The real estate market crisis has caused homeowners fall behind on their mortgage payments. If this is you, you may want to prepare yourself for what will come. This article will cover what you need to know about this process.
Foreclosure is usually not enforced as soon as the first mortgage payment is missed. After three mortgage payments are missed, however, reminders, fees and penalties are sent to the homeowner by the lender. These are usually friendly in nature.
Be aware that not all lenders operate in the same manner. Some are more lenient with homeowners, but others are quick to jump to the foreclosure proceedings. Given that the market is in a dire condition, it may take some time before they get around to you. That being said, it is very rare that one is allowed to go six months of not paying a mortgage payment before the foreclosure process is started.
Different states and even cities have different foreclosure processes, but most of them start with the Notice of Default, followed by the Notice of Foreclosure, and the Notice of Trustee’s Sale.
These three notices are usually all publicized in the local real estate investor’s publications and in one local newspaper. Once you receive the Notice of Default, you can expect investors to start calling you many times each day offering you small amounts of money for your home. (Assuming you have any equity in it.)
Before the actual Trustee’s sale, the homeowner usually has the last chance to pay off the mortgage loan and save his or her home. However, most homeowners cannot afford to pay back the mortgage loan and the home goes to be auctioned off. A foreclosure home auction often attracts real estate investors or people looking to buy cheap homes or buy homes for investment. Foreclosure homes are often run down, trashed, need repairs. But they often sell for much less than the market value so many people invest in foreclosure homes.
When a home comes up for auction, and is sold to the person willing to bid the most, the owner will be evicted. The lender can (in most states) actually bill the homeowner for the difference between the selling price and what the homeowner owes.
This is called a deficiency judgment. It is a common but sad story, occuring to those foreclosed upon and evicted. First they have to find a new place to live and then they are told by the law that they are to be held liable for several thousands dollars of repairs to the property they no longer own! If extensive repairs are needed for the home in question, the ex-homeowner can’t expect to simply walk away with bad credit and loss of house.
With the housing market being at an all-time low, foreclosure has become very common and this is a serious problem for homeowners across the nation. It’s not just about loss of home, it affects their credit score and their finances too. Coming back financially from a foreclosure usually takes an entire decade, at which time it’s wiped from your credit record in most states.