Looking for suggestions on our situation.

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Submitted by Anonymous on Thu, 04/10/2008 - 1:22pm.

We have an issue where we got an attorney provided to us by the state (due to lack of income) and once we were served the foreclosure notice, our attorney was going to submit an answer with a counterclaim (our mortgage is illegal in our state and she was going to ask to have it rescinded). Well, her clerk took forever to do documents and ended up missing their deadline for filing their answer even though we stayed on top of them daily. The attorney said not to worry, she would work it out with the lender’s attorney. Well, she got him to extend the time for her to give an answer but she says he will not agree to a counterclaim. This leaves us without the ability to do what we legally were allowed to do and now the attorney says she should negotiate a deed in lieu of foreclosure which is not what we wanted to do. Does anyone have any suggestions? My husband has been unemployed which is why we fell behind, and once he can gain employment again, we will be able to afford our home. We live in Kentucky.

Comments:

Submitted by admin on Thu, 04/10/2008 - 1:27pm.

Hi Jennifer, 1. Your Hi Jennifer, 1. Your question gets into some legal technicalities that we aren’t qualified to comment on. My experience, however, is that when attorneys screw up they tend to try to cover with “this is your only option”. Forget malpractice unless you have very deep pockets, but you may want to have another attorney review your file to see if there isn’t another technicality that will reopen your chance to counterclaim. 2. Even if you were able to win your counterclaim, know that unless there were some really extenuating circumstances (like significant fraud), you will have to repay the mortgage even if you won and it was “rescinded”. Likely best case is that you’ll get some interest and penalties waived. If you aren’t in the position to repay at least the principal (either have the cash or the ability to refi), then worrying about a counterclaim was never worth the trouble. As for suggestions, I always come back to this - can you afford the debt you took on? If the answer is no, then you need to move on and a deed-in-lieu is probably better than having the foreclosure finish. If the answer is yes, and the only problem is some issues with the loan in question, then you should focus on negotiating a “short pay” - your lender may be willing to take the principal balance as payment in full vs. face the costs of foreclosure. Best Regards.