At What Point Do Mortgage Firms Foreclose?

If you simply neglect to make a mortgage payment, or your check gets lost in the email, don’t worry. Your mortgage company isn’t likely to instantly come in and take your house away. But if you miss three or more obligations in a row, then you can expect the lender to start foreclosure proceedings–particularly if you ignore its letters and calls looking for an explanation.


The very first step down the road to foreclosure is a missed payment–not merely a late payment. Mortgage companies typically give their borrowers a grace period of 10 to 15 days to receive their obligations in, so if you occasionally make a payment in a week or two after the deadline, you are still OK. If you pay after the grace period, you’ll get hit with a late fee, but your payment isn’t formally”missed” until it is 30 days late.


When you skip a payment, your lender will probably give you a call or send you a letter asking what’s up. After you miss two payments in a row, then these contacts will probably intensify. And if you miss three in a row, then you’ll receive something called a”demand letter” from the email. Also known as a”note to quicken,” this letter notifies you that your mortgage is delinquent, tells you how much you’re behind, and requests you to get current on your payments over 30 days. If this period moves and you have not acted, your home is entering foreclosure. Depending on state conditions, it can take anywhere from a few months to more than a year to get a home to go from the very first missed payment into a foreclosure auction. In California, for example, it typically takes approximately 120 days, according to the site United States Foreclosure Laws.


Depending upon the wording of your mortgage and also the laws of your condition, your home can enter either”judicial” or even”nonjudicial” foreclosure. Every state allows judicial foreclosure, where your lender basically sues you, and also a judge declares a foreclosure and orders that your property sold at auction. Nonjudicial foreclosure is an option in several states, such as California, if your mortgage comes with a”power of sale” provision. Under this provision you’ve given your lender consent to seize and sell your home if you enter default.


At a judicial foreclosure you could have the ability to convince the judge to give you a bit of opportunity to get current on the mortgage. If you can not, you need to escape the house immediately. At a foreclosure the lender needs to issue a notice of sale. Prerequisites with this vary by country. In California you have to receive a copy of the notice 20 days prior to the date on which the lender proposes to sell the house. You have until five days prior to the sale date to get current on the property; then your house is gone. Even if the lender can not locate a purchaser, it is not your house anymore.


If you find yourself sliding toward foreclosure, remember that mortgage companies really would prefer to have your money, not your property. Foreclosure is costly and time-consuming to get your lender, and the lender pops up with a house that it has to sell, probably at a loss. Talk to a housing counselor approved by the Department of Housing and Urban Development (HUD), and communicate with your lender. You may have the ability to work out a strategy to keep yourself from becoming three months behind. But to do this you need to answer the creditor’s calls. Ignoring them “hoping for the best” isn’t likely to work. As soon as you receive a demand letter, it may be too late.

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