Mortgage Forbearance vs. Deferment
Suppose you’re a homeowner that is having trouble making your mortgage payments. In that case, it may be time to look into mortgage forbearance or deferment, as these alternatives will help you avoid foreclosure. While both terms are often utilized interchangeably, there are minute differences between the two. Forbearance simply means pausing your mortgage payment, while deferment is an option once a forbearance term is completed to take care of any missed mortgage payments. If you’re experiencing financial hardship that’s impacting your ability to pay your mortgage, seeking guidance from an experienced real estate lawyer can be beneficial.
How Do You Qualify for Mortgage Forbearance or Deferment?
Mortgage forbearance and deferment are very similar, meaning they are often used interchangeably by lenders. The eligibility period is determined by the lender but is usually no more than one year. Those interested in pursuing mortgage forbearance or deferment must meet one or more of the following requirements to qualify:
- Home cannot be permanently vacated
- Home must be the borrower’s principal residence
- An expense-to-income ratio must be stated by the lending bank
- Borrower’s monthly expenses must be a certain percentage of their monthly income
Exploring Mortgage Forbearance
A mortgage forbearance is a temporary agreement between a borrower and lender to suspend or reduce payments for an allotted amount of time. Many in today’s economy request a mortgage forbearance if they’ve recently experienced a form of financial setback such as job loss, prolonged illness, or injury.
How Does It Work?
The lender involved in a forbearance agreement agrees to accept reduced payments or no payments for a time frame of no longer than 12 months. Once the forbearance period ends, the borrower or property owner is required to resume payments, repay the amount owed during the forbearance period, and any interest or additional fees. Repayments can be made in full or up to 12 installments, which are usually added to the predetermined regular monthly payments. Forbearance agreements are generally requested for mortgages; however, each scenario works differently depending on the borrower’s unique situation.
Homeowners may request a mortgage forbearance if they need to catch up on payments and avoid foreclosure. It’s common for lenders to request proof that a homeowner is experiencing a temporary financial hardship along with assurance and a plan that the borrower will be capable of paying back the owed amount once the forbearance period ends. Any foreclosure proceedings are halted during the forbearance period, and the borrower can make reduced payments or no payments at all. If financial hardship lasts longer than anticipated or funds aren’t available to make repayments, a loan modification may be an option between the lender and borrower.
What About Interest?
On mortgage forbearance, interest will accrue unless the lender states otherwise. Interest accrues on skipped or lowered payments in mortgage forbearance, meaning the borrower must pay back what is owed during the forbearance period along with accrued interest.
Mortgage Forbearance and Your Credit Score
A borrower’s credit score may be affected if the lender reports a mortgage forbearance to the credit bureau. If the borrower wishes to refinance or purchase a new home, reestablishment as a credible borrower must be achieved by repaying the full amount owed. A temporarily lowered credit score from a mortgage forbearance is better than a missed payment and helps avoid foreclosure, which would then stay on the borrower’s credit report for seven years.
Exploring Mortgage Deferment
A mortgage deferment is a temporary agreement between a borrower and lender to delay or suspend loan payments for an allotted amount of time. Many in today’s economy request a mortgage deferment if experiencing financial hardship as it temporarily halts required repayments. Those choosing a mortgage deferment may experience higher monthly payments and a loan term increase as a result.
How Does It Work?
Payments are suspended during a deferment period similar to forbearance, but for a shorter amount of time. Borrowers are also not required to pay back the owed amount all at once, which differs from a mortgage forbearance. Instead, any owed amount is added to the end of the loan’s term, thus increasing the loan term overall. Every situation is unique, meaning deferred payments work differently based on individual circumstances.
When applying for a mortgage deferment, the lender will likely ask the borrower for a brief explanation outlining why payment deferment is necessary. It’s common for lenders to consider a borrower’s credit score and report before deciding. While mortgage deferment may seem like a viable solution in the here and now, it may be more beneficial to explore refinancing options as financial hardships can often last longer than expected.
What About Interest?
Whether or not a borrower is charged interest during mortgage deferment depends on the type of loan and the lender’s decision. A borrower may be responsible for the accrued interest during the payment postponement period but might not be if the interest rate only applies to the principal balance. This means that the borrower will not be charged additional interest on the accrued interest. Once payments are restarted, accrued interest during the mortgage deferment period may be applied to your principal balance along with your interest rate resulting in more accumulated interest once regular payments are resumed.
Mortgage Deferment and Your Credit Score
A borrower’s credit score is usually not impacted by mortgage deferment once the lender reports the agreement to the credit bureau. However, if the borrower stops making payments or misses a payment, their credit score could be impacted. Approval for mortgage deferment may be granted after the agreement with the lender has already started, meaning payments must continue to be made on time until verification of deferred payments is received to avoid damaging your credit score and history.
How Can a Real Estate Lawyer Help?
Experiencing financial hardship is already stressful and can often be challenging to navigate. A real estate lawyer experienced in mortgage forbearance and deferment can help property owners avoid foreclosure, so you can catch up on past due amounts owed to your lender. Mortgage forbearance and deferment can benefit both the lender and borrower as the borrower will be released from the obligation to pay the mortgage loan during financial hardship, and the lender will no longer be required to sell the property. Instead, the lender agrees to work side by side with you to keep you in your home in the most affordable way possible.
You Don’t Have to Lose Your Home
Here at Cline Jensen PLLC, we understand how daunting financial hardship can be. Whether you’re experiencing financial hardship due to an illness or a worldwide event, it doesn’t mean foreclosure is your only option. Your home comes with a large investment, but it’s also the foundation of your life. Contact a dedicated real estate attorney with experience in mortgage forbearance and deferment, so you can explore all available options with guidance from an expert.
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Know Your Rights: The Landlord-Tenant Relationship
Have you recently found a new rental property, or are experiencing issues with your current landlord? Becoming aware of your rights as a renter is extremely important. Each state caters to tenants under a specific set of state and local laws to ensure they are protected and residing in a safe establishment. Suppose you’ve found yourself in a situation that you’re unsure how to handle, such as a landlord not caring for the building correctly, raising your rent without notice, or visiting your residence with no warning. In that case, it’s encouraged to seek guidance from an experienced real estate attorney immediately.
What Are Renter’s Rights?
The Fair Housing Act was passed in 1968, which protects you as a renter or homebuyer. The Act was created to provide all Americans an equal opportunity to find housing without being discriminated against. Landlords are also prohibited from providing an unsafe or unhealthy living environment for tenants. Should a landlord or tenant break any of the rules laid out in the Fair Housing Act, eviction, lease termination, and withholding of payments can occur. Tenant’s rights vary by state and local laws but are ultimately in place to keep each party safe and ensure the renter has the necessary privacy, safety, and habitability on a landlord’s property with no discrimination.
Upon renting any property, it’s encouraged for renters to review the lease provided by the landlord in full, so you fully understand what guidelines and rules you’re agreeing to. Renters are encouraged to take photos before moving into a unit, so the original condition is accounted for. Looking into renter’s insurance can also be worthwhile as this will help protect your belongings in the event of theft or damage. Additionally, establishing open and transparent communication with your landlord right off the bat will help form a positive landlord-tenant relationship and promptly ensure any necessary repairs are completed.
Landlords Must Maintain Their Properties
Whether you’re renting an apartment, townhome, or house, your landlord must maintain the property, so it’s fit for living. Repairs must be completed promptly with little to no delay, and the environment must be maintained to meet state and local health and safety laws. In Minnesota, any reported damages must be corrected within 14 days of notice; otherwise, a tenant could take further actions against the landlord. There are instances where a landlord may have the tenant complete light maintenance tasks such as yard work, but all stipulations must be agreed upon by both parties.
Many tenants are unaware that landlords can pay for tenant improvements (TI), which can include upgrades to the physical space based on the tenant’s unique needs. Landlords may compensate the tenant for their improvements or discount monthly rent, so the remaining funds can be utilized for improvements. Tenant improvements are expected for medical tenants as spaces may require specific ceiling heights, additional plumbing, and cabinet space. Regardless of your situation, it’s encouraged to inquire about tenant improvements should this apply to you before you sign your lease.
Rent Raise Restrictions
A lease provides a definite term not only for the duration of time spent in the rented property but how much the tenant will pay in rent and many more important factors. Your landlord cannot raise the rent at any point during the lease time frame unless otherwise noted in the lease itself. Landlords must give tenants proper and timely notice of changes to rent, which is typically one rental period plus one day. If your landlord doesn’t inform you of increases to your rent, it’s recommended to bring it to their attention as you should be given a grace period for lack of information.
Your Right to Privacy
Every tenant has a right to privacy, meaning your landlord can’t enter your property any time they want. A landlord is only allowed to enter your property for reasonable business purposes, such as performing maintenance work, showing the unit to prospective tenants, buyers, or agents, and checking on a tenant who is causing disturbances or may be violating their lease. Regardless of the reasoning, a landlord is required to give you substantial notice before entering your property. Of course, there are exceptions for these guidelines if the renter’s safety or well-being is questioned. If a landlord violates your privacy, you may be eligible to take the landlord to court to break your lease, recover your damage deposit, and even receive payment for each violation.
Calling an Inspector or Emergency Services
Tenants have the right to call inspectors, police, and other emergency personnel services at any time. Landlords cannot restrict your ability, evict, or otherwise penalize you for doing so. For example, if there are maintenance needs or other issues that affect your quality of living that your landlord isn’t addressing, you can call an inspector to visit your location. Whether or not the inspector assigned to your case discovers a code violation, your landlord cannot retaliate against you for contacting an inspector. If retaliation occurs in any form, the renter may be eligible to take the landlord to court.
Renter’s Property Tax Refund
A few states throughout the country including Minnesota offer refunds to renters that meet specific qualifications based on their income, whether or not they appear as a dependent on another individual’s tax return, and whether they paid rent in a building that was taxed. If your state offers a renter’s property tax refund, your landlord must give you a Certificate of Rent Paid by January 31st of each year. Upon receiving this document, the renter must complete a form and file it to receive their return the following summer or fall.
Familiarize Yourself With Your State Renter’s Rights
The guidelines mentioned above are similar across the country. However, each state differs in renter’s rights to some extent as each is developed based on state and local laws. It’s recommended to review renter’s rights in your state, so you can be sure your landlord is treating you correctly. If you’re in a situation where you’re unsure of what to do or feel your landlord isn’t meeting your basic living needs, contact an experienced real estate lawyer today.
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Minnesota Quiet Title Actions: Everything You Should Know
Real estate disputes can present themselves when we least expect it and come about for varying reasons. Whether you are attempting to navigate a boundary dispute or have discovered a lien against a property that shouldn’t be there, an experienced real estate attorney can help you manage the process effectively from start to finish.
What Is a Quiet Title Action?
Quiet title is an action lawsuit or legal proceeding meant to help clear title to real property and establish a person’s title to said property. Quiet title actions are usually between co-borrowers, co-owners, or family members who have disputed each other’s contributions and interests. Lenders and trustees appearing on a borrower’s deed of trust that either no longer have any interest or no longer exist can also be challenged. The overall purpose is to “quiet” any claims or challenges to that title, especially if there are multiple claims, disputed interest, or title defects.
A quiet title action can be used when possession needs to be recovered of a property that has been wrongfully occupied by another individual. A plaintiff, buyer, or new homeowner can choose to file an action to include any present or past owner of the property who may have a claim to it. Once a determination is made in favor of the filing individual, no challenge to their ownership can be made in the future.
Boundary Disputes
There are many different types of real estate disputes, but one of the most common is a boundary dispute. This can occur in numerous situations. However, a great example is if a neighbor builds a fence on the wrong side of the property line or if a tree was planted on a neighbor’s property in the past and the owner of the property wishes to have the tree removed. Additionally, homes, garages, sheds, and other common structures that have been built on other property by mistake can all cause issues. There are several ways in which a boundary dispute can be put to rest, such as the party using the property choosing to purchase it from the owner or merely remedying the issue. A “prescriptive easement” can also be pursued, which means one person owns the land while another lawfully uses it – the party using the property gains ownership of it.
Defective Titles
The term defective title is utilized when an asset or property has a mortgage, judgment, or lien against it, which means another party can lay claim to the asset or property. In the instance of a defective title, the property owner is prevented from legally transferring the title to another party or refinancing the property. An experienced real estate attorney is recommended if you need a lien removed or feel a lien was wrongfully placed on your property.
Why Are Quiet Title Actions Filed?
Processes and outcomes for your unique situation can vary depending on the circumstances. Getting a clean title on a property will eliminate any troubles for selling it in the future, as well as obtaining any financing information. Quiet title actions can be filed for multiple reasons. Still, overall, it is to establish clear ownership of a property and quiet anyone who may try to challenge the property’s ownership.
- Establish free-and-clear ownership of the property and resolve any defects found in a property title search
- Resolve any outstanding liens on the property due to administrative errors
- Resolve any issues with a quitclaim deed
Who Can File?
Each state varies in who can file for a quiet title action, meaning it is vital you familiarize yourself with your residing state’s guidelines. Some states only allow the lender who holds the mortgage to file while others require the current property owner to file. According to MN Stat § 559.01, any person in possession of real property personally or through the person’s tenant, or any other person having or claiming title to vacant or unoccupied real property, may bring an action against another who claims an estate or interest therein, or a lien thereon, adverse to the person bringing the action, for the purpose of determining such adverse claim and the rights of the parties respectively. There are a variety of parties that can file a quiet title action:
- Property owners (if not the plaintiff)
- Heirs of the deceased stray interest holder
- Any other unknown parties claiming an interest
- Other persons with interest in the property (holders of mortgages, judgments, easements, liens) in the event the court order must be binding on them
The Filing Process
Depending on the state you reside in, a quiet action title can take an average of 2 to 4 months to complete, but the process can take longer or shorter considering the factors surrounding the dispute, such as court rulings. The steps for pursuing a quiet action title vary by state, but a few applicable steps remain the same across the board.
- A copy of your deed must be obtained as this will show if there are any liens against the property in question. If a copy of your deed is not saved in your files, it is recommended to contact your county assessor’s office to get a copy.
- The civil court must be petitioned for a quiet title. The petition you submit must include a legal description of the property, including the address and parcel number, the adverse claims against the plaintiff’s title, and a request for granting the quiet title. Many courts provide a specific cover sheet to make the petition process simple, but you can draft your petition if not. A pleading should include when the property was purchased, the defendants, and other necessary information to prove why the defendant’s claimed interest is not legitimate.
Seek Guidance From a Skilled Real Estate Attorney Today
Conflicts in property ownership commonly lead to litigation, and the process is often very technical. You must seek guidance from an experienced real estate attorney, so you do not risk losing an interest in the land in question. Reviewing past client testimonials is an excellent way to determine the best real estate attorney for your case. The individual you choose for your case must have familiarity with quiet title actions, so you can have the peace of mind you have been hoping for and get the outcome you deserve.
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