Foreclosure Freezes or Moratoriums: What Does it Mean For You?




Foreclosure Freezes or Moratoriums: What Does it Mean For You?

Recently there have been many news stories about freezes or moratoriums on home foreclosures, often because the lenders have had problems with their legal documents. This video will tell you what you can do if you are a homeowner threatened with foreclosure and how a freeze or moratorium might affect you.

This video is for information only. It is not meant to provide legal advice. Information may become outdated as laws change. You should talk to a lawyer about your situation. You can learn about finding more assistance at the end of this video.

What is a foreclosure?

When you fall behind on your mortgage, foreclosure is a legal process that allows the lender to sell your house and use the money to pay back the loan.

Foreclosures involve several steps. The last step is the sale. Foreclosure is not the same as eviction. You cannot be evicted until after the foreclosure sale. You don’t have to leave your house until you are legally evicted.

Why are lenders freezing foreclosures?

Most people do not try to protect their legal rights during foreclosure. They assume that the lender is right or that there’s nothing they can do. Because of this, lenders have been able to save money by cutting corners. They often don’t follow required legal procedures. Sometimes they do not have proof that they have the right to foreclose. Sometimes they make mistakes in calculating how much money the borrower owes, or they charge illegal fees.

Courts and public officials have recently become concerned about these problems, so some lenders have promised to temporarily freeze foreclosures and fix their systems.

No matter what you’ve heard, a foreclosure freeze is not really a freeze. It may not affect your foreclosure at all. Your State Attorney General’s Office or your local Legal Services office should be able to tell you what your lender is doing in your state.

No matter what, you must pay attention to letters and notices and make sure you don’t miss any deadlines for fighting the foreclosure. If you are threatened with foreclosure, you should try to find a lawyer or a housing counselor to help you as soon as possible. You also need to watch out for offers of help that are really scams.

What kind of help should you look for?

You can find help for free from a HUD approved housing counselor. Legal Services programs may also offer assistance if your income is low. Information about free counselors and legal assistance is at the end of this video. Local bar associations may be able to refer you to a private lawyer or you can get lawyer recommendations from people you trust.

What should you watch out for?

By law, lists of homes in foreclosure are available to the public. That means scam artists can find you and target you with fake offers of assistance. You should be cautious of anyone who contacts you instead of you contacting them. You should be cautious of anyone who asks for payment in advance or who makes promises or guarantees that they can save your home. So anyone who tells you otherwise, is not being honest.

If you want to keep your house, you will need to figure out a way of dealing with your mortgage debt. Whether or not your foreclosure is affected a freeze, there are steps you can take that may stop or slow down the foreclosure process. You should use any extra time you get to work on a long-term solution.

How can you stop or slow down the foreclosure process?

In some states, the lender must go to court to get permission to hold a foreclosure sale. These are called judicial foreclosure states. In other states, the lender only has to notify you and publicize the sale in the newspaper. These are called non-judicial foreclosure states. In either kind of state, if there is something legally wrong with the foreclosure, you can go to court to stop it or delay it.

In a judicial state, you can raise defenses in the lender’s foreclosure lawsuit. In a non-judicial state, you will have to start your own lawsuit against the lender. This can be very complicated. You should try to get a lawyer to help you.

The lender may not have correctly followed the foreclosure process. If you didn’t get a notice warning you of the foreclosure, the lender may not have followed the rules. If the company trying to foreclose is not your lender, it may not be able to prove it has the right to foreclose. You may also be able to challenge a foreclosure if there were legal problems with the loan when you got it.

For example, if a home improvement contractor ripped you off, you may be able to stop a foreclosure based on the home improvement loan. You may also have defenses to a foreclosure if the lender lied to you or broke other laws when it made the loan. By pointing out these kinds of mistakes to the court, you may be able to force the lender to start over, or at least stop the process until the mistake is corrected.

If you or your spouse is in the military, you have special rights to slow down the foreclosure process and to temporarily reduce your interest rate. But you must exercise these rights during active duty or shortly after retuning, so make sure to act quickly.

Now, let’s talk about dealing with your mortgage debt.

You have a lot of options, but you should take a realistic look at your short-term and long-term financial situation. A free HUD approved housing counselor can help you do this.

If your financial difficulties were temporary, you may be able to keep your original mortgage and work out a repayment plan with your lender. The lender will often let you catch up your mortgage over several months. You will have to make your regular payments plus an extra amount each month to make up the past due payments.

If you cannot afford your regular mortgage payments, you can ask your lender to modify your mortgage. Your lender may agree to lower your monthly payments by lowering your interest rate, or extending your repayment period, or taking other steps.

Many lenders are participating in the federal Home Affordable Modification Program or HAMP. HAMP requires lenders to modify mortgages under certain circumstances. If you qualify, your payments should be lowered to an affordable amount.

Another option for stopping the foreclosure sale and possibly modifying your mortgage is to file bankruptcy. Bankruptcy is a complicated legal process, and may or may not be helpful to you, depending on your other debts. A good bankruptcy attorney should be willing to do a free consultation with you and tell you the pros and cons of filing.

If you cannot get an affordable modification, you may still have options that are better than foreclosure. Instead of a foreclosure sale, you can ask the lender to agree to a short sale. This means you sell the home, usually for less than what you owe on the mortgage.

Another option is to agree to give up your house without going through the foreclosure process. This is called giving a deed in lieu of foreclosure. However, these options may increase your tax or other liability.

Talk to an attorney or tax expert if you have any questions. In either case, get the lender to agree in writing that you do not owe any other money as a result of the foreclosure.

To review, don’t assume that foreclosure freeze will protect you.

Read all notices carefully and be careful not to miss deadlines.

Look for help from trustworthy sources.

Don’t be fooled by scammers who contact you, who ask you to pay in advance, or who make unrealistic promises.

Don’t assume that the lender is following the rules.

If there was something wrong with your loan, or if the lender has made a mistake, or if you are in the military, then you may be able to stop or slow down the foreclosure process.

Use any extra time you get to improve your financial situation and negotiate with your lender.

Even if you cannot afford to keep your house, a short sale or deed in lieu may still be better than a foreclosure sale.

Get the lender to agree not to seek any other money and to be informed about the possible tax consequences.

Finally, even if you cannot avoid a foreclosure sale, remember that you do not have to leave your home until after the sale and after you have been legally evicted.

To talk to a HUD approved housing counselor, call 1-800-569-4287 or go to If you are low-income, contact Legal Services in your area to apply for help. For help finding a private attorney, contact the local bar association in your area.


Written by: Arielle Cohen & Kristin Nelson Verrill

Produced by: The Atlanta Legal Aid Society, Inc. & The National Consumer Law Center Alston and Bird

This project was made possible in part by: a Technology Initiative Grant from the Legal Services Corporation, video footage generously donated by Illinois Legal Aid Online, and expertise generously donated by the law firm Alston and Bird

Video Development Committee: Arielle Cohen, Tamara Sewer-Caldas, Marty Ellin, John Bartholomew, Nadine Lang, Jennifer Staack, Cicely Barber, Mark Harper, Darwin Berman, Kristin Nelson Verrill

Special Thanks To: The Honorable Jay Roth, State Court of Fulton County; The Honorable Patsy Porter, Magistrate Court of Fulton County; The Honorable Stephani Lacour, Magistrate Court of Fulton County

Copyright Illinois Legal Aid Online, 2008 & Atlanta Legal Aid Society, Inc., 2010

Last Review and Update: May 30, 2019
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