Foreclosure is a stressful process for any homeowner. No one wants to face the prospect of losing their home. Everyone knows that the word “foreclosure” is a loaded one and that ultimately it can lead to the loss of property, not to mention permanently damaged credit. But what does the foreclosure process really look like? What happens after payments are missed and before a homeowner is evicted?
1. Missing payments: Many people start by falling behind on their mortgage payments. Unexpected emergencies, medical bills or any number of other circumstances can prevent otherwise responsible homeowners from staying current on their mortgage. Falling behind on payments can be the start of the foreclosure process, though missed payments don’t automatically mean a house will get to foreclosure. Sometimes homeowners are able to turn things around and get caught up on their loan. Banks don’t want to go through the whole process of foreclosure for a few missed payments. They’re in the business of loaning out money, not managing and reselling real estate properties. To avoid foreclosure, lenders will sometimes offer forbearance, which means they’ll work with borrowers to accept a lump sum payment of the owed amount or spread out the back owed amount over time to reduce the burden on homeowners. If your financial problems are temporary or have been short-lived, you may be able to avoid the foreclosure process by working with your bank or loan servicer to get your loan in good standing again. At this point, it’s definitely in a homeowner’s best interest to make a serious effort to right the ship. Otherwise, the reality of foreclosure gets a bit closer.
2. The lender notifies you about defaulting on your loan: The foreclosure will begin moving forward when a borrower hasn’t contacted their lender about their situation and has continued to miss payments. This usually happens within the first 30-60 days after a payment has lapsed and can come in the form of a letter or a phone call. If you haven’t contacted your bank at this point, now is the time. You can still save your home if you work with the bank to come up with an arrangement to help bring you current on your financial obligation. If your financial setback is permanent and you are unable to reinstate the loan, your lender will likely start the foreclosure filing.
3. The foreclosure filing: If a homeowner stays in default on their loan and is unable to make payments, the bank will usually file formal foreclosure paperwork. Some states have a judicial process, where courts are heavily involved in the foreclosure. Others have non-judicial processes that can move forward without court approval. In these cases, the deed of trust includes a “power of sale” clause that lets the trustee sell the property without involving court visits. ‘
4. Final foreclosure and resale: The term foreclosure is the legal term for taking back possession of a mortgaged property. The foreclosure sale or auction will usually happen after the bank has foreclosed on a home, as the lender wants to avoid having a property in their ownership that they’re not collecting any kind of payment on. Banks will usually sell foreclosed homes below market value in order to expedite the sale process.
Even laid out as straightforward as this, foreclosure is a scary and uncertain thing. A home is many peoples’ most important asset, and few have a backup living situation ready. It can be helpful to have a lawyer available to answer questions and even to help prevent foreclosure.
A lawyer can help negotiate the restructuring of your loan with your lender. If you are able to continue making some payments, your lawyer might help you work out a short sale to keep your home as long as you can. Lawyers can also help you fight a foreclosure without going through the short sale process. If you believe that your foreclosure is happening unlawfully, a lawyer can help stop your foreclosure from proceeding. Circumstances that might warrant a case include serious errors made by your lender; improper foreclosure procedures; or the inability to prove that your lender actually owns your loan. Any successful defense of a foreclosure process would almost always require the assistance of an attorney.
Our law firm has experience with foreclosure law, and we specialize in helping clients with debt and financial problems. You don’t have to fight foreclosure alone. You deserve support and assistance to guide you through the procedure and understand your options. We pride ourselves on personalized service and working to understand your unique situation.
Get in touch today for a free consultation, and get one step closer to peace of mind when it comes to your home and finances.