Owning a home today is more difficult then in the past. For most of us there is no such thing as job security our parents had and with that comes the inability to find good jobs that can cover all of your bills. If you are having financial problems that cause trouble with you repaying other bills you are likely wondering if you are at risk for foreclosure.
The following information comes partly from the Federal Department of Urban Housing and they are a very basic resource for anyone going through foreclosure.
As you may be aware many lenders are working with people through initiatives with the government to provide some leniency and forgiveness when it comes to certain home loans. Unfortunately you are likely to find that you do not qualify for help from your lender and the many who have received help are re-defaulting on their loans at a rate of 70% or higher. This can be very troubling because it seems the people that are least deserving / responsible are getting huge portions of their homes paid for with taxes that we all pay but someone that honestly needs just a little help or maybe a refinance to a lower rate as had been standard for generations gets no help at all.
No matter what your circumstances you should always try to find the best solution. It may mean filing for bankruptcy or it may just mean finding someone at your bank that can help. When you do find help you should be serious about making payments and addressing all of the problems you can to make sure this never happens again. Often we like to place blame on others because the value of our home has fallen or we think we owe more then others in our area with similar homes. The fact is you signed an agreement to purchase your home at a price you thought was fair. If you are under water now it does not mean you will be in 15 years when you still have a third of your original loan to repay. You never know what the future brings but you have to be an educated buyer whether you buy your home at the top of the market or at the bottom. And because life is short you often only get to make that decision once.
If you get a chance to improve your original deal then look at it with gratitude because when you signed the papers you made a choice to live up to your purchase price.
Some people buy condo sized homes in New York City for 10 million dollars and if you drive not an hour away you can buy a 5 bedroom home for less then $500,000 on a big lot in a safe neighborhood with good schools… and if you moved to Alabama or Wyoming you could buy a nice house backed up to a small farm for the same price…. These are the choices we make…. When you sign the line you agree to live up to it no matter how unfair you think it is in the future. And if you agree to pay something you know up front you never could repay then that is your fault just like it would be for your neighbor.
What Can You Expect In The Foreclosure Process
Here’s how it happens.
Note: Timeline varies by state.
- First month missed payment – your lender will contact you by letter or phone. A housing counselor can help.
- Second month missed payment – your lender is likely to begin calling you to discuss why you have not made your payments. It is important that you take their phone calls. Talk to your lender and explain your situation and what you are trying to do to resolve it. At this time, you still may be able to make one payment to prevent yourself from falling three months behind. A housing counselor can help.
- Third month missed payment after the third payment is missed, you will receive a letter from your lender stating the amount you are delinquent, and that you have 30 days to bring your mortgage current. This is called a “Demand Letter” or “Notice to Accelerate.” If you do not pay the specified amount or make some type of arrangements by the given date, the lender may begin foreclosure proceedings. They are unlikely to accept less than the total due without arrangements being made if you receive this letter. You still have time to work something out with your lender. A housing counselor can still help.
- Fourth month missed payment – now you are nearing the end of time allowed in your Demand or Notice to Accelerate Letter. When the 30 days ends, if you have not paid the full amount or worked our arrangements you will be referred to your lender’s attorneys. You will incur all attorney fees as part of your delinquency. A housing counselor can still help you.
- Sheriff’s or Public Trustee’s Sale – the attorney will schedule a Sale. This is the actual day of foreclosure. You may be notified of the date by mail, a notice is taped to your door, and the sale may be advertised in a local paper. The time between the Demand or Notice to Accelerate Letter and the actual Sale varies by state. In some states it can be as quick as 2-3 months. This is not the move-out date, but the end is near. You have until the date of sale to make arrangements with your lender, or pay the total amount owed, including attorney fees.
- Redemption Period – after the sale date, you may enter a redemption period. You will be notified of your time frame on the same notice that your state uses for your Sheriff’s or Public Trustee’s Sale.