What If I Am Facing Foreclosure?

Jan 24, 09 What If I Am Facing Foreclosure?
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The housing numbers are frightening.  Not only are new home starts at historic lows, but economists are predicting an even higher number of foreclosures in 2009.  A foreclosure is a proceeding in which a lender or creditor seeks to repossess the collateral for a default loan.  Considering the deteriorating state of the economy, it is possible that many of us may be faced with foreclosure.

If you are asking yourself, “What if I am facing foreclosure”, then it is important for you to understand how the process works and what your options are before and after foreclosure proceedings have begun.  Though you may not get your desired results, armed with this knowledge, you will at minimum get a result that will be the most beneficial for your particular situation.

The Process

Once you fall between 1-3 months behind on your mortgage payments, your creditor or lender will attempt to contact you.  If during this period you fail to make appropriate arrangements to pay what you owe, the lender will initiate foreclosure proceedings.

  1. A complaint is filed by the creditors or mortgage lender in a civil court.
  2. You will then be served via mail, sheriff, or both.  Once you are served, you will then have an opportunity to dispute the accuracy of the debt amount.
  3. If you fail to either win your case before the judge, or chose to ignore the lender’s subpoenas, then the lender begins setting up auctions and posting sales notices.
  4. At this point, if you still have not paid the debt completely, the sheriff will inform you that you have approximately 30 days to vacate the property.  If you are not out by the deadline, chances are the sheriff will forcibly evict you.

While this is a general description of the foreclosure process, RealtyTrac provides more in-depth information about each state’s guidelines and timetables.

What Are Your Options

If you are between 1-3 months behind on your mortgage payments and the reasons for your lateness are temporary and manageable, it is imperative that you ask your lender to set up repayment options.  Whether you need to refinance your loan, want to set up a partial payment schedule, or discuss other options, it is of the utmost importance that you contact your lender and apprise them of your situation before you are served.  Read your loan documents thoroughly and study your state’s foreclosure guidelines and timetables.  Do an honest assessment. If you can no longer afford your home, waiting until the proceedings have begun will severely limit your options.  Your ability to sell your home or file bankruptcy are longer viable options once you have been served.

You should definitely be wary of “foreclosure assistance firms” that will knowingly peddle any number of scams on unsuspecting consumers.  HUD has an excellent, resource rich website and contacts with local counselors in your area that will willingly help you navigate the foreclosure minefield.

Take A Long Look In The Mirror

2008017618During lean times, honesty is a bitter pill to swallow.  However, you must be realistic about your options in order to create an effective action plan.  Burying your head in the sand will not make the problem go away.  Do not ignore letters and notices.  Do become familiar with guidelines, timetables, and options.  Do negotiate early from a position of knowledge and strength.  While foreclosure has become an unfortunate reality for far too many of us, you can avoid the pitfalls, survive the tough times, and move forward.

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