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Georgia Attorney General - Mortgage and Foreclosure Information

Georgia Attorney General - Mortgage and Foreclosure Information

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Published by: ForeclosureGate.org Library on Mar 17, 2011
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About the Office Press Room Opinions Key Issues Careers Links Contact Us
Home>Key Issues> Mortgage and Foreclosure Information
Mortgage and Foreclosure Information
Frequently Asked Questions About
 The Attorney General has developed this website to provide information about mortgages and foreclosures inGeorgia. This page also contains telephone numbers and links to websites where you can find help andadditional information.1.What are my most important mortgage documents? 2.Who holds my mortgage? 3.What is a “loan servicer”? 4.I want to file a complaint against my bank or its servicer. Where should I send it? 5.What is a “loan modification”? 6.What is the “Making Home Affordable Program”? 7.I’ve been solicited by companies offering to help me obtain a loan modification or avoid foreclosure –are they for real?8.What can I do if my mortgage holder has made mistakes in my account, or if I need more informationabout my mortgage account? 9.How does foreclosure work in Georgia? 10.What happens after the foreclosure sale has taken place? 11.What if I am a tenant in a home that has been sold at foreclosure? 12.What are the tax consequences if my home is sold at foreclosure? 13.What if I have lost my home in foreclosure and I cannot afford to live elsewhere? 14.How can I avoid foreclosure? 15.What is a short sale? 16.What is a deed in lieu of foreclosure? 17.How can a bankruptcy petition help me? 18.Who can help me avoid a foreclosure? 19.What preparations should I make before consulting a housing counselor or lawyer about problems withmy mortgage? 20.Are there any special legal protections for active duty military personnel?**************************************1. What are my most important mortgage documents?When you take out a loan to buy a house, you will sign at least two documents: a
promissory note
,in which you promise to make regular payments on the loan, and a
deed to secure debt
(commonlyreferred to as a “mortgage”) which gives the bank the legal right to take away your house if youdefault on the note. The process of taking away your house after a default is called
promissory note
and the
deed to secure debt
will be cancelled on the day that you pay off your loan. Until then, those two documents spell out the rights and responsibilities that you owe toyour lender, and that your lender owes to you. Make sure you know where your copies are, and readthem.2. Who holds my mortgage?In the old days, you applied for a home loan from a bank, and that bank held your promissory noteand deed to secure debt until the day the loan was finally repaid in full. Now, it is common for banksto buy and sell home loans. Your note and deed may be sold, transferred, or assigned at any time tosomeone other than the bank which gave you the loan. This could be another bank, or even aninstitutional investor. If you are not sure, you have the right under federal law to write and ask for thename, address, and contact information of the company that currently holds your mortgage. At theend of this webpage, you will find form letters that you can modify to fit your particular request.3. What is a “loan servicer”?
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loan servicer
is a company hired by the lender to handle the day-to-day business of communicatingwith homeowners, sending out bills, and keeping track of payments, escrow accounts, insurance,property taxes, and the like. The loan servicer is the company that sends you a monthly statement,and to whom you send your monthly payments. Not all lenders use a loan servicer; some lenders dotheir own loan servicing. To make things even more confusing, many of the largest loan servicers arealso banks! The name and contact information of your loan servicer will appear on your monthlystatement.4. I want to file a complaint against my bank or servicer. Where should I send it?Complaints against a bank or its servicer should be sent to the federal or state banking regulator withjurisdiction over that particular bank. This can be very confusing, since there are fifty State bankingregulators and several federal bank regulatory agencies. For example, several of the biggest mortgagelenders – Wells Fargo, Bank of America, Citibank, and Chase – are national banks regulated by thefederal Office of the Comptroller of the Currency. To file an online complaint against a national bank,go to:http://www.helpwithmybank.gov/complaints/ These websites can help you find out who regulates a particular bank:http://www.ffiec.gov/consumercenter/default.aspxhttp://www.helpwithmybank.gov/national_banks/index.html http://www2.fdic.gov/idasp/main.asp  5. What is a “loan modification”?A
loan modification
is a written agreement between you and the holder of your mortgage to changethe original terms of your mortgage (such as the length of the loan, principal balance, or interestrate.) If you obtain a permanent loan modification, then your monthly payment may be reduced to amore affordable amount. You apply for a modification in much the same way that you apply for a loan,by providing personal and financial information, tax returns, proof of employment, etc. If yournumbers meet the numerical formula used by the lender, then your application will be approved andyour loan terms will be changed. If not, then your application will be denied, and you will still bebound by the terms of the original loan. Please be aware that in some cases, the length of the loan orthe principal balance may be increased in return for a lower interest rate and monthly payment.Some lenders allow homeowners to participate in a
trial modification program
while theirapplication for a permanent modification is being considered. Please be aware that if your applicationfor a permanent modification is denied, the lender may demand that you pay the difference betweenyour original monthly payments and the trial program payments. Moreover, if the homeowner isdelinquent in making payments under the trial modification program, it is almost certain that theapplication for a permanent modification will be denied.Many lenders have their own loan modification programs, with their own formulas and requirements.The federal government’s Home Affordable Modification Program (“HAMP”) is designed to helphomeowners who are experiencing a financial hardship. If you are found to be eligible for HAMP, thenyour loan may be modified to make your monthly mortgage payment no more than 31% of your grossmonthly income. For more details on HAMP eligibility and requirements, visit
.But be warned: applying for a loan modification may not stop a foreclosure. There have beeninstances where homeowners have had their homes sold at foreclosure while their modificationapplications were still pending. You should take action immediately if you receive a notice that yourhome will be foreclosed on by the holder of the mortgage.6. What is the “Making Home Affordable Program”?The
Making Home Affordable Program
is a federal program administered by the United StatesDepartment of the Treasury and the Department of Housing and Urban Development. It offers severaloptions for homeowners, some of which are available through private lenders, including:
refinancing mortgage loans through the Home Affordable Refinance Program (“HARP”);
oan modifications for first and second mortgage loans through the Home AffordableModification Program (“HAMP”) and the Second Lien Modification Program (“2MP”);
providing temporary assistance to unemployed homeowners through the HomeAffordable Unemployment Program (“UP”); and
offering other alternatives to foreclosure through the Home Affordable ForeclosureAlternatives Program (“HAFA.”)To get more information on these programs, visithttp://www.making homeaffordable.gov/borrower-faqs.html.
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I’ve been solicited by companies offering to help me obtain a loan modification or avoid foreclosure –are they for real?Maybe … and maybe not. Many companies advertising these services are scam artists who stealmoney from distressed homeowners by taking upfront fees and not delivering on their promises. Hereare some suggestions for identifying scams and what to do if you feel that you have been a victim:
You should never pay a fee for assistance with or information about the
Making HomeAffordable Program
Beware of any person or organization that asks you to pay an upfront fee in exchangefor a counseling service, foreclosure prevention, or modification of a delinquent loan.
Beware of anyone who wants you to sign over the deed to your house in order to “saveyour home.” 
Beware of anyone who advises you to deliberately miss a mortgage payment.
Never make your mortgage payments to anyone other than your mortgage holder,unless you have the mortgage holder’s approval.To file acomplaintor to get free information on fraud and other consumer issues, call theHomeowner’s Hope Hotline at
1-888-995-HOPE (4673) or contact the
Federal Trade Commission atwww.ftc.gov/consumerprotectionor 877-FTC-HELP (4357). In addition to contacting the FTC, youmay also wish to file a complaint with the Governor’s Office of Consumer Protection by calling 404-651-8600 or toll free at 1-800-869-1123. For more information about foreclosure rescue or loanmodification scams, go towww.LoanScamAlert.org,www.ftc.gov/MoneyMatters, or http://www.occ.gov/news-issuances/consumer-advisories/2008/consumer-advisory-2008-1.html.8. What can I do if my mortgage holder has made mistakes in my account, or if I need moreinformation about my mortgage account?The federal Real Estate Settlement Procedures Act, 12 U.S.C. Section 2605(e), gives you the right to
request information about your mortgage account
. It also gives you the right to
demand thatyour account be corrected
, if you believe the lender or servicer has made a mistake. At the end of this webpage are sample letters that you can use to request information, or to ask that the servicercorrect your account. Be sure to clearly identify the name of the borrower as it appears on theservicer’s records, the account number, and the property address. Federal law requires that thelender or servicer acknowledge your letter within twenty days, and answer it within sixty days.9. How does foreclosure work in Georgia?Georgia is a “non-judicial foreclosure” state. That means the lender can foreclose on your homewithout filing suit or appearing in court before a judge. The procedures for foreclosure are spelled outin the Official Code of Georgia, Sections 44-14-162 through 44-14-162.4.Foreclosure begins with a
under the terms of the original promissory note or deed to securedebt. Usually the default is your failure to make the required payments on the loan. A default canalso occur due to things such as failing to maintain property insurance or pay your property taxes.Next, the holder of your mortgage must send
notice to the borrower of its intent to foreclose
.The borrower will not get much advance notice – Georgia law requires that the notice be sent at least30 days before the date of the proposed foreclosure sale. The notice must be in writing and includethe name, address, and telephone number of someone who has authority to negotiate, amend, andmodify the terms of the mortgage with the borrower. The notice must also be sent to the borrower byregistered or certified mail or statutory overnight delivery, return receipt requested, and include a copyof the advertisement of the foreclosure sale that will be published in the official county newspaper forpublic announcements. Refusing to accept a notice sent by registered or certified mail is a bad idea; itwill not invalidate the notice.The holder of your mortgage must
publish notice
of the foreclosure in the official county newspaperfor public announcements where the real property is located for four consecutive weeks prior to thescheduled foreclosure.If it has not already done so, the holder of your mortgage must file proof that it owns title to thesecurity instrument related to the real property with the clerk of the superior court of the county inwhich the real property is located, prior to the start of the foreclosure sale. This proof is usually in theform of an
of the promissory note and deed to secure debt. Since mortgages are oftensold or assigned, this requirement may assist the borrower with identifying the current holder of theirmortgage.The
foreclosure sale
will take place on the courthouse steps in the county where the property islocated. By law, foreclosure sales take place on the first Tuesday of the month between the hours of 10:00 a.m. and 4:00 p.m. Bidding is open to the public, but the mortgage holder often is the onlybidder. The mortgage holder will sign a
deed of foreclosure
to the winning bidder, which may wellbe itself. At that point, the winning bidder becomes the new owner of the property.10. What happens after the foreclosure sale has taken place?
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