While the home foreclosure process may seem incredibly daunting, especially if you’ve entered it, there’s not necessarily a reason to be scared. Your bank usually would rather keep you paying your loan and in your home instead of foreclosing on your property. Most times they will incur some sort of loss on a foreclosure, although not as much as the entire loan. Finding a way to stop foreclosure starts with you. Have good contact with your bank and use programs like Stop Foreclosure Now to pull all the strings that you can to keep you in your home. Education is also important. Here are the important steps in house foreclosure that you need to be aware of.
The pre-foreclosure process begins when you miss your first loan payment. At this point, the bank will give simply give you a warning that you are late on your mortgage payment. If you end up paying your balance, nothing else will happen to you at this point. However, if you don’t make your payment you’ll be subjected to several other notices that will get more and more severe as time passes. While rules and regulations differ from state to state, generally once you reach 60 days past due on your mortgage, the entire process begins to accelerate. You will get a series of notices starting with the Notice to Accelerate.
The first notice that you will get from the mortgage company is a notice to accelerate. At this point you are usually around 60 days past due on your mortgage. The notice will tell you to bring your mortgage current or risk being charged the fees of an attorney on top of your mortgage payment for file foreclosure papers. It will state a date of acceleration in the notice that you will have to pay the amount by, usually about 20 to 30 days in advance. If you pay off the loan during this time plus late fees or negotiate a deal with your bank, the process will stop here with some minor damage to your credit history. However, if you ignore the notice the next step will kick in.
The next step in the process is called a demand letter. The demand letter formally tells you to bring the loan amount current. At this point a lawyer has usually been hired and the bank or mortgage company is ready to take legal action if the loan isn’t paid back.
If you ignore the demand letter without paying back the loan amount that you owe the next step in the process is the notice of default. This is a formal notice that has been filed with the court and will list entire amount that you need to pay. Once again you can negotiate with your bank at this point, but it will be much harder and attorney’s fees will be included. You will normally have 20 to 30 days to respond to this notice.
The final two steps in the foreclosure process are the notice of default and the notice of sale. IF you don’t pay the amount owed on your investment mortgage, a formal foreclosure notice gets filed with the court that lists the entire amount of your mortgage, which you usually have twenty to thirty days to respond to. If you still don’t respond, then the property will be auctioned off to the highest bidder. The sheriff will set the auction date and you will usually have 30 days from the time of sale until you have to vacate the property.
The most important lesson to take away from the foreclosure process is that your bank usually isn’t out to get you. It is out to protect its investment and recover the money that it is owed. Along every point you have the opportunity to talk with your home or investment property lenders and seek help from other sources. Make sure that you try to do so! If you hope to stay in your house, stay in contact with your bank and let them know about your financial situation.