| Foreclosure Factsheet | |
What is Foreclosure? In the contract you signed when your mortgage lender loaned you money to buy your house, you agreed that if you can’t repay the loan, the lender can foreclose to take ownership of the house. Home foreclosure is a process by which a lender regains a property which they have financed. Typically, this is because the borrower or homeowner is behind on house payments and is unable to catch up. State laws vary, but generally, a loan that is 90 days delinquent can be considered in foreclosure. There is also a legal time frame, which varies from state to state, which determines how long the foreclosure process can take. How can I prevent Foreclosure?
What is Loss Mitigation? One of the main reasons foreclosures happen is because borrowers do not take the opportunity to work something out with their lender. When facing financial difficulties, it is essential that you communicate with your lender by returning phone calls and responding to mail. You should contact your lender as soon as you know you will have difficulty making a payment. The goal of loss mitigation is to work out an agreement between the homeowner and the lender that will stop foreclosure proceedings permanently. This allows the homeowner to stay in their home and protects their credit history. The lender does not want your house, it wants the money it lent you paid back with interest. Morris-Griffin Corporation has a specially trained, highly experienced team of loan counselors dedicated to help borrowers who are past due or who are facing foreclosure. Back to Top What if I am behind in my payments and want to keep my house? Contact your lender right away and explain your situation. Try to reach an agreement on making up the payments you have missed. DON'T move out of your home. In order to qualify for some loss mitigation assistance programs, homeowners are required to be living in their home. Some possible loss mitigations options may be: Pay the Delinquency — Under most circumstances, lenders are required to accept payment of the delinquency which may include certain legal costs if you are already in foreclosure. Forbearance Plan — If you are temporarily unable to meet your monthly payment obligation but can do so in a few months, the lender may agree to suspend payments for a limited period of time. Repayment Plan — If you have missed some monthly payments, you may be able to catch up by creating a schedule for repaying the past-due amount by repaying a part of the delinquent amount each month in additional to your regular monthly payment. Modification — In some cases, mortgage loan terms can be changed on a temporary or permanent basis to make the payment more affordable such as reducing the interest rate or extending the repayment term. Payment Assistance — Many state and local governments, as well as private charitable organizations have programs which will pay all or part of your mortgage obligation for a fixed period of time. Partial Claim Advance — If your mortgage is FHA insured, you may qualify for an interest-free loan from your mortgage guarantor to bring your account current. The repayment of this loan would be required when you sold or re-financed your home. Back to Top What if I am behind in my payments and don't want to keep my house? You can pursue one of the following loss mitigation options: Private Sale — Try to sell your house yourself or through a realtor. If you are able to sell the house before a foreclosure sale, you might get a good enough price to avoid owing the bank money. Pre-foreclosure, Short-Sale or Compromised Claim — If you cannot sell your home for the amount that will pay off the loan, talk to your lender about a pre-foreclosure sale resulting in a short payoff. Depending on your situation, the mortgage company may be willing to accept a payoff amount less than you owe. Deed-in-Lieu — Any time after you are behind on payments or if you cannot sell your home in a reasonable period of time, you can ask the lender to let you deed the house to them. Your lender may be willing to accept a deed where you voluntarily transfer the property to them. If the lender agrees and accepts a deed from you, you will lose the house, but you will not owe any more money to your lender as the lender is giving up its right to sue you in a foreclosure action. This option may not be available if you have other liens such as a second mortgage on the property. Consent Foreclosure — In some jurisdictions, if the lender has already sued you, you can ask for a consent foreclosure. If it is granted, you will lose the house but will not owe any more money to your lender but you might have to pay the lender’s court costs and attorneys’ fees. What if I am sued for foreclosure? Consider calling a lawyer to talk about your legal options. Some of your options are: Right to Reinstatement — Reinstating means catching up on all your missed payments in full and paying that amount in one lump sum. In addition, you will also have to pay the lender’s attorney fees, court costs, and other charges associated with the default. You can reinstate any time up to the actual foreclosure sale date. If you exercise your right to reinstate the mortgage, the foreclosure suit is ended, and your mortgage remains in effect. Bankruptcy — Sometimes you can postpone or cure the foreclosure by filing for bankruptcy. If you file for bankruptcy, the foreclosure case will automatically stop at least for a temporary period of time while the bankruptcy case proceeds. However, bankruptcy is very unlikely to help you save your home permanently. There are times when bankruptcy is appropriate and we recommend you consult an attorney for advice. Right of Redemption — In some states, you have a right to "redeem" your mortgage for a certain period of time after the foreclosure sale. That means you would have to pay off the entire loan including all attorney fees and court costs, not just the amount you are behind on. Time periods to redeem, if allowed by a particular state, vary. Right To Possession — You can usually continue to live in your home even after the foreclosure sale date until such time as an eviction order is issued however, attorney fees and court costs will continue to accrue. After an eviction order is granted, you will be physically removed if you do not leave voluntarily. Do I owe the lender any money if it takes the house back or sells it to a third party at a foreclosure sale? In many states if the house sells for less than you owe you will still owe them the amount of the "deficiency", meaning the difference between what they got and what you owe. If you think you will face a deficiency you should consider a deed in lieu of foreclosure or a short sale that makes an agreement with the lender that they will forgive the deficiency. Back to Top |