June 2009
Prepared by: The Legal Aid Society Legal Services for NYC, Foreclosure Prevention Project South Brooklyn Legal Services, Foreclosure Prevention Project Staten Island Legal Services, Homeowner Defense Project
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This material is not intended for nor should it to be used as a substitute for legal advice.
Bring this with you to the settlement conference and use these pages to take notes during your conference.
Phone number
Email address
Table of Contents
Page # Overview What is Foreclosure What is a Settlement Conference Five steps to preparing for a settlement conference Step 1: Reach out for assistance Step 2: Gather your documents Step 3: Prepare your budget Step 4: Review your options Prepare your offer Step 5: Tell your story Note taking form for your conference 3 4 5-9 10 11 12-13 14-23 24-25 26 27-33 34-35
BEFORE YOU LEAVE: . Explain your understanding of what happens next. Ask the judge to confirm you are right. I need to:
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Adjournment date (if one was set) Adjournment requested by: Reason adjourned:
You should focus on three areas when preparing for your settlement conference: (1) understanding what a settlement conference is; (2) reviewing your financial situation; and (3) identifying possible solutions to your foreclosure.
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What is foreclosure?
In New York State, a foreclosure is a lawsuit filed by a mortgage holder (Plaintiff) against a mortgage borrower (Defendant) asking the Court to sell the home to repay the mortgage. A foreclosure lawsuit begins after a homeowner falls behind in making mortgage payments. The bank files a Summons and Complaint with the Supreme Court in the county where the house is located and gives the homeowner copies of these documents (this is called service). You can take steps to avoid foreclosure. Failure to respond to the foreclosure action may result in your house being sold at auction.
Have you tried to contact your lender or bank? If so, talk about your efforts. (How many times have you called? What happened?) Were the people you spoke to helpful and responsive? If any offers were made to modify your loan, explain what they were.
These are the conversations I have had with my lender to try to In New York, all foreclosures must go through the Court. The process takes time, from the beginning (filing of a Summons and Complaint) to the end (discontinuance, dismissal or auction and eviction). It usually takes more than six months but your case could be longer or shorter. Both the Plaintiff and the Defendant have the right to go to court to resolve the foreclosure lawsuit. A homeowner facing foreclosure may appear in court pro se (without a lawyer) or with a lawyer. See the guide How to Answer a Foreclosure Complaint Pro Se (without an Attorney) available at http://www.sbls.org/ index.php?id=349 for instructions on how to file an answer. avoid foreclosure:
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You can make the most of this opportunity by coming prepared to present an offer to the lender before or at the beginning of your settlement conference.
This is how many months behind I am: I believe I owe $______________ in unpaid mortgage payments not including charges and attorney fees.
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Did you lose your job? Was there a medical emergency? Did you struggle to make mortgage payments right from the beginning? (If so, you need to fully explain how you got a mortgage you couldnt afford.) Did you get behind when your interest rate went up? Did you get behind because you had to make essential repairs to your home? Did the bank start applying your payments to late fees? Were there escrow charges? Did you think the monthly payments would be lower? Why? Any other reasons you have?
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Were you looking for a loan? Who helped you get it?
Have a friend, family member, or attorney assist you; Speak with an attorney or other advisor before reaching any decision; Have anything explained to you; Accept or reject all or part of any proposal from the bank; Make an offer to the bank or propose changes to the banks offer; Ask for an adjournment, or rescheduling, of the conference for a good reason; Ask to receive copies of any documents related to your case such as the payment history (to make sure the charges and amount due are correct), the loan file, and proof that the bank really owns the note (the bank can only foreclose if it owns the note and mortgage); Ask the banks attorney to explain how any amounts were calculated. This includes an explanation of each and every fee the bank claims you owe. Receive translation assistance at the conference and for key documents received from the court.
How much money were you hoping to borrow and what were you planning on using it for?
When talking about your loan explain whenever your loan terms were different from what you were promised. You should be able to discuss basic information about your loan. This means you should be prepared to talk about:
The current amount of your monthly payments: Your interest rate and whether it adjusts (changes):
If the loan is interest only (you make payments, but the amount you owe does not go down) or negatively amortizing (you make payments, but the principal amount you owe increases):
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To tell your story, you need to be able to answer the following questions: 1. How did you get your loan? 2. How did you end up in foreclosure? What happened? 3. What have you done to try to keep your home? 4. What is a possible solution to your problem?
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Waivers that give up your right to complain about actions the bank may take after the settlement agreement is signed. Arbitration clauses that limit your right to go to court to resolve any issues you have with your mortgage. Forbearance agreements: These are designed to bring you current. You may be paying higher payments or have a balloon payment at the end. If the terms of your loan were not affordable in the first place beware of accepting a forbearance agreement. Payment plans you cant afford.
Keep copies of all communication with the court, including letters sent to the court and records of the phone calls you made (record the date, time, person you spoke with and outcome of the conversation).
You dont have to agree to something in a rush. If the bank wants to make a deal, you can ask to discuss it or have it explained in front of the judge. If you still dont understand, you can ask for an adjournment to talk to an advocate. ASK FOR these settlement terms: The agreement should clearly state how much you owe, what each charge is for, and that anything not on the list is deemed waived by the plaintiff. The agreement should state what you should do if the 28 bank violates the terms of the agreement.
What should you do if you are homebound or permanently unable to attend a conference?
You should call and write to the court and explain why you are unable to travel. You may also want to have someone you trust attend the conference with copies of your letter and ask the court to appoint a guardian ad litem to help represent you.
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Lower your interest rate; Change from an adjustable rate loan (ARM) to a fixed rate loan; Forgive or reduce interest owed/past due; Waive late charges and other fees;
This Guide will walk you through what you need to do.
Step 1: Call today to make an appointment with the nonprofit advocates working in your community or neighborhood (see next page). Step 2: Gather your documents. Step 3: Complete your budget and figure out what you can afford. Step 4: Learn what some of your options are and identify the plan you think is best for you. Step 5: Practice how to tell your story at the conference.
Forgive or reduce the loan principal (lower the amount you owe); Extend the term of the mortgage (make the mortgage payable over a longer period of time).
Before reaching an agreement all homeowners should: Ask for a written explanation of all fees charged; Request that attorneys fees and late fees be reduced or waived as part of any settlement agreement. Elderly homeowners: If you are over 62 years old, you may be able to resolve your foreclosure with a reverse mortgage. You should consult with an attorney or housing counselor right away. Even if you get a reverse mortgage, you should still review all fees charged. 27 You can also ask the bank to accept a reduced payoff amount.
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Now that you have figured out what you can afford you should present this offer to the Judge and Bank at your Settlement Conference.
$________________ (I on page 24). This is 31% of my gross income as required under the Making Home Affordable Plan enacted by President Obama. If my payment is lowered to this amount I can afford to remain in my home because my total monthly household income after taxes is $___________________(F on page 20) and I would have $____________________(K on page 25) left over each month, which is enough to cover my other expenses.
The Center for NYC Neighborhoods hotline 646-786-0888 or www.cnycn.org; The Office of Housing and Urban Development (HUD) 800569-4287; The NY State Banking Department referral line 1-877BANK-NYS; The Department of Housing and Community Renewal lists resources by county at http://nysdhcr.gov/ ProgramsForeclosurePrevention/CounselListing.htm.
Special Assistance for Some Union Members: The following unions offer legal services to their members and retirees. If you are a member or retiree of the following unions, contact the legal support unit to see if it can help: ***Make 2 photocopies of this page if you can*** Share the copies with the banks attorney and the
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Gather your loan documentsthey are important to tell your story. Bring copies of your loan and foreclosure papers with you when you meet with an attorney or housing counselor and when you go to court. Keep copies in a safe place. If you are missing important loan documents ask the bank to give you copies at the settlement conference. If you dispute the amount your lender or servicer says you owe make a list of payments you made including the date and amount you paid. Bring proof of these payments to the settlement conference (for example, canceled checks and bank statements). Sometimes the amount the bank says you owe is not accurate.
Current Mortgage Payment (you need to look this up if you dont know) - Affordable Mortgage Payment (this is I on page 24) REDUCTION IN MONTHLY PAYMENT
Total Take-Home Household Income (F on page 20) - Affordable Mortgage Payment (this is I on page 24) INCOME REMAINING AFTER MORTGAGE
Ask yourself:
You should still attend and participate in your settlement conference even if you do not have your documents.
Does the income remaining after your mortgage payment (this is K above) seem like enough to live on? Do you think you will be able to make ends meet if you spend this much each month on your mortgage?
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If you do not think you can afford to live on the amount that is left over, you should speak with an advocate. You should not fill in the information on page 26 if you dont think that this amount is affordable to you.
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Documents to Gather
Your most recent mortgage statement. Forbearance, loan modification or workout offers you have received (include both rejected and accepted offers). All papers and letters you have received from court and from your mortgage lender or servicer. Copies of any letters, emails or faxes you have sent to court, your mortgage lender or servicer.
Get it
Tool to Calculate Affordable Monthly Mortgage Payment under the Making Home Affordable Plan.
All copies of your loan application (usually 4 pages long and known as a Uniform Residential Loan Application or 1003 form). Your Settlement Statement (usually two pages of long paper 8 x 14 - with two columns of numbers. It says HUD 1 on the top right).
Total Pre-Tax Monthly Household Income (this is G on page 21) x 0.31 AFFORDABLE MONTHLY PAYMENT
x 0.31
= _____
The Note maybe called a Balloon Note or Adjustable Rate Note. Bring any riders associated with your note. Mortgage and riders (if there are any). Truth-in-Lending Disclosure Statement (all copies you received). Good Faith Estimate. Your Deed. Most recent appraisal report (if available). Any papers related to fees you paid at closing (to your lender, mortgage broker or others). If the mortgage was to purchase your home: the Contract of Sale and papers about repairs or the condition of your home. OR 13 If you refinanced your home to do repairs: copies of any home improvement/repair contract.
What is affordable to you depends on your situation. If you have a lot of other debts or past due bills, the Affordable Monthly Payment you calculated above may not be affordable to you.
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Housing counselors or foreclosure defense lawyers will need the same information this guide requires. If you arent working with a housing counselor, this step is especially important. You should fill this out carefully. Just as you need to gather your loan documents, you also need to gather proof of your income. This is necessary to negotiate with your bank.
The purpose of preparing your budget is to figure out what you can afford to pay on your mortgage. Once you have completed your budget, this guide will help you prepare an offer to present to the bank at your settlement 14 conference.
Total Take-Home Monthly Household Income (this is F on page 20) - Total Monthly Expenses (this is A on page 16). TAKE-HOME INCOME REMAINING AFTER EXPENSES
Take-home income remaining after expenses is what you have leftover each month after you pay all your bills. Look at your budget and the amount you have left over after your monthly bills are paid. It is very likely that with your current mortgage payments included, your income remaining after expenses (this is H above) is negative or close to zero. Ask yourself: What expenses can be reduced or eliminated? What steps must be taken to make that happen? What, if any, rental income could you collect? If necessary, make these changes and recalculate your budget.
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Remember to be realistic and honest with yourself as you complete your budget.
Throughout the process of preparing a budget and gathering your income documents, you should include the income of other household members, including your spouse, partner, parent or any individual, only if that person regularly, and 15 reliably, contributes to the mortgage and other household expenses.
Other income in Other income in your house your house BEFORE taxes AFTER taxes
(spouse, family member, girlfriend/ boyfriend) (spouse, family member, girlfriend/ boyfriend)
+
16
________
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Budget Worksheets
Monthly Housing Expenses: Rent or Mortgage: $ Second Mortgage: $ Condo Fees/Maintenance: $ Home Owners Insurance: $ Property Tax: $ Cable: $ Internet: $ Telephone/Cell Phone: $ Gas: $ Water: $ Electricity: $ Other: $ My Total Housing Expenses: Add together all of the expenses listed above: $ fill this in on page 16.
Income
Regular Wages: Part Time Work: Rental Income (that you actually receive): Welfare: Unemployment: Disability: Social Security: Pension: Alimony: Other:
Total Income:
Monthly Food and Grocery Expenses: Groceries: $ TOTAL TAKE-HOME MONTHLY HOUSEHOLD INCOME Lunch (work/school): $ Dinner Out: $ Entertainment:$ Cleaning Supplies: $ Other: $
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= ________
My Total Food and Groceries Expenses: Add together all of the 17 expenses listed above: $ fill this in on pg. 16.
Budget Worksheets
Monthly Transportation Expenses: Car Payments: $ Insurance: $ Gas: $ Tolls/Parking:$ Bus/Train: $ Other: $ My Total Monthly Transportation Expenses: Add together all of the expenses listed above: $ fill this in on pg. 16. Doctor/Dentist: $ Medication: $ Other: $ My Total Medical Expenses: Add together all of the expenses listed above: $ fill this in on pg. 16. Monthly Clothing Expenses: Clothing (includes uniforms): $ Laundry: $ Dry Cleaning: $ Other: $ My Total Clothing Expenses: Add together all of the expenses listed above: $
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Monthly Education Expenses: Tuition/Fees: $ Student Loans: $ Book/Supplies: $ Other: $ My Total Education Expenses: Add together all of the expenses listed above: $ fill this in on pg. 16. Monthly Medical Expenses: Insurance Premiums/Co-Pay: $
Monthly Children Expenses: Alimony/child support: $ Day Care: $ Formula/Diapers: $ Other: $ My Total Children Expenses: Add together all of the expenses listed above: $
Religious contribution $ Credit Card Payment: $ Credit Card Payment: $ Sou Sou: $ $ sent to family members (remittances): $ Other: $ My Total Other Monthly Expenses: Add together all of the ex19