Why Is It Better to Hire a Lawyer for Surplus Funds Recovery vs. a Surplus Funds Agent?
The foreclosure process does not always end when the bank takes your home after you fall behind on payments. You still have a contract with the bank, and a financial relationship may survive the foreclosure sale.
You may still owe the bank money if your property is underwater. However, the bank may also owe you money if the sale results in more proceeds than you owe the bank on the mortgage. This money rightfully belongs to you, and you deserve every dollar of it.
You may need assistance recovering these surplus funds, especially when you have difficulty with the trustee. You may not even know of your legal rights in the process.
Then, you must choose who to hire to help you get your money back.
Certain people bill themselves as surplus funds recovery agents, but outright fraudsters may overcharge you or take your money.
Get help from a real estate attorney. Some issues may emerge in the process that require you to take further legal action.
Surplus funds lawyers are legal professionals with knowledge and experience in handling complex legal matters. They have undergone extensive education and training to ensure they understand the law. This knowledge allows them to provide you with legal advice, guidance, and representation throughout the surplus funds recovery process.
What Are Surplus Funds?
When your property is foreclosed on, banks can sell it to receive the money you need to pay them. You may have fallen behind on your mortgage, and you owe the bank several payments, along with the remaining unpaid mortgage. Banks can recover the money you owe them, but they do not have a right to your money.
You may build equity when you own your property for a considerable time. In addition, the value of the property may have appreciated. All of these funds may belong to you.
When banks sell the property, they will often do it at a foreclosure auction with the help of a trustee. Once they receive the money, they will deduct the leftover amount on the mortgage, along with fees and penalties you may owe (these fees cannot be punitive or excessive).
If the bank receives less money than you owe, you are still underwater and will need to pay the bank this amount over time. Alternatively, banks may receive more money than you still owe them, and these funds become surplus money you have a right to receive.
How to Recover Surplus Funds
You should have left a forwarding address with the trustee handling the foreclosure sale. Theoretically, they should contact you and provide you with a check for surplus funds after the foreclosure sale. In practice, getting all the money you deserve can take a lot more work.
First, the trustee may not contact you at all, and you may need to track them down to recover your funds. One of the most common issues is that the trustee is giving you a check, but it is for far less than the amount of money you believe that you deserve.
The trustee may claim that no one owes you money (or that you even still owe money) when you feel that you should receive compensation for what is yours.
You may even dispute the amount of money you should receive. The trustee may try to deduct all sorts of unreasonable fees from your money that are either excessive or that they have no right to try to collect.
You may need to engage extensively with the trustee during the process and even have to fight legally to get the surplus funds you deserve.
Leave this process to someone deeply familiar with the legal process who knows all of your rights and remedies.
Who Can Recover Surplus Funds for You?
Never deal with the trustee independently, especially when you may not even know your rights and cannot deal with any possible disputes.
Some people bill themselves as surplus funds recovery agents but may lack the experience to represent you before the trustee.
Finally, you can hire a foreclosure attorney to defend your interests. You may already have hired one for the foreclosure, and if so, they can continue the job for you through the end of the sale and the distribution of any remaining funds.
A foreclosure attorney can represent you in any possible administrative issues or disputes throughout the process.
Take Care When Dealing With Surplus Funds Recovery Agents
Surplus funds recovery agents perform legitimate services for people whose homes banks have foreclosed on.
However, people may pose as agents who can take advantage of you. Many of them are not licensed by the state, and they do not need to pass any professional tests to call themselves agents.
These fraudulent individuals may find your information as a matter of public record and aggressively contact you, but they will not help you. Instead, they may ask for a significant amount of money upfront that you do not have.
Reports show that a surplus funds recovery agent may charge as much as 30 percent of the funds you will receive. Note that your surplus funds are not the same thing as lawsuit proceeds; this is money that is legitimately yours, and you need to make an effort to secure and receive it.
You have little visibility and confirmation that a surplus fund recovery agent is who they say they are. These people may claim to represent you to the trustee. However, they may get paid the money you deserve, and they will disappear. You have no way of knowing that you can trust this person.
You Can Trust That a Lawyer Is Licensed and Accountable
When you hire a foreclosure attorney, you know who they are. You also know that they have passed an exam and have a license to do business in the state where you live.
If the foreclosure lawyer does something wrong, you have a cause of action against them, and they may carry legal malpractice insurance to cover any damages they caused you.
Foreclosure lawyers have a fiduciary duty to act in your best interests. This requires them to prioritize your needs, protect your rights, and advocate for you effectively. Surplus funds agents, on the other hand, may not always have the same level of accountability or legal knowledge.
In addition, you can always review whether a foreclosure attorney has any disciplinary history with their state bar. You can learn whether any credible misconduct allegations resulted in punishment against them.
If an attorney committed a serious infraction involving dishonesty, they may lose their law license. The less-regulated field of surplus funds recovery agents may lack such sanctions.
A Foreclosure Attorney May Get the Same Results for Even Less Cost
A surplus funds recovery agent may charge you a percentage of the funds they can receive on your behalf. However, nothing regulates their charges. They may even charge you a very high fraction of the money they receive when their work may not even come close to justifying their high charges. You can end up paying someone a large part of the money you deserve for doing very little work.
Essentially, you commit to paying someone a percentage of the funds you will receive without knowing how difficult the work may become for them, and you may give away a large amount of money in exchange for relatively little.
When you hire a foreclosure lawyer, they will bill you hourly. If the job is as simple as sending some letters and watching over the trustee’s job in selling the property, it may not cost you much money. The amount your foreclosure lawyer bills you reflects the work they do.
Your attorney can handle all aspects of your case, from filing the paperwork to representing you in court if necessary. A foreclosure lawyer can thoroughly review your case, analyze potential legal issues, and develop a strategic approach to your circumstances. This comprehensive approach ensures a solid legal foundation and increases your chances of successfully recovering surplus funds.
If your foreclosure attorney must file a lawsuit against the trustee or financial institution for any reason, they may represent you on a contingency basis. They will receive a portion of the money you recover in the lawsuit but will not charge you anything for your time and services if you do not win the case.
You Can File a Lawsuit for Breach of Fiduciary Duty
The trustee handling the foreclosure sale owes you fiduciary duties even though you no longer own the house. Since you have a financial stake in the outcome of their work, and they act as the agent conducting the sale, the trustee cannot simply do whatever they want. If they could, it would cost you significant money and even result in you owing the bank. Therefore, the law constrains how they can handle the sale.
A trustee can breach their fiduciary duty in one of two ways:
- Breach of the Duty of Care: The trustee must use their due diligence to sell your home. In other words, they must use commercially reasonable methods to make the sale and have a duty not to be negligent. If the trustee acts carelessly and costs you money, they may have breached the duty of care.
- Breach of the Duty of Loyalty: A trustee must avoid conflicts of interest in selling your foreclosed home. For example, they cannot buy the house themselves or sell it to a related entity.
Like any fiduciary, you can hold the trustee personally liable when they breach the duties that they owe you. Since they act as an agent, and you essentially rely on the results of their work, they may owe you money if they did not act appropriately in selling your home.
Your Foreclosure Attorney Can Take Legal Action for You
If you hire a foreclosure attorney to assist you, they can review the actual sale of your property to determine whether the trustee breached their duty.
A foreclosure lawyer understands fiduciary responsibilities, and they are familiar with the legal circumstances that can constitute a breach. They will not need to contact anyone else to file a lawsuit on your behalf. Your foreclosure attorney can file the lawsuit themselves as you seek compensation for the wrongful actions of the trustee.
Here, the trustee is likely to be some professional or licensed agent. They should have deep pockets or an insurance policy covering them in case of a lawsuit. Thus, when you sue a trustee, they face high financial stakes. If you succeed, you can recover the total amount of your losses from the trustee’s wrongful actions.
Reach Out to an Experienced Foreclosure Attorney Today
When recovering surplus funds, you want to ensure you have the best possible chances of success. Hiring a lawyer assures you that you have a legal advocate, someone who can handle the legal system and fight for your rights.
Do not settle for less regarding something as important as your financial recovery. Retain a foreclosure lawyer for surplus funds recovery and experience the peace of mind that comes with having them by your side.