What you need to know about mortgage foreclosure
Your lender may foreclose your home if you are unable to make your monthly mortgage payments on time. A mortgage foreclosure is undoubtedly a homeowner’s nightmare. It has a long lasting effect on your credit score as it stays in your report for a minimum of 7 years. However, the lenders don’t want foreclosure, as the process is expensive and difficult; at the same time, they do not hesitate to foreclose a property when they don’t get any better options. Their purpose is to recover the mortgage loan, as much as possible.
6 steps in foreclosure
Though the foreclosure laws vary from one state to the other, there are 6 basic steps in mortgage foreclosure, which are described below.
1. Notice of default: If you default on your home loan for consecutive 3 months, then your lender will at first give you a written Notice of Default.
2. Period of paying back: You will be given a time period within which you can reinstate your loan by repaying the amount that is needed to cure the default.
3. Type of foreclosure: If you cannot repay the default amount, then depending on your mortgage deal, your lender may file either a judicial or a non-judicial foreclosure.
4. Foreclosure sale notice: The lender may send you a Notice of Sale if you’re not able to repay the default amount within 90 days of foreclosure filing.
5. Public auction: Your lender can set up a public auction within 15-30 days of sending the Notice of Sale. The highest bidder gets the property and if no one bids enough, then the lender can buy the property; the lender is then required to submit a credit bid on the basis of the home loan amount you currently owe.
6. Unlawful detainer lawsuit: If you do not vacate your property by the time of foreclosure sale, then an unlawful detainer lawsuit is filed against you in order to evict you from the property.
However, at any point of time, if you pay off the default amount along with the necessary foreclosure costs, then you’ll be able to avoid mortgage foreclosure; it will also help you to become current on your home loan.
Avoid foreclosure – Negotiate with your lender
If you are in trouble paying your mortgage, then you should contact your lender to negotiate and modify the terms and conditions of your mortgage. The following lines describe how you can make your monthly home loan payment affordable in order to avoid mortgage foreclosure.
• Extending the loan term: You can negotiate with your lender to lower your monthly payments by increasing the loan term.
• Reducing or waiving off late fees: Your lender can waive off any late fees in exchange of a longer payment period.
• Refinancing your mortgage: Refinancing is quite a good option that can help you to replace a high interest mortgage with a low rate home loan.
• Reducing the interest rate: You can request to reduce the current interest rate, so that the payments become affordable.
Depending on your financial condition, you can negotiate on any of the above modifications in order to make your monthly home loan payments quite affordable.
Useful sites :
Guide for stopping foreclosure – The Foreclosure Stop Guide exists as a resource to help you find all the information you need to educate yourself about stopping foreclosure.
Mortgage Notes - Get information on mortgage notes, real estate funding and trust deeds etc.