Facing Foreclosure

Many homeowners are still facing the question of what happens after foreclosure. Reading the news and watching various reports on the economy, it seems like the economy is recovering. They are showing that factory orders are up, unemployment claims are down and exports are increasing as well. Home sales are increasing in both the new and existing home markets. What is not taken into account is the number of people who have exhausted their unemployment benefits and have been tapped out financially trying to keep up with all of their financial obligations including their home mortgages.

While President Obama has opened up a glimmer of hope for those behind in their mortgages with the federal loan modification funds and programs, the sheer number of people in trouble has resulted in month long delays in getting their applications for help processed. In the mean time, many people are now facing the foreclosure process. Another issue is that people who have been able to stay current are not eligible in many cases for loan modification. These people basically have to ruin their credit so that they can get relief from a crushing financial obligation.

If you are in the unfortunate situation to be behind in your mortgage payments or have just been laid off or lost your job for other reasons and will not be able to continue making your mortgage payments on time you will need to understand the steps of foreclosure and what you can do no matter where you are in the process right now. The process is lengthy and can take several months depending on the state regulations and the judge whose court you end up in. It’s very important to understand your homeowner rights on a foreclosure.

The first step of begins when the homeowner is declared to be in default on his mortgage loan. This is when the homeowner falls behind in his mortgage payments. Every lender has different criteria as to when a homeowner is officially in default. The note holder then sends a notice of default to the homeowner notifying him of the situation. At this point the homeowner can still negotiate with the mortgage bank about the past due payments but is on notice that foreclosure is a distinct possibility.

Real estate investors can get lists of properties that have received a notice of default and can contact the homeowner directly to offer to buy the property at a reduced price (short sale) but only if the lender agrees to the lower price. Lenders like this situation if the selling price is close to the amount owed on the mortgage and they can avoid the costs involved with completely foreclosing on a property. Homeowners like the situation because they can get out from under the mortgage and avoid a foreclosure mark on their credit report. About three months after the notice of default the lender can file a notice of trustee sale (auction). The lender files a notice with the court and a date is set for the auction. It is common that the actual auction is postponed many times as the homeowner and lender tries to hammer out an agreement to avoid the final foreclosure. If all else fails the property is sold as is at auction.

If you find yourself in this situation, it’s imperative that you contact your lender. While there are no guarantees, banks and other lenders are increasingly willing to try and find solutions rather than have to repossess a home or property.

Facing Foreclosure” written by Melanie Ullman

This entry was posted on Monday, October 5th, 2009 at 6:14 pm and is filed under Homeowner Rights on a Foreclosure, How Does Foreclosure Work, steps of foreclosure. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.