When you apply and get approved for a mortgage, the lender uses the property as security meaning that if you fail to make your payments as agreed, the lender is legally entitled to take the home, a process known as foreclosure. If you know that your payment records are not up-to-date, it is important to act quickly in order to prevent foreclosure. But what to do if you fall behind on your mortgage payments and face foreclosure proceedings?
- First and foremost you should call your lender. Rest assured that the last thing most lenders would want is for you to lose your home, since the process of foreclosing and stuff takes a lot of time. Just talk to your lender and explain to them why you are late, and request for a review that will ensure your payments are current.
- Seek legal advice to find out whether filing for bankruptcy could be a good option
- Never ignore letters from your lender. Just respond and let them know you are ready and willing to work with them. Your lender can help you by accepting a payment plan for your late payments or better still give you more time to get your finances in order. But only when you communicate
- In case your lender doesn’t want to help, you can always call another lender and request of any mortgage plan that could offset your current mortgage but with better terms
- Better still, sell your home as you may collect enough money from the sale that will enable you pay off the loan and leave you with enough money
Foreclosure proceedings start when you receive a Notice of Default via mail telling you that you haven’t made any payments. The notice will also tell you the amount of money you owe your lender in terms of foreclosure fees and of course the missed payments. You have a grace period of 3 months starting from the date the Notice was recorded to ensure you pay back what you owe. If you make it within the three months, the lender will not sell the property.
Failure to which, the lender will have no option but mail you a Notice of Sale after the 3 months, which will feature the date, time, and location of your home to be sold. Note that this Notice of Sale will be mailed to you 20 days prior to the scheduled date of selling the property. If you wish to stop the sale, you must pay the amount due inclusive of fees at least 15 days before the scheduled date of sale. If you decide to act within the last 5 days of sale, you will have no choice but to pay the whole loan amount owed. Once you pay the money, ensure the lender records a Notice of Rescission that will indicate and prove that the sale has already been canceled.