Home ownership is a milestone in life that lays a solid foundation for your future, especially for younger persons who may be considering starting a family and being able to leave something behind for future generations. For most persons, achieving this dream requires taking on a mortgage which is the simplest option, however, default in payments can lead to foreclosure.
What happens during the foreclosure process?
You’ll receive notice of default payments by the lender after which a notice of default will be filed. The next document to be filed will be a notice of sale followed by the auctioning of the property.
If you have taken out a mortgage on your home but have failed to make the outlined payments over a set period of time, a lender will take back possession of the property and seek to sell it in order to recover the unpaid debt owed to them. This is what is meant by foreclosing on a property. There is a process that must take place before you lose your ability to retain your home and these will be analyzed below.
Your default notification letter
If you have defaulted on your mortgage payments for a total of 90 days be it consecutively or accumulative your mortgage lender is responsible for notifying you that you have fallen behind. They may offer you a grace period of up to 90 days to catch up with your payments after which they may wish to file a notice of default indicating their intent to foreclose on (or sell) the property.
A notice of default has been filed
Once a lender has filed a notice of default you will receive a copy of the document which indicates to you that they have begun the process of foreclosing on your home. From the date of this notice being filed you have 90 days during which you still have the ability to reinstate your mortgage by covering the full value of the debt owed. If you are unable to do this before the deadline your home will be put up for sale and auctioned. You will receive notice of this action once it has been filed.
You are notified of the sale of your property
If you fail to repay your debt within 90 days of your notice of default being filed you will receive notification on the sale of your property. This will include the auction day which is generally 21 days after the notice of sale has been filed. You are now in pre-foreclosure and must cover your debt within five days of the auction after which you will lose your ability to reinstate your mortgage and your property will be sold.
Although this is the general process used for foreclosure laws and redemption periods vary based on state and it may be valuable to consider any variations that may exists that may give you an opportunity to retain ownership of your home.
What additional consequences can you face when your home is foreclosed?
Apart from losing your home your ability to get another is significantly diminished as you unlikely to receive relocation assistance and your credit may not allow you to receive the financing you need to get a new home. Since the auction of your home is listed in newspapers, it may also cause a great deal of embarrassment in addition to the stress of not having anywhere to live.
Is your debt wiped out after foreclosure?
Not necessarily. Depending on how much your home is sold for at the auction, you may still have a deficiency balance which is not covered by the sale that you are required to pay. For example, your default balance may have been $100,000.00. If your home is sold for $90,000.00 at auction, you are required to cover the balance of $10,000.00 that still remains.
From the moment you receive your letter notifying you of your default in payment to the moment your home is auctioned is a period of 6 months – 9 months. This may be longer based on the amount of time your lender is willing to extend for you to catch up with your payments. Considering all your options in this regard can put you in a position to keep your mortgage and eventually fulfill your dream of owning your own home.
If you are facing foreclosure you have options. Depending on your situation, personal bankruptcy may be the right choice for you. Stopping foreclosure is possible and seeking advice from an experienced bankruptcy attorney is wise. At Border Law, Southfield,MI we understand the significance of your house to you and your loved ones. Our Bankruptcy Firm has successfully assisted many clients by stopping foreclosure and attaining financial relief. If you are searching for a knowledgeable attorney who will offer truthful guidance on your choices, you have found the right place, call us today to set up a Free case evaluation.