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Mortgage and Foreclosure Information

Frequently Asked Questions About

MORTGAGES and FORECLOSURES in Georgia

The Attorney General has developed this website to provide information about mortgages and foreclosures in
Georgia. This page also contains telephone numbers and links to websites where you can find help and
additional 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 information
about 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 with
my mortgage?
20. Are there any special legal protections for active duty military personnel?

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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 (commonly
referred to as a “mortgage”) which gives the bank the legal right to take away your house if you
default on the note. The process of taking away your house after a default is called foreclosure.

The 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 to
your lender, and that your lender owes to you. Make sure you know where your copies are, and read
them.

2. Who holds my mortgage?

In the old days, you applied for a home loan from a bank, and that bank held your promissory note
and deed to secure debt until the day the loan was finally repaid in full. Now, it is common for banks
to buy and sell home loans. Your note and deed may be sold, transferred, or assigned at any time to
someone other than the bank which gave you the loan. This could be another bank, or even an
institutional investor. If you are not sure, you have the right under federal law to write and ask for the
name, address, and contact information of the company that currently holds your mortgage. At the
end 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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A loan servicer is a company hired by the lender to handle the day-to-day business of communicating
with 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 do
their own loan servicing. To make things even more confusing, many of the largest loan servicers are
also banks! The name and contact information of your loan servicer will appear on your monthly
statement.

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 with
jurisdiction over that particular bank. This can be very confusing, since there are fifty State banking
regulators and several federal bank regulatory agencies. For example, several of the biggest mortgage
lenders – Wells Fargo, Bank of America, Citibank, and Chase – are national banks regulated by the
federal 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.aspx

http://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 change
the original terms of your mortgage (such as the length of the loan, principal balance, or interest
rate.) If you obtain a permanent loan modification, then your monthly payment may be reduced to a
more 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 your
numbers meet the numerical formula used by the lender, then your application will be approved and
your loan terms will be changed. If not, then your application will be denied, and you will still be
bound by the terms of the original loan. Please be aware that in some cases, the length of the loan or
the 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 their
application for a permanent modification is being considered. Please be aware that if your application
for a permanent modification is denied, the lender may demand that you pay the difference between
your original monthly payments and the trial program payments. Moreover, if the homeowner is
delinquent in making payments under the trial modification program, it is almost certain that the
application 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 help
homeowners who are experiencing a financial hardship. If you are found to be eligible for HAMP, then
your loan may be modified to make your monthly mortgage payment no more than 31% of your gross
monthly income. For more details on HAMP eligibility and requirements, visit
www.makinghomeaffordable.gov.

But be warned: applying for a loan modification may not stop a foreclosure. There have been
instances where homeowners have had their homes sold at foreclosure while their modification
applications were still pending. You should take action immediately if you receive a notice that your
home 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 States
Department of the Treasury and the Department of Housing and Urban Development. It offers several
options for homeowners, some of which are available through private lenders, including:

z refinancing mortgage loans through the Home Affordable Refinance Program (“HARP”);
z oan modifications for first and second mortgage loans through the Home Affordable
Modification Program (“HAMP”) and the Second Lien Modification Program (“2MP”);
z providing temporary assistance to unemployed homeowners through the Home
Affordable Unemployment Program (“UP”); and
z offering other alternatives to foreclosure through the Home Affordable Foreclosure
Alternatives Program (“HAFA.”)

To get more information on these programs, visit

http://www.making homeaffordable.gov/borrower-faqs.html.

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7. 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 steal
money from distressed homeowners by taking upfront fees and not delivering on their promises. Here
are some suggestions for identifying scams and what to do if you feel that you have been a victim:

z You should never pay a fee for assistance with or information about the Making Home
Affordable Program.
z Beware of any person or organization that asks you to pay an upfront fee in exchange
for a counseling service, foreclosure prevention, or modification of a delinquent loan.
z Beware of anyone who wants you to sign over the deed to your house in order to “save
your home.”
z Beware of anyone who advises you to deliberately miss a mortgage payment.
z Never make your mortgage payments to anyone other than your mortgage holder,
unless you have the mortgage holder’s approval.

To file a complaint or to get free information on fraud and other consumer issues, call the
Homeowner’s Hope Hotline at 1-888-995-HOPE (4673) or contact theFederal Trade Commission at
www.ftc.gov/consumerprotection or 877-FTC-HELP (4357). In addition to contacting the FTC, you
may 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 loan
modification scams, go to www.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 more
information 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 that
your 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 servicer
correct your account. Be sure to clearly identify the name of the borrower as it appears on the
servicer’s records, the account number, and the property address. Federal law requires that the
lender 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 home
without filing suit or appearing in court before a judge. The procedures for foreclosure are spelled out
in the Official Code of Georgia, Sections 44-14-162 through 44-14-162.4.

Foreclosure begins with a default under the terms of the original promissory note or deed to secure
debt. Usually the default is your failure to make the required payments on the loan. A default can
also 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 least
30 days before the date of the proposed foreclosure sale. The notice must be in writing and include
the name, address, and telephone number of someone who has authority to negotiate, amend, and
modify the terms of the mortgage with the borrower. The notice must also be sent to the borrower by
registered or certified mail or statutory overnight delivery, return receipt requested, and include a copy
of the advertisement of the foreclosure sale that will be published in the official county newspaper for
public announcements. Refusing to accept a notice sent by registered or certified mail is a bad idea; it
will not invalidate the notice.

The holder of your mortgage must publish notice of the foreclosure in the official county newspaper
for public announcements where the real property is located for four consecutive weeks prior to the
scheduled foreclosure.

If it has not already done so, the holder of your mortgage must file proof that it owns title to the
security instrument related to the real property with the clerk of the superior court of the county in
which the real property is located, prior to the start of the foreclosure sale. This proof is usually in the
form of an assignment of the promissory note and deed to secure debt. Since mortgages are often
sold or assigned, this requirement may assist the borrower with identifying the current holder of their
mortgage.

The foreclosure sale will take place on the courthouse steps in the county where the property is
located. 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 only
bidder. The mortgage holder will sign a deed of foreclosure to the winning bidder, which may well
be 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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A valid foreclosure wipes out the borrower’s right to live in the house. The new owner of the property
may file a dispossessory action to evict the borrower from the home. Some lenders have a “cash
for keys” program, in which they will pay homeowners a small amount to voluntarily leave the
property.

In most cases, the mortgage holder accepts the property in satisfaction of the loan, and foreclosure
marks the end of legal proceedings against the borrower. However, the holder of the mortgage may
file suit against the borrower to recover any difference between the amount paid for the property at
the foreclosure and the amount remaining on the promissory note. This is called a deficiency
proceeding. If this happens, the matter will go before the courts.

If you believe that you have been the victim of a wrongful foreclosure, then you should seek legal
advice as soon as possible from a private attorney or legal aid organization. If you do not have an
attorney, you may wish to contact the State Bar of Georgia at 404-527-8700 or 1-800-334-6865 to
obtain the telephone number for a referral service in your area. Alternatively, you may be eligible for
free legal services. For those residing in the Atlanta metropolitan area (Clayton, Cobb, DeKalb, Fulton,
and Gwinnett counties), please contact the Atlanta Legal Aid Society at 404-377-0701. For all other
Georgia counties, please contact the Georgia Legal Services Program at 404-894-7707 or 1-800-822-
5391.

11. What if I am a tenant in a home that has been sold at foreclosure?

Under the federal “Protecting Tenants at Foreclosure Act of 2009,” Pub. L. No. 111-22, 123 Stat. 1660,
a tenant with a bona fide lease has the right to stay in the home after foreclosure, and must be given
at least ninety days’ notice to move out. The Act does not apply if the tenant is the borrower, or a
member of the borrower’s immediate family. It is scheduled to expire at the end of 2012.

12. What are the tax consequences if my home is sold at foreclosure?

The Internal Revenue Service has a special section on its website for people who have lost their homes
through foreclosure. The IRS also reminds homeowners that although mortgage workouts and
foreclosures can have tax consequences, special relief provisions may reduce or eliminate the tax
burdens for borrowers who lose their homes. This information is available at:
http://www.irs.gov/newsroom/article/0,,id=174022,00.html

13. What if I have lost my home in foreclosure and I cannot afford to live elsewhere?

The Georgia Department of Community Affairs has a number of home and rental assistance programs
available for eligible Georgians. For more information, contact DCA at 404-679-4940 or toll free at 1-
800-359-4663.

14. How can I avoid foreclosure?

Several options may be available to a homeowner facing foreclosure:

z Contact your lender or servicer and make arrangements to cure the default. Usually,
this means making a cash payment to bring the loan current.
z Contact your lender or servicer and make arrangements for a “short sale.”
z Contact your lender or servicer and make arrangements for a “deed in lieu of
foreclosure.”
z Consult a private attorney to see if a bankruptcy petition is advisable.
z Consult a private attorney to see if there are legal grounds to seek a restraining order.

Which options are available or appropriate for the homeowner will depend on the particular facts of the
case. Although our office is prohibited by law from giving you legal advice, a private attorney or HUD-
certified housing counselor may be able to help you. Some of these options are explained in more
detail below. In all cases, though, you must act immediately after receiving notice of a
foreclosure.

15. What is a short sale?

A short sale occurs when you sell your home for less than the balance remaining on your mortgage.
It is important to understand that a short sale must be approved in advance by your lender. If it is
approved, the holder of your mortgage agrees to accept the proceeds of the sale and to cancel the
mortgage.

You may also be eligible for the federal government’s Home Affordable Foreclosure Alternatives
Program (“HAFA,”) which offers short sale and deed-in-lieu options. For more details on HAFA
eligibility requirements, visit www.makinghomeaffordable.gov.

16. What is a deed in lieu of foreclosure?

A deed in lieu of foreclosure is a legal document signed by the homeowner to voluntarily transfer

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ownership of the property to the lender in exchange for a release from the loan. This is sometimes
referred to as “giving the property back to the bank.” This option is only available if the lender agrees
to accept the deed and to cancel the mortgage.

In some situations, if your mortgage is owned by Fannie Mae, you may be able to lease your home
after signing a Deed in Lieu of Foreclosure. Even if your loan is not owned by Fannie Mae, there may
be a similar leasing option offered by your lender.

17. How can a bankruptcy petition help me?

Under federal law, the valid filing of a bankruptcy petition acts as a “stay” of legal proceedings against
the debtor, including a non-judicial foreclosure. Such a petition will suspend the foreclosure
proceedings if it is properly filed with the Clerk of the U. S. Bankruptcy Court before the property is
sold on the courthouse steps. However, in some cases, the mortgage holder may seek permission
from the bankruptcy judge to resume foreclosure proceedings. Moreover, if you want to keep your
house, then you will have to continue paying the mortgage during the bankruptcy proceedings.

The filing of a bankruptcy petition has serious consequences. You should seek legal advice before
making that decision to ensure that it is in your overall best interests.

18. Who can help me avoid a foreclosure?

You can find a nearby HUD-certified housing counselor online at

http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or by calling 1-800-569-4287.

In the metro Atlanta area, the Consumer Credit Counseling Service of Greater Atlanta, the Fannie Mae
Foundation, the Homeownership Preservation Foundation, NeighborWorks America, and the United
Way have joined together to provide free counseling to Georgia homeowners to provide consumer
education and to prevent home foreclosures. This foreclosure prevention program offers a toll-free 1-
888-995-HOPEhotline. The hotline is staffed 24 hours a dayby counselors who provide free,
confidential advice for those facing foreclosure. Homeowners who want or need in-person counseling
will be referred to local organizations. Counseling is available in English and Spanish. Visit their
website at www.995hope.org.

The U.S. Department of Housing and Urban Development (“HUD”) and Fannie Mae have launched
websites to assist borrowers who are having difficulty with their mortgages. HUD’s website is at
http://www.hud.gov/foreclosure/index.cfm. While a good deal of this information may apply to all
homeowners in danger of losing their homes, not all of the foreclosure avoidance options mentioned
may be available to you if you have a VA or conventional loan.

Fannie Mae’s website is at http://www.knowyouroptions.com/, and it provides information for all

borrowers, whether or not Fannie Mae owns your loan.

"If you are having trouble making your mortgage payments due to unemployment or
underemployment, then you may wish to apply for assistance from the Georgia Department of Labor's
"Hardest Hit Fund." For more information, visit
http://www.dca.state.ga.us/housing/homeownership/programs/hardesthitfund.asp."

19. What preparations should I make before consulting a housing counselor or lawyer about problems with
my mortgage?

The first step is to gather together all the documents pertaining to your mortgage, such as the
documents from your loan closing and any subsequent closing, letters and mortgage statements, and
records of payment. Fannie Mae offers a very helpful financial checklist to fill out before seeking help.
To download a copy, visit:

http://www.knowyouroptions.com/sites/default/files/KnowYourOptions_Financial_Checklist_1007.pdf

20. Are there any special legal protections for active duty military personnel?

The federal “Servicemembers Civil Relief Act,” 50 U.S.C. Sections 501 through 596, limits the rate of
interest that may be charged to military personnel on active duty, and imposes limitations on a
lender’s right to pursue foreclosure or legal action. This Act applies to active duty military personnel
who had a mortgage prior to enlistment or prior to being ordered to active duty, including members of
the Army, Navy, Marine Corps, Air Force, Coast Guard; commissioned officers of the Public Health
Service and the National Oceanic and Atmospheric Administration who are engaged in active service;
reservists ordered to report for military service; persons ordered to report for induction under the
Military Selective Service Act; and guardsmen called to active service for more than 30 consecutive
days. Dependents of servicemembers also may be entitled to protections in some cases. For more
information, please call the military information number at 1-800-342-9647, or visit HUD’s website at
http://www.hud.gov/offices/hsg/sfh/nsc/qasscra1.cfm

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QUALIFIED WRITTEN REQUEST UNDER THE

REAL ESTATE SETTLEMENT AND PROCEDURES ACT

FOR CORRECTIVE ACTION

[Lender/Loan Servicer]

[Lender/Loan Servicer Address]

Attn: Mortgage Loan Accounting Department

RE:

Borrower:__________________________

Account Number: ___________________

Property address: ___________________

Dear Sir or Madam:

I am writing pursuant to the Real Estate Settlement and Procedures Act, 12 U.S.C. Section 2605(e), to ask
that you correct the records of my account.

Your records of my account are in error because [explain in detail what the servicer has done wrong, or the
information that is incorrect. For example, you may say “the fees you have charged are improper” or “my
July payment has not been appropriately applied.”]

My account should be corrected to show [explain the correct information that should appear on your
account.]

In addition, as required by the Real Estate Settlement and Procedures Act, I would like you to provide me
with the name and telephone number of an individual who can provide me with further assistance if needed.

Thank you in advance for acknowledging and answering this request.

Sincerely,

[your name]

*********************

QUALIFIED WRITTEN REQUEST UNDER THE

REAL ESTATE SETTLEMENT AND PROCEDURES ACT

FOR ACCOUNT INFORMATION

[Lender/Loan Servicer]

[Lender/Loan Servicer Address]

Attn: Mortgage Loan Accounting Department

RE:

Borrower:__________________________

Account Number: ___________________

Property address: ___________________

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Dear Sir or Madam:

I am writing pursuant to the Real Estate Settlement and Procedures Act, 12 U.S.C. Section 2605(e), to ask
for the following information:

[Insert the specific information you need. Here are some examples which may be relevant to your particular
needs:

z The name and address of the current holder and owner of the original note and deed to secure
debt
z A complete payment history which lists the dates and amounts of all the payments I have made
on the loan to date, and how each payment was applied or credited (whether to principal,
interest, escrow, suspense, or some other treatment)
z A breakdown of the amount of claimed arrears or delinquencies on the account, including an
itemization of all fees and charges you claim are currently due
z The payment dates, purpose of payment, and recipient of any and all fees and costs that have
been charged to the account
z The payment dates, purpose of payment, and recipient of all escrow items charged to the
account
z A copy of any annual escrow statements, and notices of a shortage, deficiency, or surplus sent
within the last three years
z The current balance in any suspense account as of today and the reason why such funds were
deposited in the account
z The name and address of the owner of the promissory note secured by the deed to secure debt
for the mortgage loan referenced above
z The names of all entities to whom the promissory note referenced above has been sold,
assigned or transferred, and the dates that each sale or transfer of the note occurred
z A copy of the note referenced above, and any attachments showing endorsements that have
occurred
z A copy of any assignment of the note or deed to secure debt
z A description of all loss mitigation and foreclosure avoidance steps taken with regard to this
mortgage loan, including all calculations concerning debt-to-income and net-present-value
determinations and all documents regarding loss mitigation
z A description of any foreclosure avoidance steps taken with regard to this mortgage loan]

In addition, as required by the Real Estate Settlement and Procedures Act, I would like you to provide me
with the name and telephone number of an individual who can provide me with further assistance if needed.

Thank you in advance for acknowledging and answering this request.

Sincerely,

[your name]

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