What is foreclosure?
When the homeowner (borrower) is unable to make the mortgage payments the property goes into foreclosure. The bank (lender) can take back the house to recover the money loaned. The bank does not take your house right away. It takes four missed payments (four months) for the bank to start the foreclosure process.
Who gets foreclosed on?
Everyone who has a mortgage runs the risk of foreclosure if they fail to make the agreed upon payments. When people fall on hard times such as unemployment, medical expenses, divorces, or death of a loved one, it can become difficult to keep up with the payments.
What happens when you miss mortgage payments?
Unpaid mortgage payments hurt your credit which can lead to not being able to take out a loan in the future. Every missed payment gets you closer to being foreclosed on. When you miss the first payment the lender will sometimes offer a fifteen-day grace period. The bank will allow you to send in the full payment without being delinquent or a late fee. If there is no payment after fifteen days you will be charged a late fee that can reach 5% of your monthly payment.
If the next payment is missed then your mortgage will be in default. Now the bank will contact you. Take advantage of the situation to explain your situation and how you are going to fix it.
The Right to Cure Notices are sent when the third payment is missed. The letter will give you the amount you owe and that you have 30 days to pay it back. Some banks will start the foreclosing process at this point.
When the fourth payment is missed, the deadline that was given in the letter, the foreclosure process will officially begin. The lender’s lawyer will be in contact with your which will result in legal fees.
Can I stay in my home during the foreclosure process?
Yes. You can stay in your home throughout the process. Even though you can still live in the home it will be extremely difficult to get it back. Once the bank’s lawyers finish the legal work the process of foreclosing will start abruptly.
The process officially starts when the lender records a Notice of Right to Cure. This is a public notice filed by the government saying that the homeowner is behind on mortgage payments. This gives you 30 more days to pay what you owe. When no payment is received after 30 days a Failure to Cure by Proper Times will be recorded. Failure to Cure by Proper Times will be sent to you by certified mail, published in a newspaper, posted on your home, and in a public place (court house). After 30 days of the Failure to Cure by Proper Times is recorded and your house will be up for auction. Once the house sells you will no longer own the home. You either must move out or pay rent to the new owner. The whole foreclosing process usually takes 150 to 180 days.