Legal Question in Real Estate Law in Kentucky

Foreclosure

What can you do if a mortgage company(debt collector) threatens to foreclose on your property when you are 30 days behind on a payment. We had talked with the company in May of 2003 when we were going to be late with that payment. Our place of employment was going through tough times and had cut the work hours of its employees and changed how the checks were being distributed. We asked if we could split the payment into two installments during the month or change the date from the first of the month to the last of the month. We were told know to both. We sent the check in for the month of May at the end of the month. They had received it by June 1,2003 held onto it and mailed it back on June 9 stating we had not made our payment as promised and needed to make both payments now (June and May). Our checks were not deposited until Jan. 2,2004 instead of Dec,31,2003 as usual due to the bank being closed for the holidays. We will be making both payments (Dec,2003 and Jan.2004) at the end of the month. They are threating to foreclose, have an onsite inspection and add penalties to the loan.


Asked on 1/21/04, 2:15 pm

1 Answer from Attorneys
Philip Owens Philip M. Owens, Attorney at Law

Re: Foreclosure

Your mortgage and note will have a "default" or acceleration clause in which it is provided that if a payment is so many days late then the mortgage company can declare the loan in default and demand payment of the entire amount. A lot of the processing is automatic and the people that you speak to on the phone are following a script. It is a pretty rigid system. They cannot prevent you from making as many payments as you want. However, if they interpret a payment as being sufficiently late they can start forclosure. Despite what the callers say, the mortgage company cannot just throw you out. In Kentucky, the holder of the mortgage must file a lawsuit, serve you with papers, obtain a judgment and order of sale; the commissioner schedules the sale and advertises it for three times in the local paper and a public auction is held at which the mortgage company is usually the buyer. On the practical side, it is not very efficient to commence forclosure on a payment that is a few days late. But who knows. Mortgage companies do not follow normal business practices and are not very practical. Have a local attorney review your paperwork and follow his or her advice. This will get an answer that you can rely on.

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Answered on 1/21/04, 10:41 pm


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