When a person wants to buy a house and is unable to pay the full amount upfront, their only option is to borrow from a lender. By doing so, the mortgagee (lender) and mortgagor (borrower) establish a legally binding agreement commonly known as a mortgage.
Additionally, the mortgage comes many clauses that, among other things, allows the lender to sell the property in the event of the borrower’s default. In other words, if a borrower fails to pay their mortgage, the lender has the right to sell the property to recover their investment.
Foreclosure, especially with larger lenders, tends to move quite slowly. For example, if a borrower misses their monthly payment by three weeks, the “missed payment letters” may not show up in your mailbox until the last week of the month.
In general, each lender has a different timeline regarding when to initiate foreclosure proceedings. Even so, here is what you can expect once you that fourth week hits:
Again each lender is different; small ones are quick on their feet while larger ones tend to move much slower. With that said, there is no specific timeline that can be applied as each foreclosure is unique.
The best way to prevent foreclosure is never to be late with the payments in the first place. However, since you’re reading this article, it can be assumed that you, or someone you know, if facing foreclosure at this very moment.
Do not fret; there are steps that you can take right now to lessen or even prevent the impact of the foreclosure.
First things first, if you are or will be late on a payment, contact the lender ASAP! They are more likely to be lenient if you reach out and tell them why you’re falling behind on the payments. If your circumstances fall under the extenuating category, the lender may be willing to work out a deal with you:
Once you get a hold of the lender — their number is on your monthly statement — ask to speak to the loss mitigation department and explain your situation to them. Loss mitigation, as their name implies, exists to help homeowners prevent foreclosure by modifying the Note’s (mortgage) terms.
It is of the utmost importance that you begin the loan modification process immediately after you are aware of any hardship! Some lenders take up to 90 days to process your application, and if you call 10 days before the auction date, they will not be able to help you.
However, if you can get the loss mitigation department to help you in time, there are a variety of things they can do for you:
If you are not able to get any help from your lender on your hardship, you may consider calling the Making Home Affordable Program at 1-888-995-HOPE or visiting them online at www.makinghomeaffordable.gov.
Note: The making Home Affordable Program is a government program designed to help homeowners stay in their homes.
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