UNDERSTANDING FORECLOSURE


This article is intended to be a helpful guide to help you understand the Foreclosure process, and what you can do to help yourself to avoid Foreclosure.

 

Whether you have missed a house payment or not, it is never too late to seek help!

  • Search for a HUD-approved housing counselor, or
  • Call Toll Free (800) 569-4287 to find a Housing Counselor near you, or
  • Call the HOPE NOW Alliance at (888) 995-HOPE.

Are you afraid that you might miss a house payment soon (or have already missed a few)?  Some common situations that strain a person’s financial situation are a mortgage payment increase, loss of job, divorce, medical bills, an increase in property taxes, or other similar situations.

If your credit card debt if becoming unmanageable, or finding yourself forced to use your credit cards to buy daily staple items, please contact the resources above.  Again they are:

  • Search for a HUD-approved housing counselor, or
  • Call Toll Free (800) 569-4287 to find a Housing Counselor near you, or
  • Call the HOPE NOW Alliance at (888) 995-HOPE.

Here is a general synopsis of the Foreclosure timeline:

  • Contacted by Lender – Depending on your payment history and credit profile strength, the number of missed payments that accrue before you are contacted by your Lender will vary from 1 month to 3 months.
  • Repayment Plan – After this initial Lender contact, your Lender (or likely a social worker hired by or employed by the Lender) will begin calling you to discuss why you are not timely with your payments.  I cannot stress enough how important it is to take their phone calls!  Talk to your Lender and honestly explain your financial situation.  Be objective and factual as possible, and how you have taken various courses of action to correct your delinquency.  Try to arrange a repayment plan with the Lender.
  • Several Mortgage Payments Missed – You will receive a letter from your Lender detailing your delinquent amount, and that you have 30 days to bring your mortgage current.  This is often called a “Demand Letter” or “Notice to Accelerate”.  The Lender is not likely to accept less than the total balance due, and the lender will begin foreclosure proceedings after this 30 days.  You still have an opportunity for a housing counselor to help your situation!!
  • Failure to Fulfill “Demand Letter” – This puts you after the 30-day allowance defined in the paragraph above.  At this point, the Lender will likely have their attorneys take over management of your delinquency, and you will incur all attorney fees as part of your outstanding balance.  You still have an opportunity for a housing counselor to help your situation!!
  • Sheriff’s Sale or Public Trustee’s Sale – the Lender’s attorney will schedule this Sheriff Sale.  You may be notified of this sale in up to 3 ways: mail, a notice taped to your front door, and an advertisement in the local newspaper.  The time lapse between the “Demand Letter” and the actual Sheriff’s Sale is typically 2-3 months.  To be clear, this Sheriff’s Sale date is not your “move out date”, rather it is simply the date the Lender will auction your home for sale.  You still have up until the day of the Sale to become current on your outstanding mortgage balance and accumulated attorney fees.
  • Redemption Period – Once the Sheriff’s Sale takes place, you enter a 6-month “redemption period” before you will be forcefully removed from your home.  In this redemption period, you can still “save your home” from foreclosure, but now you must pay off the ENTIRE mortgage balance including your delinquent amount, attorney fees and all applicable late fees.  This could be done by selling your home on the open market.  If you lack equity in your property and cannot sell, then please explore a “Short Sale” as soon as possible!  A successful Short Sale, is where you sell your home “short” of (less than) your loan balance. This could save you from the detrimental credit profile effects of foreclosure.

The moral of the story here is that if you finding yourself in a financial hardship, seek help from the above sources ASAP!  Also, contact a reputable Realtor® to see how they can help you as well by exploring a “Short Sale”.