Chapter 7 Filed To Stop Foreclosure - Need Your Advise

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CynthiaG

LoanSafe Member
Feb 23, 2020
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There was a foreclosure sale date on my home last Feb 19, 2020. I filed skeleton Chapter 7 on Feb 5, 2020 which put the foreclosure auction sale date on hold. I submitted a loan mod to the lender on Feb 13, 2020. Took a few days for them to acknowledge it. It was finally accepted and currently being reviewed by underwriter as of Feb 20, 2020. I did not submit the required docs for Chapter 7 within 14 days and so my Chapter 7 will get dismissed. My questions are: 1) Can the lender foreclose once they find out that my Chapter 7 gets dismissed? If or when they do, can they schedule a sale date right away? 2) Can the lender foreclose if they are reviewing my loan mod application? If the bank can still foreclose, is there anything I can do to stop it?
 

CynthiaG

LoanSafe Member
Feb 23, 2020
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To clarify on my above post, I had a loan modification done in 2015 and went through the 3 month trial modification successfully. Last year, when my income had dropped and started having difficulty making payments on time. My last mortgage payment was June 2019. Hired a law firm in October 2019 but they didn't do anything. They said they have been talking to my lender and they have been advised. Until I received a voicemail from someone local on January 14, 2019 asking if we want to sell our house because he saw an ad in the local paper about the foreclosure sale. The law firm was not aware of that and I had to tell them. They then submitted my loan mod app on January 17, 2019. I then removed the law firm from my account and requested a refund. I received the refund but left with a foreclosure sale date. I filed Chapter 7 to postpone and so I can apply for a loan modification. The underwriter has my loan mod app now as of Feb 20, 2020. But I am very scared that the lender will still foreclose if and when they find out that my Chapter 7 has been dismissed due to failure to submit the required paperwork within 14 days. The idea is just to submit a skeleton paperwork to postpone foreclosure and to get in the loan mod review but I have been reading that lenders are still foreclosing even during a loan modification review. Please advise! Thank you.
 

OneHugeMess

LoanSafe Member
May 30, 2016
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To clarify on my above post, I had a loan modification done in 2015 and went through the 3 month trial modification successfully. Last year, when my income had dropped and started having difficulty making payments on time. My last mortgage payment was June 2019. Hired a law firm in October 2019 but they didn't do anything. They said they have been talking to my lender and they have been advised. Until I received a voicemail from someone local on January 14, 2019 asking if we want to sell our house because he saw an ad in the local paper about the foreclosure sale. The law firm was not aware of that and I had to tell them. They then submitted my loan mod app on January 17, 2019. I then removed the law firm from my account and requested a refund. I received the refund but left with a foreclosure sale date. I filed Chapter 7 to postpone and so I can apply for a loan modification. The underwriter has my loan mod app now as of Feb 20, 2020. But I am very scared that the lender will still foreclose if and when they find out that my Chapter 7 has been dismissed due to failure to submit the required paperwork within 14 days. The idea is just to submit a skeleton paperwork to postpone foreclosure and to get in the loan mod review but I have been reading that lenders are still foreclosing even during a loan modification review. Please advise! Thank you.
Out of curiosity, have you used your two Adjournments?

Those will at least buy you 58 days of time, in the state of NJ to work out a solution with your lender. If you do not know how to do this, wait until the next sale is announced, and than, physically visit the county sheriff's office, two days before the sale. They will help you fill out the form, and get it done correctly - you do not need a lawyer to do it.

In addition,

Find your county on here - https://salesweb.civilview.com/
And than, search for your name after checking "Sold/Canceled" - under the Defendant: side. That will tell you where your home is in the auction process. It'll also tell you, if there has been a adjournment, and when the bankruptcy stay will be lifted.

Generally, even when your Bankruptcy is dismissed, you have at least two or three months, from the date of filing as protection. In most cases, the servicer (who collects payments on your loan every month) will have to apply for a order to remove themselves from the stay. Only than, can they instruct the law firm, handling the case to reschedule the auction.

Also -- I think, and @wanda robo would be able to answer this better than I can. But, after the foreclosure auction, there is supposed to be a 10-Day Window of Redemption. You may be able to file for bankruptcy protection during that time as well, and negotiate a loan mod or reinstatement.

To answer your questions, yes, Occasionally lenders will do what is referred to as a "Dual Track" where they process a Foreclosure case, all while processing a modification. It's rare these days, but, it happened a lot through 2009-2012. New Federal Laws require Home Loan Servicers to actually process the modification request, and give you a formal approval or denial before they can sale the home.

You also have protections, by contacting the CFPB and the NJ State Attorney General's office, if they do not comply with the law. https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-expands-foreclosure-protections/
 
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isisis

LoanSafe Member
Jun 22, 2010
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Hi CynthiaG,

It would be helpful to know what state you're in because each state has somewhat different procedures. From what you've said it sounds like you're in a non judicial foreclosure state in which case you should have received a notice of sale. Ever back when you were represented by an attorney the notice is sent directly to you. If you didn't receive one they haven't followed procedure and that's something you could challenge.

As OHM mentioned checking in your County records is a good idea.
 

CynthiaG

LoanSafe Member
Feb 23, 2020
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Hi guys! Thank you so much for your prompt reply.

I live in Virginia and yes, it's non-judicial. :(

Since I retained a law firm in October 2019 to help me with my loan mod, they said they have ceased all communications from the lender so they are the ones getting all correspondence. Not sure if that also includes the notice of sale. Each time they would call me which once or twice a month, they would say it's on active foreclosure but no sale date.

To answer about the notice of sale, I received regular and certified mails about the foreclosure sale date roughly 2 weeks prior which I believe in my state is what they are only required to do.

As mentioned above, when I spoke to the law firm in mid January, they didn't say anything about the sale so they were not even aware about it. I just found out from someone local on Friday Jan 14, 2020, who left me a voicemail wanting to buy our house for his son.

I informed the law firm right away but could not get hold of anyone so I waited Monday for a reply. They called me and told me that they are submitting the loan mod on that day. I lost trust and scared that things could get even worse with them so I removed them from the case and asked for a refund. I did get a refund.

I am now getting help from a friend, not a lawyer, but has been helping a lot of homeowners in the same situation for a while.

We called the servicer (Fay Servicing) and they said they would need 37 business days in order to consider a loan modification review which we didn't have. So, I filed a pro se skeleton chapter 7 on Feb 05, 2020 which postponed the foreclosure.

It took Fay Servicing until Feb 10, 2020 and daily calls from us for them to acknowledge the filing of bankruptcy and to update their system.

We submitted my 30 page loan modification application on Feb 16, 2020. On Feb 20, 2020, they have accepted and reviewed the loan mod app to be complete and forwarded the paperwork to the underwriting dept.

This is what I am very concerned about: When we asked if our house is protected from foreclosure, one of the account managers (not the one assigned to my case), said she checked with her supervisor and told her that because of my previous loan modification (2015) and upon reviewing my paperwork that our house is on "No Foreclosure Protection" once the bankruptcy gets dismissed or discharged. We are not sure if that account manager is new because she had to check with her supervisor about the status of my case and had to place us on a long hold. We felt that she didn't understand what her supervisor told her but we could be wrong.

I was under the impression that once we get in the loan modification review stage that they cannot foreclose especially if we are 37 days or more away from the foreclosure sale date. Because I did not submit the required paperwork within 14 days after filing it on Feb 05, 2020 and will not attend the 341 creditor meeting in March 18, my chapter 7 will get dismissed.

When will it get dismissed and How fast can the trustee schedule a new foreclosure sale date after finding out the dismissal are my two biggest questions. You said the servicer will have apply to remove themselves from the stay and instruct the law firm to reschedule the new sale date so that may take some time. Also, I was told that it normally takes a bank or a servicer 30 days or so to update their system.

Another question is: I notice that our local newspaper is still running an ad for the trustee sale of our property with the date Feb 19, 2020. Why is that?

I did not find my county on this list: https://salesweb.civilview.com/. Is there another list that I can check? It would be good to know more about my property.

Thoughts? Thank you for all your help and attention.
 

CynthiaG

LoanSafe Member
Feb 23, 2020
7
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1
Btw, I asked a lawyer in California. This is from rocket lawyer site. This is his response:

Yes, a bankruptcy dismissal closes your bankruptcy case, and if it occurs before you receive a discharge, it will mean that you've lost the protection of the automatic stay (the order that prohibits creditors from collecting debts). So your foreclosure can go back on the menu. That's not to say it will, of course, if there's a loan modification in the works, they may be willing to let that play out, if they think it'll be less hassle and/or get them more money than they would through the foreclosure auction.
 

isisis

LoanSafe Member
Jun 22, 2010
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North bay
Try this. Go to auction.com and type in your address. It should show of your property is scheduled for sale. If it is don't panic. Scroll down further and see if it says that it's been cleared for sale.

You can also reach your County records just by googling your County name and recorder or deeds. You should probably be able to view documents online though every state and County have different regulations on it.

If I remember correctly when I filed Chapter 13 a few years ago to stop a sale despite the stay being in place a sale would still show up on the website but always get cancelled.

I'm pretty sure that they can't foreclose if you're being considered for a modification. I'll get back to you with the statute and also some other ways you can delay a sale.
 

isisis

LoanSafe Member
Jun 22, 2010
1,821
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North bay
From the CFPB

If your servicer receives your complete application more than 37 days before your scheduled foreclosure sale, you should hear back from your servicer in writing within 30 days. Your servicer may respond to your complete application in three ways:

  • Your servicer may offer you a loss mitigation option. It will also tell you how long you have to accept the offer. This may depend on how long before your scheduled foreclosure sale you completed your application.
  • Your servicer may deny you loss mitigation. If your servicer denies your application for a loan modification it has to tell you exactly why you were denied. If your servicer receives your complete application for loss mitigation at least 90 days before a scheduled foreclosure sale, you may also have a right to appeal if you were denied a loan modification.
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.
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...

 

CynthiaG

LoanSafe Member
Feb 23, 2020
7
0
1
Thank you for all the info. I went to Auction.com and typed in my full address and nothing came up. I typed in my street name and one came up but not my house address.

I am aware about the 37 days before foreclosure sale date and I would have been calmer if the law firm I retained back in October 2019 submitted my loan modification application during that time.

Fay Servicing started or initiated the sale date on Dec 31, 2019 and the sale date was scheduled on Feb 19, 2020. They gave me a 14 day notice via email.

I am wondering about the 37 day period. I spoke to a lawyer in D.C. last evening for a free consultation. He said it is possible that Fay Servicing will instruct the trustee to proceed with foreclosure once they find out the dismissal of my Chapter 7. He also said that the time frame for them to schedule a new sale date is 30 days from when they find out about it.

Since they accepted my loan modification application on Feb 20, 2020 plus 30 days from "when" they will find out about the dismissal (This depends on when the Court will decide on this. The deadline for the submission of my paperwork was Feb 18, 2020. The deadline for a hearing regarding my application to waive the fee is March 09, 2020 and the 314 meeting is on March 18, 2020).

Will be talking to a lawyer from legalzoom.com this morning and will keep you guys updated.

Again, thank you for all the info.
 

isisis

LoanSafe Member
Jun 22, 2010
1,821
254
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North bay
Ok, let me understand this. You submitted an application on February 14 and received a notice of sale two weeks before the sale date which is February 19 but that date is now past since this is the 25th.

A couple things you could do is go to your County records online search and see what's been recorded in your name. I don't want to scare you but you need to be sure a trustee's deed has not been filed indicating that your home was sold. Conceivably that's why it's not showing up on auction.com.

Also look on the notice of sale you received and there should be some information about how you can find out the status of the sale. I got the auction.com site from my notice of sale.
 

CynthiaG

LoanSafe Member
Feb 23, 2020
7
0
1
Ok here me try this again...

Chapter 7 filed - Feb 05, 2020
Sale date - Feb 19, 2020 - postponed due to Chapter 7
Loan Modification Accepted and in Underwriter's Department - Feb 20, 2020
As of Feb 20, 2020, they said I am in active bankruptcy, sale date is postponed, and loan mod app is with underwriter. They said it will take 30 days to make a decision.

NEW EVENT:

Today, I received a letter from Fay Servicing dated Feb 21, 2020 that they will NOT be reviewing my loan modification application because the owner of the loan does not offer loss mitigation options to borrowers who submit applications less than the applicable number of days before a scheduled foreclosure sale. The documents required to complete my loss mitigation application must be received more than than 37 days before a scheduled sale date. They are pertaining to Feb 19 sale date which was postponed because of Chapter 7.

They also said that in order to avoid foreclosure, it is important that I make the full reinstatement payment as quickly as possible and prior to the scheduled foreclosure sale date.

If I am unable to reinstate, they may pursue foreclosure and the sale of my home.

Also, I received a letter from the court about my Chapter 7 saying that it is ordered that my case and all related pending motions and adversary are dismissed. It is also ordered that upon the trustee filing a final report, the same shall be deemed approved without further order, the trustee's bond shall be released, and the trustee shall be discharged from further liability unless proper objection is made to said final report within 30 days after filing of the same or such extended time as may be granted upon proper application made within said 30 days.

I called the trustee on Feb 19 and they said it is on hold. I went to their website BWW Law Group and my home is not listed there.