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FHA Mortgage Foreclosure Seeing Loss Mitigation Challenge

FHA mortgage foreclosure lawsuits could be affected by a Ohio based lawsuit

In a recent court filing, many individuals facing FHA mortgage foreclosure are fighting back. As you may be aware, an FHA Mortgage, and a resulting FHA Mortgage Foreclosure, is a very small subset of loans that were backed by the federal government, namely the Department of Housing and Urban Development (HUD). These loans require specialized rules regarding pre-foreclosure actions taken by the mortgagee (the bank or holder of the Note) before the bank can even file a lawsuit. In fact, many of the FHA Notes will state, flat out, that non-compliance with these specialized provisions will prevent acceleration of the debt and creates defenses to foreclosures.

What are the issues with FHA mortgage foreclosures?

FHA loans require that prior to the fourth month of missed payments that a borrower is reviewed for loss mitigation on a monthly basis. This can mean loan modification  (recasting of a mortgage) or forbearance, short sale (pre-foreclosure sales), deed in lieu, or another workout option that is available to the borrower by the bank. It is important to note that this review is supposed to be monthly, and determine what option may be appropriate for the borrower. This is because other FHA servicing requirements say that the borrower and mortgage company must have a face-to-face counseling. This is what, in theory, helps the FHA mortgagee understand what option would be best for the borrower in a given situation in an attempt to avoid the FHA foreclosure.

Can this defeat a foreclosure suit?

At times, this can lead to a granting of a summary judgment from the defense side or can defeat a motion for summary judgment from the bank. Knowing what is required from an FHA Mortgage – in the foreclosure action – can sometimes be extremely valuable to your case. It is important, if your mortgage is an FHA mortgage, that you bring this fact to your attorney’s attention. If you are just meeting with an attorney at a consultation, you should mention these facts as well.

If you are facing an FHA Foreclosure Action, my office is available to speak to you regarding your options. If you would like to speak with an attorney, please do not hesitate to contact me at 813.252.0239.

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