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Many homeowners face sudden circumstances that hinder them from being able to make their monthly payments on time. These circumstances can be job loss, divorce, extreme debt, or sudden illness/death. Going into foreclosure is quite common and can be taken care of in ways that can potentially make everyone involved pleased. The bank does not want to own your home. Banks have to go through various time consuming steps and they must invest money into hiring attorneys, contractors, realtors, inspectors, and other specialists to get the foreclosure processed and then get the property ready for sale.

Q: What is foreclosure?
A: Foreclosure is the process of taking possession of a mortgaged property as a result of the mortgagor’s failure to keep up mortgage payments. A foreclosure is one of the worst things that can show up on your credit and it can ruin your financial ability to get a loan, or even rent an apartment, for up to ten years. There are two types of foreclosures: non-judicial and judicial. Judicial foreclosure involves a lawsuit being filed against the borrower through the civil court, whereas a non-judicial foreclosure does not involve the court system. No civil lawsuit is filed with a Non-Judicial Foreclosure. Whether a foreclosure is judicial or non-judicial is significant because it affects the foreclosure process and procedures.

Q: How does a home go into foreclosure?
A: Foreclosure proceedings usually begin after a borrower has skipped three mortgage payments. The lender will record a notice of default against the property. The lender will then notify the buyer in writing that he or she is in default. The lender can request a trustee’s sale or a judicial foreclosure, in which the property is sold at public auction. A borrower can cure the default by paying the overdue amount and the pending payment after the notice of default is recorded, usually no later than a few days before the property’s sale. Unless the debt is satisfied, the lender will foreclose on the mortgage and proceed to set up a trustee sale.

Q: Who do I talk to about my home?
A: Talk to your lender! As soon as you realize making mortgage payments will be an issue, contact your lender. Do not disregard letters sent to you from your lender. If only to reduce the number of foreclosures they’re dealing with, lenders are encouraged to negotiate with home loan borrowers. Several different things can happen. The lender may agree to accept reduced payments, or no payments, for a time frame agreed upon (though you may have to agree to make up the difference later), agree to accept a late payment, or agree to redo the terms of your loan so that you can better afford payments. Also known by the terms of forbearance, loan reinstatement, and loan modification. These options entail more information that your lender should provide upon call.

Q: What is “Cash for keys?”
A: In order to avoid foreclosing on a home, banks will offer a sum of money to the borrower in exchange for the deed of the home. Doing this will stop your home from being foreclosed on and provide you with money to get another place to live. Because your home was not foreclosed on, your credit will not be harmed.

Q: What is “deed-in-lieu” foreclosure?
A: Deed-in-Lieu means the borrower agrees to sign over the deed of the property to the bank and in exchange they agree not to foreclose on the property; there’s legally no reason then to foreclose since the title has been given and one has been released from debt. This is how one can avoid a foreclosure showing up on their credit report.

Q: What is a Notice of Default and what happens when a Notice of Default has been made?
A: A Notice of Default is a public notice filed with a court stating that a mortgage borrower is behind in payments. This is one of the first steps toward foreclosure, and if the borrower does not pay, the next step is for the lender to file a notice of sale for the property. When this happens, you can still stop the foreclosure of your home. One way to stop the foreclosure is by selling your home or property. You can hire a broker to determine the market value of your home and list it as a short sale. If your property is worth significantly less than you owe on it, this may be your best option. While this does affect your credit, it is not as damaging as a foreclosure would be.

You don’t want your home to be foreclosed on and neither do we. If you have any questions regarding foreclosures, please feel free to email me at SOLD@STACEYTOWNS.COM. I will be more than happy to answer any questions that you may have.