Waiver: An act of waiving a right or claim.
Waiver: The voluntary action of a person that relinquishes that person’s right or claim in a legal action. A waiver eliminates a real or potential liability for the other party in the action.
Waiver: Giving Up a Claim on Legal Action
In foreclosure proceedings, homeowners may be asked to sign a waiver form or request one themselves. By signing a waiver form, the homeowner may relinquish their rights at certain stages of the foreclosure process. They may also request that certain legal requirements be waived.
For example, in Illinois, “If you do not have money to pay court fees, you can use our Application for Waiver of Court Fees program to help you make the forms. These forms ask the court to file documents in the court case for free. The cost depends on the type of case you have and the county where you are filing. Contact your local circuit clerk’s office for information on the fees,” according to Illinois Legal Aid.
Another example of a waiver is the lien waiver, which is an agreement that the bank will not enforce a lien on the homeowner’s property in order to obtain payments. The creditor bank will forfeit their right to execute a lien through the waiver. The bank would thereby be restricted to procuring payments through the homeowner’s credit, bank accounts, or other properties.
There are several types of lien waivers:
- A conditional waiver on progress payment waiver can be used if the claimant has received timely payments from the homeowner. The waiver will serve as proof against any lien claim on the property.
- An unconditional payment on progress payment waiver relinquishes the claimant’s rights until a specific date.
- A conditional waiver on final payment relinquishes the claimant rights to file a lien if the homeowner is current on all payments.
Lien waivers are used to encourage open communication between both parties. Lien waivers must be in writing and signed by the party authorized to file for a lien. The waiver should provide a description of the property, which will be “off grounds” in terms of liens.
In cases of forbearance, the homeowner may sign an agreement with the bank in which they agree to pay a lump sum up front, and then enter into a payment plan for the balance of the debt. Homeowners will be asked to sign a waiver, relinquishing certain rights, such as the right to raise defenses to contest a foreclosure case.
In cases of loan modification, the homeowner may sign an agreement with the bank in which they agree to a loan modification in which one or more of the terms of the mortgage is changed in order to make mortgage payments more comfortable for the homeowner. Homeowners who agree to loan modifications will be asked to sign waiver, relinquishing certain rights, such as the right to raise defenses to contest a foreclosure case.
In cases of deficiency, state laws vary when it comes to waivers.
In Wisconsin, for example, “Lawyers representing clients in foreclosure should pay special attention to whether the creditor is seeking, or waiving, its right to a deficiency judgment. Most large national lenders foreclosing in Wisconsin waive any and all rights to a deficiency judgment, because doing so reduces the length of the redemption period, usually by 50 percent,” according to the State Bar of Wisconsin.
In mediation cases, certain guidelines are set forth, which may allow the mediator to propose a waiver.
In Illinois, for example, “If the mediator determines the borrower may qualify, the mediator schedules the borrower for a mediation within 30 days in person with the lender and lender’s representative. A former judge or attorney with at least five years of real estate experience oversees this first meeting. Failure to attend or to participate in good faith will result in sanctions by the court, including possible dismissal of the action. If the borrower does not qualify, the mediator assists the parties in discussing a consent foreclosure in which the lender will waive any deficiency. If no agreement is reached, the foreclosure resumes,” according to the American Bar Association.