We all have had some kind of experience with it. Whether it being a friend, co-worker, family member or even your own experience, the foreclosure of a home is present in everyday life. Yet, what if I told you that there is a way to delay a foreclosure.
It begins with understanding the foreclosure process. So what is foreclosure? It is a legal process in which a person who has a mortgage on his/her property fails to pay their monthly installments after a period of time. This results in the mortgage being evicted and the estate sold to recover monies owed. Foreclosure happens for the following reasons, failing to make payments on the loan, transferring ownership of your property without the bank’s or mortgage lender’s consent while still paying off the debt, or violating documented terms of the loan.
The expenditure covered includes the balance of the mortgage, costs of collecting the added debt , and what was spent in foreclosing the property. In the event, the property is not purchased at a certain price, it will become the lender’s. Note, there has to be a certain amount of time as well as a certain amount of payments missed in order for the foreclosure process to start. If you miss the first payment, the bank or lender will send you a 30-day late. A representative from the bank or lender will call or send you a notice in the mail for the missed payment. If you continue to miss mortgage payments, you will be sent a 60-day late, then if missed again a 90-day late. By the 90-day late mark, the bank or lender will send a “Notice of Default”. The NOD will state that you have 30 days to make the payment current, appear in court, or face the risk of a foreclosure. If you fail to appear in court within 30 days or make your payments current, the court will rule in the favor of the lender, and schedule an auction to sell your home within 7 days. But what does it take to delay the foreclosure?
You have 4 options, a forbearance plan, a partial claim, pre-foreclosure sale, and a deed in lieu of foreclosure. A forbearance plan is a payment plan created by the lender to make it easier for payments to be made or even suspend payments temporary until your situation becomes current again.
A partial claim is when the bank allows the mortgagee or borrower to advance funds to the mortgagor in the form of a promissory note. This is a written agreement which states that you will have to pay a certain amount by a certain date. So long as you are not delinquent over 12 months. This will if followed properly, bring your mortgage payments current. It acts as a second mortgage behind your existing one that collects no interest and is not due until you pay off your first mortgage or sell your home.
Next, there is the pre-foreclosure sale which is a short sale that helps you avoid a foreclosure, but at the risk of selling your home. The sale might most likely go for much less than what the property is worth but can still save you some expenses. Lastly, there is the deed in lieu of foreclosure. This allows you to sell your home back to the bank that financed your mortgage. It is a great way to avoid the foreclosure process but you will lose your home nevertheless. Now you know what it takes to delay a foreclosure with a bank. I hope brighter days are ahead for you.
Foreclosure©Daniel X. O’neil/Flickr