What Homeowners In Foreclosure Should Know… Part 3Michael Schulman
What is a Referee?
If you had applied for a loan modification or other loss mitigation option and did not qualify, and the Court agrees with the determination, the foreclosure then continues. It should be noted that the Lender has an obligation, enforced by the Court, to negotiate in good faith during the loss mitigation review process. If the Court finds that the Lender did not do this, they can enforce penalties such as monetary sanctions, tolling of interest, or reductions in principal.
Most homeowners at this point are fearful they will lose their home any day. This is not the case. The lender still has a number of steps it must take before the home is set for auction. Depending on what county the property is located in, this can take months or even years.
The Court must first appoint a Referee to compute the amount owed and due to the Lender. If an answer was filed (which I already addressed in Part 2 of this series) the Lender must file a Motion for Summary Judgment. This is a motion where the Lender must address all of the affirmative defenses you or your attorney set forth in the answer, and argue why these are not valid defenses to the foreclosure action. Additionally, in this motion, the Lender asks the Court to appoint a Referee. You have the opportunity to oppose this motion and address all of the Lender’s points. The Lender can then reply to your opposition. This motion is submitted to the Court for decision. If this motion is granted, a Referee is appointed to compute the amount owed and due. If this motion is denied, the Court usually advises the Lender as to what their reason for the denial was so that they have an opportunity to remedy same (if possible).
In the event that you or your counsel did not file an answer, you still have some options. If you have a reasonable excuse for your delay, and a valid claim against the foreclosure, you can file a motion to vacate your default and be able to file a late answer.
If, this is denied, or you choose to not file an answer in the action, the Lender proceeds by an Order of Reference to Appoint a Referee. These are granted by the Court more liberally, as the Lender does not have any affirmative defenses to address. Once granted, a Referee is also appointed here.
Many homeowners do not understand what a Referee is and what their role serves in the foreclosure. The Referee has no association with the Lender or the homeowner, and is an impartial third party appointed by the Court. They are often times attorneys, and are familiar with foreclosure actions. Their role is to compute how much the Lender is due based on the homeowner’s default, as well as conduct the foreclosure auction and sign all accompanying documents post sale.