We hear about the foreclosure process all the time in the news these days, but what exactly is foreclosure and how does it work?
Even if you miss one mortgage payment, you are in danger of having the foreclosure process begin. Now, this does not necessarily mean you are inevitably going to be foreclosed upon, but the mortgage company is going to tell you that they have not received your payment and that you should send it immediately.
Typically, you will get these letters for two to three months if you do not make a payment, and nothing else will happen. If you make good on your mortgage payments, nothing else should occur and everything should be okay as far as your mortgage goes. However, it might go on your credit report that you have been past due on your mortgage payments.
Let's now see how the foreclosure process unfolds if you do not meet your obligations:
Once you are sixty days past due, you will get what is called a notice to accelerate. At this point, you will need to bring the loan current and nothing else will do, usually, to stop the foreclosure process. You will need to pay the past amount plus any late fees they assess you.
You may also receive a threatening letter saying that if you do not pay by a certain date, they may accelerate the due date of the loan and start the foreclosure process.The letter may also tell you that if you do not pay the amount past due and they accelerate the due date of the loan, you will also be responsible for any attorney fees added to the delinquent amount.
If you do not respond by paying the full amount due on the date the mortgage company has established in their notice to accelerate, they will hire an attorney and this attorney will forward you what's called a demand letter. This letter formally notifies you that if you don't bring your loan current immediately, the foreclosure process is going to go ahead within the court system.
If you do not respond to the previous demand letter by paying the full amount due plus any attorney fees, the lender will then file a formal foreclosure notice with the court. This is a notice of default, and will list the entire amount you need to pay. You have about twenty to thirty days to respond to this judgment before the foreclosure process proceeds further.
If you have not previously responded to the demand letter or to the notice of foreclosure, you will be given a notice of sale after twenty to thirty days have gone by, the period of time you were given to respond to the notice of foreclosure. This particular notice simply sets the sheriff's auction date, and your house will be sold at auction at that point.
Be aware that this is the foreclosure process the mortgage lender takes if you do not respond at any other point in the process. With the exception of the last step, the notice of sale, you have the ability to stop home foreclosure, in some cases, as long as you stay in communication with the bank.
It does not necessarily mean you are not going to lose your home, but be aware that the bank does not want to foreclose on you any more than you want the foreclosure process to happen. Therefore, to help stop home foreclosure, establish communication with the bank at the very first step of the process even before you have missed your first payment if you know it.
They may be willing to work with you to accept partial payments right up front until you've caught up, as long as you keep in constant communication with them.
Once you get to the point in the foreclosure process where they cannot accept partial payments, the notice to accelerate, you will have no other recourse but to make full payment or lose your house. Therefore, it is in your best interests to keep in constant contact with your mortgage lender once you know you're going to have trouble meeting your mortgage payments.
What is the bottom line, then? Your mortgage lender wants to keep you in your house as much as you want to stay there, so work with them to avoid a foreclosure process.
And if you cannot avoid losing your home, there are steps you can take to save yourself the trouble of being foreclosed on. Talk with your lender about these steps, so that both you and your lender are saved the trouble of going through the foreclosure process.