the market for a long time before the bank makes the decision to invest some additional cash into it in a bid to lure buyers. If you’ve planted the idea that you can provide painting and decorating services, you may also be given a chance to earn cash for interior decorating. Basically, you should ensure you take every opportunity to up sell additional services; you never know, you may just be taken up on them. Property preservation denotes a lender (or new owner if post-foreclosure sale) averting waste to the value of real property by repairing, securing, or maintaining the same, often times through third-party vendors. These steps could include (but are not limited to): changing locks, preventing squatters, winterizing to avoid damage, cutting grass to pre-empt a municipal lien, fixing damages such as broken windows, and other related precautionary measures. During the pre-foreclosure sale period, property preservation is governed by contractual obligations in the deed of trust. Once a foreclosure is complete, determining how to proceed requires evaluation of the home for signs of occupancy, extent of any damage, and remnants of any personal property. If the property is vacant, the new owner may change the locks and start the REO process.

Foreclosure Lawyer Free Consultation

When you need help with real estate foreclosure, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

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Mortgage contracts generally allow a servicer the company that handles the loan account to charge late fees, inspection fees, foreclosure costs, and other default-related fees to your account under certain circumstances, like when you are late on a payment or are in foreclosure. If the servicer charges fee and costs in excessive or incorrect amounts, this will unfairly increase the total balance you owe on your loan. If this happens to you in foreclosure, you can challenge those fees and costs. If your mortgage payment is late, your servicer may charge you a late fee. But servicers sometimes incorrectly assess late fees either inappropriately or in the wrong amount which can add hundreds of dollars on to the amount you owe on the mortgage loan. The servicer assesses a late charge during the grace period. Most mortgage contracts include a “grace period” of around ten or fifteen days. If you make your payment late, but during the grace period, there shouldn’t be a late fee. The servicer delays posting your payment to your account. If the loan servicer delays posting your payment to your account until after the grace period end, it can also result in an improper late fee. The servicer assesses an incorrect late charge amount. Late fees can only be assessed in the amount specifically authorized by the loan contract. The late charge amount is usually found in the promissory note.

Even then, state law may limit the amount that can be charged. If the state limit is lower than what the contract allows, it will generally override the loan contract. Most prime, conventional loan contracts allow the loan servicer to assess a late fee equal to 5% of the payment due. However, state law may limit the fee to, say, only 4%. If the loan documents and state law allow for different late fees, the servicer can only charge the maximum allowed by state law. In this situation, the late fee would be limited to 4% pursuant to state law. It is up to the borrower to make sure the servicer only charged 4% to the account, not 5%. The servicer illegally “pyramids” late fees. In some cases, servicers charge borrowers late fees on full payments that were made on time because the borrower didn’t include a payment for a previously unpaid late charge. “Pyramiding” occurs when the loan servicer takes the assessed late fees from the regular payment and leaves part of the scheduled payment overdue, which results in the assessment of another late charge. When the servicer does this, more and more late fees accumulate. Federal regulations, state law, and mortgage contracts usually prohibit this practice. According to the Federal Trade Commission, pyramiding of late fees is unfair to consumers. Regulation Z, which implements the Truth in Lending Act (TILA), also prohibits the pyramiding of late fees for mortgages covered by TILA. The servicer assesses post-acceleration late charges. In most cases, the servicer is prohibited from assessing late charges after the loan has been accelerated. (When a loan is “accelerated,” you have to immediately pay the entire balance of the loan, not just the past due amounts. This sets the stage for the foreclosure procedure to begin.) If you default on your mortgage payments (that is, you fail to make the mortgage payments), your loan servicer may assess particular charges to your account.

Default-related fees typically include:
• Property inspection fees
• Property preservation costs
• Foreclosure costs/fees, and
• Miscellaneous corporate advances.
Some states limit the amount of fees that can be charged pursuant to a default. For instance, charges may be limited to reasonable expenses, including costs and fees. Most mortgage contracts allow the servicer to take necessary steps to protect the lender’s rights in the property, including conducting property inspections to determine the physical condition or occupancy status of the mortgaged property. Inspections are generally ordered automatically once the loan goes into default. The charges for the inspections are then added to the total mortgage debt. The amount charged for each inspection, which is generally drive-by in nature). However, inspections might be performed monthly or more often, so the charges can add up quickly. Some courts have found that repeated inspections when the servicer is in contact with the homeowner, knows the property is occupied, and has no reason to be concerned about the condition of the property, are not necessary. The loan servicer may also assess costs for preserving the value of the property. Most courts have held that such fees must be reasonable in order to be collectable from the borrower. Generally, foreclosure costs must be reasonable and actually incurred before they are recoverable against the borrower. Most mortgages require the borrower to pay the lender’s foreclosure attorney’s fees as well. To be collectable, attorney’s fees must be reasonable and actually incurred. Additionally, some states limit attorneys’ fees in foreclosures. Corporate advances are expenses paid by the servicer to be recovered from the borrower. Corporate advances may include bankruptcy fees or force placed insurance costs, for example. If undefined corporate advances appear on your account, you should contact your loan servicer for an explanation to ensure they are appropriate for inclusion in the total amount owed. Borrowers may raise any number of defenses regarding improper late fees or other incorrect default-related fees. While some may constitute a full defense to the foreclosure, others will reduce the amount owed on the debt, thereby potentially decreasing any deficiency owed to the lender. (Learn more about deficiencies after a foreclosure.) If you want to challenge the fees being charged in a foreclosure action, you should speak to a qualified attorney who can advise you what defenses are available for your particular situation. Loan servicing records can be difficult to interpret and reconcile, so be sure the attorney is familiar with how to read loan servicing communication logs and payment histories.

A defendant/mortgagor who prevails in the successful defense of a mortgage foreclosure proceeding may be entitled to recover his reasonable attorney’s fees and expenses under Real Property Law. Whenever a covenant contained in a mortgage on residential real property shall provide that in any action or proceeding to foreclose the mortgage that the mortgagee may recover attorneys’ fees and/or expenses incurred as the result of the failure of the mortgagor to perform any covenant or agreement contained in such mortgage, or that amounts paid by the mortgagee therefore shall be paid by the mortgagor as additional payment, there shall be implied in such mortgage a covenant by the mortgagee to pay to the mortgagor the reasonable attorneys’ fees and/or expenses incurred by the mortgagor as the result of the failure of the mortgagee to perform any covenant or agreement on its part to be performed under the mortgage or in the successful defense of any action or proceeding commenced by the mortgagee against the mortgagor arising out of the contract, and an agreement that such fees and expenses may be recovered as provided by law in an action commenced against the mortgagee or by way of counterclaim in any action or proceeding commenced by the mortgagee against the mortgagor. Any waiver of this section shall be void as against public policy. For the purposes of this section, “residential real property” means real property improved by a one- to four-family residence, a condominium that is occupied by the mortgagor or a cooperative unit that is occupied by the mortgagor. In an appropriate case, where the mortgage provides for the recovery of the mortgagee’s attorneys’ fees and expenses, the above statute applies, and the subject real property constitutes residential real property (one family) that is the mortgagors’ home, the court may award the defendant legal fees and costs.
One of the considerations in deciding whether or not you should hire a lawyer to help you fight your foreclosure is the cost. It’s important to understand how legal fees work to make sure that you don’t end up paying more than you can afford.
Most foreclosure defense attorneys structure their fee agreements with homeowners in one of three ways:
• by charging the homeowner an hourly rate
• collecting a flat fee from the homeowner, or
• charging a monthly rate.
Hourly Rate
Some foreclosure defense attorneys charge an hourly rate for their services. The rate can range from around $100 per hour to several hundred dollars per hour. With this type of fee arrangement, the lawyer generally collects an initial retainer—an advance payment to the attorney before he or she starts to work on your case of several thousand dollars. The retainer amount and hourly rate varies widely, depending on the attorney’s experience and the customary rates in the area.
Pros and cons. The benefit to this type of fee arrangement is you’ll only pay the attorney for the amount of time he or she actually works on your case. The downside is that while the attorney will probably be able to give you a likely range of what you’ll pay in total, you won’t get an exact price as far as what the total cost of the foreclosure defense will be and hourly fees can add up quickly.
Flat Fee
Some attorneys charge a flat fee to represent homeowners in a foreclosure. Generally speaking, the fee can range from $1,500 to $4,000 depending on the complexity of the case.
Pros and cons. The benefit to paying a flat fee is that you know ahead of time exactly what the total cost of your foreclosure defense will be. Whether it takes five months or two years to dismiss the foreclosure or for the lender to complete the process you know that this is all you’ll pay. The downside is that not all foreclosure attorneys offer this option and you’ll have to pay the fee upfront, which is difficult for many distressed homeowners.
Monthly Rate
Some foreclosure attorneys charge an upfront retainer ranging from several hundred to several thousand dollars, and then a monthly fee (like $500) for each month that the foreclosure is pending. In addition, attorneys have been known to charge an extra fee on top of this called a contingent fee—if the case is dismissed as a result of the firm’s efforts.
Pros and Cons. The benefit to paying a monthly fee is that you know exactly what your attorney will cost each month without variation. Also, the attorney has an incentive to keep you in the property for as long as possible (if that’s your goal). The downside is that you must pay this amount each month, even if little activity takes place in your case during that time.
Late Fee Assessments
If your mortgage payment is late, your servicer may charge you a late fee. But servicers sometimes incorrectly assess late fees—either inappropriately or in the wrong amount which can add hundreds of dollars on to the amount you owe on the mortgage loan.

Here are some ways that can happen:
The servicer assesses a late charge during the grace period. Most mortgage contracts include a “grace period” of around ten or fifteen days. If you make your payment late, but during the grace period, there shouldn’t be a late fee. The servicer delays posting your payment to your account. If the loan servicer delays posting your payment to your account until after the grace period ends, it can also result in an improper late fee. The servicer assesses an incorrect late charge amount. Late fees can only be assessed in the amount specifically authorized by the loan contract. The late charge amount is usually found in the promissory note. Even then, state law may limit the amount that can be charged. If the state limit is lower than what the contract allows, it will generally override the loan contract.
Limits on late fees. Late fees are often limited by:
• the dollar amount that may be charged (typically a maximum of $10 or $15)
• the percentage of the payment that may be charged (generally 4% or 5%)
• the date on which the late charge can be assessed, and/or
• the payment amount on which the late charge is calculated. (For example, the late charge may be based on a percentage of the entire amount of the payment due, including principal, interest, taxes, and escrow amounts or it may be calculated based on a percentage of just the principal and interest due.)
The servicer illegally “pyramids” late fees. In some cases, servicers charge borrowers late fees on full payments that were made on time because the borrower didn’t include a payment for a previously unpaid late charge. “Pyramiding” occurs when the loan servicer takes the assessed late fees from the regular payment and leaves part of the scheduled payment overdue, which results in the assessment of another late charge. When the servicer does this, more and more late fees accumulate. Federal regulations, state law, and mortgage contracts usually prohibit this practice. According to the Federal Trade Commission, pyramiding of late fees is unfair to consumers. Regulation Z, which implements the Truth in Lending Act (TILA), also prohibits the pyramiding of late fees for mortgages covered by TILA. The servicer assesses post-acceleration late charges. In most cases, the servicer is prohibited from assessing late charges after the loan has been accelerated. (When a loan is “accelerated,” you have to immediately pay the entire balance of the loan, not just the past due amounts. This sets the stage for the foreclosure procedure to begin.)

Default-Related Fees
If you default on your mortgage payments (that is, you fail to make the mortgage payments), your loan servicer may assess particular charges to your account. Default-related fees typically include:
• property inspection fees
• property preservation costs
• foreclosure costs/fees, and
• miscellaneous corporate advances.
Some states limit the amount of fees that can be charged pursuant to a default. For instance, charges may be limited to reasonable expenses, including costs and fees.
Property Inspection Fees
Most mortgage contracts allow the servicer to take necessary steps to protect the lender’s rights in the property, including conducting property inspections to determine the physical condition or occupancy status of the mortgaged property. Inspections are generally ordered automatically once the loan goes into default. The charges for the inspections are then added to the total mortgage debt. The amount charged for each inspection, which is generally drive-by in nature, is typically minimal ($10 or $15). However, inspections might be performed monthly or more often, so the charges can add up quickly. Some courts have found that repeated inspections when the servicer is in contact with the homeowner, knows the property is occupied, and has no reason to be concerned about the condition of the property, are not necessary.
Property Preservation Costs
The loan servicer may also assess costs for preserving the value of the property. For example, property preservation costs may include fees advanced to:
• winterize the home
• replace locks
• repair windows
• restore utilities, and/or
• landscape the property.
Most courts have held that such fees must be reasonable in order to be collectable from the borrower.
Foreclosure Costs and Fees
Generally, foreclosure costs must be reasonable and actually incurred before they are recoverable against the borrower. Acceptable foreclosure costs include, among others:
• auction advertisements
• sheriff’s costs
• filing fees
• service of process, and
• certified mailings.
Most mortgages require the borrower to pay the lender’s foreclosure attorney’s fees as well. To be collectable, attorney’s fees must be reasonable and actually incurred. Additionally, some states limit attorneys’ fees in foreclosures.
Miscellaneous Corporate Advances
Corporate advances are expenses paid by the servicer to be recovered from the borrower. Corporate advances may include bankruptcy fees or force placed insurance costs, for example. If undefined corporate advances appear on your account, you should contact your loan servicer for an explanation to ensure they are appropriate for inclusion in the total amount owed.
Challenging Fees in Foreclosure
Borrowers may raise any number of defenses regarding improper late fees or other incorrect default-related fees. While some may constitute a full defense to the foreclosure, others will reduce the amount owed on the debt, thereby potentially decreasing any deficiency owed to the lender.
A few of the defenses that could potentially be raised are:
• breach of contract
• violation of state usury laws
• unfair and deceptive acts and practices
• unjust enrichment
• negligent servicing
• breach of fiduciary duty, and
• breach of good faith and fair dealing.

Foreclosure Lawyer Free Consultation

When you need an attorney to help with real estate law or a foreclosure in Utah, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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