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Dave Kennett
Dave Kennett, Attorney
Category: Business Law
Satisfied Customers: 27689
Experience:  25 years practicing law
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I own business property and the buiness on the propety. Last

Resolved Question:

I own business property and the buiness on the propety. Last fall (08) when the recession hit hard, I missed three payments on my mortgage. I have made all payments since then, but still remain three months behind. Then lender has sent notices of intent to forclose to me twice before, but never acted on it. The lender sent me another notice of intent to foreclosure several day ago.

I have considerable equity in the busines and property and I do not want to lose it in foreclosure. I expect to have reasonable profit in the business in the future.

How an I convince the bank to work with me and avoid foreclosure?

How can I defend the bank's foreclosure proceeding in court and stop the judicial foreclosure?
Submitted: 7 years ago.
Category: Business Law
Expert:  Dave Kennett replied 7 years ago.

DearCustomer- You have no legal defense to a foreclosure if you are behind on your mortgage unless you can convince a court that by accepting payments the lender has waived its right to foreclose however I doubt that will be successful. As far as working with the bank that is simply a matter of getting to the right person in management who will listen to reason.

 

Most banks really don't want to foreclose if there is some other option. I have had clients have some measure of success by offering to make up the back payments by paying an additional amount each month over a 6 month or 1 year period. If you can get a forbearance agreement in writing that they will not foreclose if you catch up the payments in a specific amount of time that will give you the best opportunity to avoid foreclosure.

 

So long as you are behind they can file at any time and you have no realistic defense. If there is sufficient equity in the property the bank may be more likely to go along with something than if the property is worth less than the mortgage since there is no protection for the bank in an "upside down" loan.

 

Dave Kennett

Customer: replied 7 years ago.

I did enter into a forebearance agreement sometime in January or February of 2009. I did make some double payments, butI I still was not able to catch up on the payments that I was behind. I had substantial sums stolen by employees which prevented me from making the extra payments. I can catch up the payments now, but I need a little more time.

 

I have abeen negoiating with the banks representative for terms on another forebearance agreement. However, while we were negoiating she went ahead and turned the matter over to an attorney to proceed with the foreclosure. I just recevied notice of the court filing and I have twenty days to respond. Since the banks representative was not negoiating in good faith, is this a breech of the covenant of good faith and fair dealings?

 

If I bring the loan current before the judicial hearing, can I prevent the foreclosure. I believe that I can bring the payments current, but may not be able to pay the accumulated late fees before the judicial hearing. If I bring the loan current, but I am not able to make the late fees by then, will I still be able to prevent the forclosure?

 

If I successfully defend the foreclosure proceeding, can I recover attorney fees?

 

How can I prevent the foreclosure or successfully defend the foreclosure action in court?

 

I need a quick response.

 

Jim

Customer: replied 7 years ago.

I did enter into a foreabearance agreement sometime in January or February of 2009. I did make some double payments, but I still was not able to catch up on the payments that I was behind. I had substantial sums stolen by emloyees whcih prevented mefrom making the extra payments. I can catch up the paymets now, but I need a little more time.

 

I have been negoiatingwith the banks representative for terms on another forebearance agreement. However, while we were negoiating she went ahead, whithout letting me know, and turned the matter over to an attorney to proceed with the foreclosure. I just recevied notice of the court filing and I have twenty days to respond. Since the banks representative was not negoiating in good faith, is this a breech of the covenant of good faith and fair dealings?

 

If I brng the loan current before the judicial hearing, can I prevent the foreclosure? I believe that I can bring the payments current, but may not be able to pay the accumulated late fees before the judicial hearing. If I bring the loan current, but I am not able to pay the late fees by then, will I stll be able to prevent the foreclosure?

 

If I successfully defend the foreclosure proceeding, can I recover attorney fees?

 

How can I prevent the foreclosure or successfully defend the foreclosure action in court?

 

I need a quick response.

 

Jim

Expert:  Dave Kennett replied 7 years ago.

You definitely need to file your answer and use the forbearance agreement as a defense plus the good faith argument. The problem is that if you didn't abide by the forbearance agreement the bank has a right to declare it as being in default and proceed with the foreclosure.

 

You will not be able to recover the attorney fees you have spent however if you are talking about the attorney fees the bank is charging in the suit those would not be owed if you prevail in the suit. Bringing the loan current is not a guarantee the foreclosure will be dropped but it certainly is a way to get the bank to be more cooperative.

 

The only way to guarantee the foreclosure will end is to pay the note in full which I assume is not a viable option.

 

Dave

Customer: replied 7 years ago.

Dear XXXXX,

 

Thank you for answeringmy questions. I intent to accept your answers so that you will get paid. However, I would like to ask a couple of more things regarding the foreclosure.

 

Although I was not able to keep the terms of the forebearance agreement which gave me until June or July 2009 to catch up with my payments, the bank has been accepting monthly payments from me since that time. If the bank asserts that I breached the forebearance agreement and proceeds with the foreclosure, will weavier be a good defense to this assertion?

 

Can unforeseen hardships brought on by the recession which was caused by the banking industry, and other unforseen circumstances (hardship) be a defense to foreclosure, if it can be shown to the court that the hardships are being over come and that I will have the ability to catch up on my payments in the near future?

 

I have put my retirement savings into the purchase of this business as part of my retirement plan, will the court have any sympathy to the fact that if I am foreclosed on, I will become a burden to state to provide for my retirement instead of a self-reliant business man?

 

Is the foreclosue proceeding an administrative hearing? Are informal rules of evidence followed? Is the foreclosure proceeding more like arguments in a motions hearing?. Or is the proceeding more like a trial with formal rules of evidence followed?

 

Can you provide me with any other information that will help me save my property and business. I appreciate you answers.

 

Thank you,

 

Jim

Expert:  Dave Kennett replied 7 years ago.

Jim - Waiver is always a viable defense, especially when payments were being accepted and if there was no notice of default. You definitely should raise the issue. Sympathy, especially when dealing with banks is a non entity. Any external factors such as the economy or death in the family etc means nothing as far as the legal issues are concerned.

 

If course you can raise these issues in private conversations with the bank but a judge would have not legal authority to consider these issues when deciding a case. This is not like a criminal case where external factors sometimes affect sentencing after a conviction. This is a contract issue and will be decided on the contract law.

 

Dave

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