Foreclosure Protection

Three Protections Against Unnecessary Foreclosure.

While the threat of foreclosure is straining enough, it's even more burdensome when it happens even though there are laws or guidelines in place to put a stop to it. If you are a homeowner for whom foreclosure is looming, you are entitled to the following protections against losing your home:

1. Suspension of a Referral to ForeclosureGavel

The servicer on your loan is not allowed to refer the loan to foreclosure if you are in the middle of an evaluation to determine if you are eligible for a modification, or if you have been offered or notified of a mortgage assistance program and the deadline for participating in it has not yet passed. Such cases include HAMP evaluation, a Trial Period Plan (TPP), and an FDD Forbearance plan. In these instances, it must be determined that the borrower is ineligible for the program or has failed to respond in time to participate in the program before any foreclosure can proceed.

2. Suspension of Foreclosure Proceedings in Process

If you apply for a HAMP evaluation after your loan has already been referred to foreclosure, the servicer of your loan must move to halt foreclosure proceedings immediately. This pause in the process is mandated as soon as you have accepted a Trial Period Plan (TPP) based on your confirmed income. No proceedings may resume as long as the trial period is in effect. The servicer must do everything in their capacity to ensure that no further judicial activity occurs on the foreclosure. Although this does not guarantee a halt to the proceedings in every case, as the court that has the authority over the foreclosure will ultimately be responsible for suspending them, it is the servicer's responsibility to make sure that the borrower's intents and interests are respected.

3. Suspension of a Scheduled Foreclosure Sale

If you submit a HAMP request seven business days or more before your home is scheduled to be sold under foreclosure, the servicer must ensure that the sale is suspended until the HAMP evaluation is completed. A foreclosure sale cannot be halted, however, if any of the following is true:

  • the HAMP request is received after the deadline
  • the borrower is no longer in good standing after having undergone a permanent modification
  • the borrower was offered a TPP but did not make a payment before the due date
  • the borrower was already evaluated according to an Initial Package and did not qualify for HAMP.

In some cases, foreclosure may proceed despite the servicer's best efforts to prevent it. If the servicer can document these efforts, they are not liable for the failure to halt the foreclosure. Although the deadline is considered to be the seventh business day before the announced date of sale of the property, it's possible that your servicer has set additional deadline requirements. In particular, you may have to meet other requirements if the servicer receives your request later than 30 calendar days before the sale date. If this is so, the servicer must provide you with these requirements and publish them on their website.

Lessening the Impact of Foreclosure

To mitigate the impact of foreclosure, the servicer must take the following steps:

  • notify a borrower who is in a TPP or HAMP evaluation that his or her home will not be sold as long as s/he is making TPP payments or being evaluated for HAMP, although some parts of the foreclosure process may continue
  • implement a written policy for communicating the borrower's HAMP or TPP status to a foreclosure attorney or trustee
  • certify to the foreclosure attorney/trustee, before the foreclosure sale occurs, that no alternative could be reached despite all reasonable efforts to avoid it. The servicer must present this certification in writing no later than seven business days before the scheduled date of sale of the property.