You received a notice that your home is in preforeclosure and it’s made you scared and worried about what can happen to you. Will the bank really take your home away from you? Will you be thrown out of the place you’ve lived? What can I do to stop foreclosure now?
Unfortunately, this is the first step a lender has to follow to ensure they are paid for the loan they provided you for you to purchase your house. This does not mean it’s the end. It’s far from it. We’re going to show you how to stop foreclosure dead in its tracks. First, let’s go over the types of foreclosure and what it could mean for you.
Types of Foreclosure
There are three different types of foreclosure. All require public notice and all parties are to be notified regarding the proceedings. After a foreclosure has occurred and the property is sold or repossessed, there is little time for a family to move out before being evicted. Here are the three types of foreclosure and what to expect.
All states allow this type of foreclosure sale, and some even require it. This simply means that everything is carried out through the judicial system with clear timelines and steps. At the end of the timeline, an auction occurs at a local court or sheriff’s office with the highest bidder obtaining the property.
Also known as a Power of Sale foreclosure, is allowed in many states where the power of sale clause is included in the mortgage. This will still require similar steps but instead of local courts carrying out the process, it becomes the responsibility of the lender. This can be more expedient but will often require judicial review.
Even smaller number of states allow this type of foreclosure and also generally only occurs when the debt owed is greater than the value of the property. With this process, the lender files a lawsuit on the homeowner and if payment is not made by the specific timeline ordered by the court, the property reverts directly back to the mortgage holder.
In all of these processes, you will be given notice and must strictly adhere to the notices given. We’ll cover the judicial sale process from here on out with the caveat you should always adhere to the notices provided and seek legal counsel no matter what. So continue reading to find out about the phases of foreclosure and the timeline you can expect.
The Foreclosure Process
The First Phase – Missed Payment On Mortgage
A missed mortgage payment signals a payment default to your lender. A payment default is at least one missed payment. Each lender will vary on their exact definition, but when you’ve met that criteria, they will send a letter and call to inform you of your missed payment.
A second missed payment means that the lender will reach out again. They will most likely look for some way to help you catch up and to assist you from falling further behind in your payments. They will likely want at least one month of payment to start to catch you up.
A third month of a missed payment will cause the lender to get worried. They then will send a demand letter or a notice to accelerate. This usually will have the amount of delinquency, including fees, and a date by that you will need to bring the mortgage current. This is almost always 30 days.
The first phase, often called the preforeclosure stage, will usually have a timeline of about 120 days and it will lead to one of three outcomes. The payments are brought current, there is a modification to the loan, or the foreclosure process moves to the next phase. At this very moment, you still have plenty of options. You can read more about your options to keep your house here.
The Second Phase – A Notice Of Foreclosure
If you’ve not made payments or caught the loan up by this time, the lender will send a foreclosure summons. This is the next legal step to inform you that a Mortgage Foreclosure Complaint has been filed against you and recorded. We advise you to seek legal counsel at this time to have a response generated to the lender. Good legal counsel can give you the time you seek to make a decision on what you hope to do with your house.
You can seek services to help you financially to avoid foreclosure. A good place to start is HUD (Housing and Urban Development). Foreclosure assistance grants are a good place to start. There are national agencies that help and local agencies. To best find a local one for you, start with your state or county housing authority.
If you don’t want to take the chance of a judgment or don’t want to take the time to file a response, you could always just sell your house with a real estate agent. You still should have plenty of time to prep and sell your house at this point. This does bring a new set of challenges to be prepared for. It includes paying the agent commission and other fees, as well as you will still need to find a new home. This could mean renting while rebuilding your credit or downsizing.
You could also look to sell your house to an investor with a cash offer if your house has enough equity. It will save you fees and commissions and let you sell the quickest, or even on your timeline. If you have no equity, some investors have more creative ways to help you sell your house to avoid foreclosure. If you’re not sure of the amount of equity, reach out to a real estate agent or local investor to help you get started.
The Third Phase – Judgments and Expiration Dates
The timing of each step can vary by state during this process. This is why it’s so important to seek legal counsel and to look at the process for your state. We’ll give you estimates to ensure that you are ahead of the game when it comes to having things completed and knowing the time you need to be ready.
After a period of time, usually about 200 days later, if no reply is filed to the notice of foreclosure, a judgment is passed by your local court system. A judgment notice notifies the public that there will be a foreclosure sale of the property. This doesn’t mean you can’t keep your home or that you still don’t have time. There is a redemption and reinstatement period that can last for up to 9 months or 5 days before your sale. The basic difference between the two is that a reinstatement would have repayment of all delinquent amounts within the given timeframe and a redemption would require full repayment of all amounts including fees assessed during the period. Please take note that even though you are on your way to a sale, most lenders would prefer you keep your house to avoid losing any further money from the loan on your property and may allow you to sell or catch the loan up all the way until the foreclosure sale.
The Fourth Phase – Notices and Eviction
If you have not addressed anything all the way to this phase, you’re going to have a difficult time keeping your house or even selling it without selling it to a cash buyer. You’re probably facing the fact that you’re going to lose your home and along with it, possibly belongings or money if you don’t do something now. Fill out this short form to receive a cash offer to help you save your belongings and even put some money in your pocket. And we can close in as little as 7 days.
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There will be one of two results after the sale has occurred. The property will be purchased, likely by an investor or it will revert back to the lender. Doing nothing at this point could lead you to dreadful unintended consequences and a sight no one wants to be a part of.
Receiving an eviction notice leaves you with little time to remove your belongings or find a new place. It also could lead to a sheriff forcibly removing you from your property. This could also lead you to have your credit ruined and could even lead up to a deficiency judgment, making it extremely difficult to purchase in the future.
How to Stop A Foreclosure
Now that we know the foreclosure process, we can look at how to stop foreclosure based on where you are in the foreclosure process. Even though it stops foreclosure, most prefer not to sell their home. You’ll want to make sure you address the foreclosure head-on and quickly decide which option may be your best. You even have options to keep your house while facing foreclosure.
You have four different categories for stopping foreclosure. They include bringing your loan current, parting with the property, or changing your monthly payment. We’ll give you options for each category along with what it could mean.
Bring Your Loan Current While In Foreclosure
Pay your debt to your lender. You simply contact the lender and catch up on the complete debt. This can include a payment that includes your missed principal and interest payments, late fees, penalties, as well as any additional interest from missed principal payments.
Have Your Monthly Payment Changed While In Foreclosure
Apply for a mortgage refinance. If your lender allows it and before you’re well into the foreclosure process, your lender may allow you to refinance your loan. This is not common but it can happen. It will change your payment based on current rates and lending guidelines, your equity, and your credit history. Depending on your situation, they may even allow you to cash out equity to help alleviate other debt.
Apply for a loan modification. Before you think of selling your home to avoid foreclosure, you should consider an option where your lender modifies your loan. Your lender can lengthen the loan, reduce the interest rate, or even defer payments. This is usually a lengthy process and should only be considered early in foreclosure.
Part Ways With Your Property While In Foreclosure
Deed in lieu of foreclosure. It isn’t commonly thought of, but a deed in lieu of foreclosure hands the property over to your lender to avoid the whole foreclosure process and absolve you of your debt. This is one way to stop foreclosure immediately. Lenders may be willing to do this if there is some equity in the property or it will require little work to allow them to resell it.
Sell your property. This is typically the last way people want to stop foreclosure. The sale of your property will be dependent on your equity in your property. Selling to a cash buyer will allow you to stop foreclosure faster than selling traditionally but may cost you some of the equity in your property. That’s the trade-off for selling to a cash buyer vs selling traditionally.
If you have little to no equity, you can still sell to an investor but it will be dependent on how much equity is left. If your loan is for more than the value of your property, you will be facing a short sale. This can cause time and will require an expert attorney. We recommend reaching out to an experienced short sale attorney to get the process started quickly if you are upside down on the property. Keep in mind that this doesn’t stop the bank from issuing a deficiency judgment to you and you may still be responsible for the difference in debt. At the very least, you may have to pay taxes on the difference and claim it as income. If this sounds like it’s too much, or want to see what your options are for selling your house while in foreclosure, fill out this short form so we can get started on helping you get out of foreclosure.
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The Worst Way To Stopping A Foreclosure
Filing bankruptcy. This is the worst way to stop foreclosure and not one I recommend to almost anyone, but it is a way to stop it momentarily. Let’s be clear if you couldn’t afford the payments before due to a change in financial status, even with a Chapter 13 bankruptcy, you are still very likely to lose your home. You should start by speaking with an expert bankruptcy attorney to help you navigate the process. We recommend that you are ready to prep the house to sell while your attorney is working through this process with you.
Tips To Stop A Foreclosure
Don’t Run From It.
Most people bury their heads in the sand when they are facing foreclosure and want it to stop. This is the worst thing you can do. By facing it head-on, you can easily navigate the process to the softest landing spot for you and anyone involved in your unique situation.
Get Help To Stop Foreclosure.
Seek out legal counsel. Talk to a friendly real estate agent. Even contact an investor, like SILT Real Estate and Investments, LLC, about what options you have when facing foreclosure and want it to stop. Typically there are other things to consider when you’re facing foreclosure, like the death of a loved one or a change in financial status. Getting help from an expert can help you understand exactly what your situation entails. Whether you’re looking to keep your house or sell it, getting guidance will help steer you through the foreclosure process.
Avoid Doing Anything By Yourself If You Want To Stop Foreclosure Now.
This does kinda go with getting help, but look for support from your family to help you with the emotional rollercoaster you may face. And if you think you want to sell the house and extract all the equity out of it you can, don’t sell it For Sale By Owner. It’s a difficult process with the addition of foreclosure and accounting for the additional time it takes to sell on your own, it could leave you in greater debt and a bank breathing down your neck.
No matter what phase of the process you’re in, you can stop foreclosure. Keeping your house and stopping foreclosure is what most people hope for. You can deal with that uphill battle by facing it head-on right away and getting help. Remember to start by asking the experts first.
If you think you don’t want to jump through all the hoops and want a fast and easy way to sell your house or you’re already facing an auction date, contact us to help you get started to stop foreclosure. We can buy your house in as little as 7 days, sometimes sooner. And our offer has no obligation for you to actually sell your house without seeing all your options. Just fill out the form below or call us at (708) 415-3801 to get started today.