Information on Mortgage Foreclosure
Try to work out a reasonable payment plan. It is critical to do this as soon as possible.
If working with a service representative is not producing results, contact the “loss mitigation area” with the lender. It is essential not to panic and hastily agree to a plan that cannot be reasonably repaid. Negotiate until a feasible agreement can be met. Once a repayment plan has been broken, the lender is less likely to bargain in the future.
Read ALL mail sent by lender. It is imperative to comply within the lender’s timeline for the paperwork and financial records requested.
The amount and type of help lenders may be willing to provide is dependant upon the original financing. Both HUD and VA have counseling agencies that offer help and assistance for homeowners. There are also incentives for servicers to work out repayment plans with consumers.
Lenders make decisions on how fast they start the foreclosure process after the borrowers fail to make their payments. Late payments can go on for as little as one month or as many as several months before the formal default notice is sent and the notice of intent to foreclose are actually sent to the home. Borrowers may negotiate with lenders before the foreclosure process starts.
The beginning of the statutory time clock starts with the notice of intent to foreclose. The sheriff’s sale is sixty days after the notice of intent to foreclose is recorded. During this sixty day period, the notice has to be advertised in a legal newspaper for six successive weeks. Once the sheriff’s sale has been held, there is a six month or twelve month statutory period of redemption. In some cases, an abandoned property can be foreclosed with a five-week period of redemption.
Short Sale (Not a Foreclosure)
When a homeowner finds themselves owing more than the value of their property, a lender may agree to do a “short sale”. That means the lender is willing to accept less than the actual payoff to close the sale. This process is not quick in most cases and it involves the lender obtaining an appraisal to determine the market value as well as having its board of directors review the documentation to determine whether or not the lender wants to proceed.
The lender may take thirty days or more to complete this action. If there a second mortgages or junior liens, the lender has very little incentive to reduce their mortgage payoff.
Foreclosure by Advertisement (Most Common)
Three conditions must be met before a foreclosure can be started:
o Default in a condition of a mortgage, i.e. missed payments, non-payments, etc.
o No other action has been initiated to collect this debt by another party.
o Mortgage has been recorded and all assignments have been recorded.
The notice of intent to foreclose served on the person in possession of the mortgaged premises, even if the borrower is not living in the mortgages premises.
Within the 60-day period from the time the notice is recorded and the sheriff’s sale, the notice must be published in a legal newspaper for six successive weeks.
The sheriff’s sale is made in a public venue and sold to the highest bidder between 9 am and sunset.
If there is a surplus after all of the costs have been paid, the borrower will be given the surplus.
For more information visit NAR's web site at http://www.realtor.org/home_buyers_and_sellers/protect_your_home.html
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