Creditor/Debtor Law

By: Alejandro E. Jordan, Esq.

If you are experiencing difficulty making on-time mortgage payments due to the national coronavirus emergency, forbearance may be an option for you. Forbearance can help consumers get back on their feet during short-term financial difficulty, but there are a few things you need to know and some important decisions you’ll need to make. Forbearance is when your mortgage servicer, that’s the company that sends your mortgage statement and manages your loan, or lender allows you to pause or reduce your payments for a limited period of time.

Forbearance does not erase what you owe.

You’ll have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them. The types of forbearance available vary by loan type. If your mortgage is backed by the federal government—this includes FHA, VA, USDA, Fannie Mae and Freddie Mac loans—provisions of the recently enacted CARES Act allow you to temporarily suspend payments if you are experiencing financial difficulty due to the impact of the coronavirus on your finances. Loan servicers may also have forbearance or deferment options for non-government backed or private loans, but the exact options available to you may differ.

Here’s how this works for federally-backed mortgages under the CARES Act.

If you are experiencing financial hardship due to the coronavirus pandemic, you have a right to request forbearance for up to one hundred eighty days.

You also have the right to request an extension for up to an additional one hundred eighty days. But, you must contact your loan servicer to request this forbearance. There won’t be any additional fees, penalties or interest added to your account. But, your regular interest will still accrue. Other than telling your servicer that you have a pandemic-related financial hardship, you won’t need to submit additional documentation to qualify for this forbearance.

It’s important to find out what options are available to you.

By: Daniel T. Pascale, Esq.

Oftentimes, creditors seeking to collect money judgments in Miami-Dade or Broward County will file a lis pendens in the public records against real property (i.e. real estate) owned by the debtor. A “lis pendens” is a written notice that a lawsuit has been filed which concerns title to real property or some interest in that real property. A lis pendens is often referred to as a “cloud on title” and will prevent the homeowner from selling or obtaining refinancing on their property until the lis pendens is removed. Other than providing notice to the public, one of the other practical effects of filing the lis pendens is that the debtor feels pressure to pay of their debt.

However, the filing of a lis pendens is not always appropriate and can give rise to an action for damages and attorneys’ fees under certain scenarios. For example, in cases where a creditor is seeking to collect a debt where there is no nexus (i.e. connection) between the real property that the lis pendens describes and the original dispute between the creditor and the debtor, the creditor is expressly forbidden from filing a lis pendens. An example of a situation where there typically is no nexus or connection between the lawsuit and a lis pendens would be where an “unsecured” creditor – such as a credit card debt collection company – files a lawsuit against a Florida homeowner and records a lis pendens in the public records. In such a case, the creditor would be held liable for any damages that the lis pendens causes and would also be required to pay any of the property owner’s attorneys’ fees which he or she incurred in removing the lis pendens.

Thus, when the primary purpose of a lawsuit is to recover money damages and the action does not directly affect the title to or the right of possession of real property, the filing of a notice of lis pendens is not authorized. Thus, a lis pendens is not an appropriate instrument for use in promoting recoveries in actions for money judgments. In the event that a creditor files an unauthorized lis pendens and the lis pendens causes the property owner damages, the property owner is entitled to have the lis pendens removed and can sue the creditor for damages.

Articles Posted in Creditor/Debtor Law

Home Mortgage Loan Modifications under the CARES Act

Forbearance does not erase what you owe.

Here’s how this works for federally-backed mortgages under the CARES Act.

It’s important to find out what options are available to you.

The Use of a Lis Pendens to Collect a Debt in Florida