Fast Facts: What Every Homeowner Should Know
Foreclosure is a legal action used by a mortgage company to recover any money from a customer when the customer does not pay his or her debt in accordance with the mortgage agreement. In other words, it's the legal remedy used by a mortgage company to assume ownership of a property when the required loan payments are not made. Foreclosure can obliterate otherwise good credit.
How does foreclosure happen?
Although the actual process varies from state to state, foreclosure proceedings occur as a result of a homeowner's inability to keep up with monthly mortgage payments. The farther behind the homeowner gets, the more in danger of foreclosure the homeowner becomes.
What happens in a foreclosure process?
State laws vary greatly, but the foreclosure process generally involves:
- The homeowner receives a written notice of default, from the lender, likely by certified mail.
- The lender gives a period of time, after proper notice, for the homeowner to pay the lender a required amount to cure the default and to reinstate the loan.
- If the homeowner remains in default, the lender may elect to proceed with foreclosure under available remedies, which may include pursuing a judicial foreclosure by filing a lawsuit to obtain a court order to sell the property, or pursuing a non-judicial foreclosure by following procedures spelled out in the mortgage (or deed of trust) that allow a trustee to foreclose on and sell the property, without a court order.
- After the required time has elapsed, the homeowner could be given a notice of foreclosure sale which could include a public sale held by auction, where the highest bidder can buy the property, or, if the auction doesn’t result in a sale, the lender may buy the property by submitting a credit bid based on the amount owed on the mortgage.
- If the lender ends up taking the property, it could be sold in a private sale at a later date, or
- If the homeowner has not vacated the property by the time of the foreclosure sale, an unlawful detainer lawsuit could be filed to evict the homeowner.
It is important to know that at any point during these proceedings, you are usually in the position to keep your home if you pay off the loan and pay for foreclosure costs.
Is anyone exempt from foreclosure?
No. Anyone with a mortgage is subject to foreclosure, should non-payment become an issue.
What should you do?
Whether you're now facing foreclosure or worried about it in the future, we are ready to provide you with important information to help you. Our counselors will provide foreclosure prevention counseling and budgeting help, information about available foreclosure assistance programs, mortgage modification programs, deed in lieu of foreclosure, short sale and many other options.
Don't assume that you can handle your financial problems without help. Don't lose valuable time by being overly optimistic. Contact your mortgage lender to discuss your circumstances as soon as you realize that you are unable to make your payments. If you need guidance before calling your lender, we can help you understand your situation and provide information about available options before you make the call. While there is no guarantee that relief will be provided, most lenders are willing to explore all possible options to help you avoid foreclosure.
Getting foreclosure information can help you understand the foreclosure process, and possibly save your home.
Just because you are behind on mortgage payments, you might be able to avoid foreclosure and save your home. Being informed on pre foreclosure, foreclosure proceedings, and what might happen after foreclosure will help you determine what steps you can take toward home preservation and stop foreclosure.