The legal process a lender uses to take a home when the homeowner defaults is called a foreclosure. The lender has this right because they use an owner’s home as collateral for the loan.
Below are Important things to note when facing foreclosure.
Never avoid your lender
The number one thing you always want to do when facing a foreclosure is never avoid your lender. You want to act quickly to stop the foreclosure and contacting your lender is the first step. Let them know you have received all notices and that you want to work with them to resolve the issue fast. Most lenders do not want your home because they are not in the business to own real estate. They want to lend money. Consequently, they will work with you as much as you are willing to work with them. So, it is highly recommended that you seek help avoiding foreclosure on your property.
Lender can grant your payment
Your lender could do several things when it comes to assisting you. The most common are to grant a payment plan on the amount that is past due. Other options may include adding the amount in arrears to the end of your loan, which means your loan would extend by the number of monthly payments you are behind.
Lender can refinance your existing loan
A couple of options you can examine are calling another lender to see if they would refinance your existing loan. This is not a reliable option because most lenders won’t refinance your loan if you are behind in payments or do not have the income to qualify for the credit.
Types of foreclosures
There are two types of foreclosures: judicial and non-judicial. In general a judicial foreclosure has to go before the courts while a non-judicial foreclosure does not. We won’t go into details because all you need to know is that the typical foreclosure starts approximately three months after your last payment. It could be slightly shorter or longer. Keep in mind; the lender has the right to initiate the foreclosure proceedings the day after you become delinquent.
When lender sells your house, they must notify you
Before the lender selling your home, they must inform you of the sale. Typically, the sale will appear in a legal newspaper. The notice should contain the date, time and place of the sale. It also must be shown as public information a certain number of days before the sale, usually 20 to 30 days.
Watch out for scams
Many legitimate companies and organizations will assist in stopping a foreclosure. However, a lot of them are scams. Take Care for people who promise to curb the foreclosure by having you quitclaim the property to them. Often, they will make an offer that is attractive to you, hope they can help, wait until the clock runs down, and then approach you with a lower offer when it’s too late. Consequently, you feel pressured to accept the below-market offer.
In summary, there are several things you can do during a foreclosure proceeding. Check all available options and resources before deciding on the alternative you will use to stop the foreclosure. Include consulting an attorney once you’ve narrowed your choices.