| What is Foreclosure? |
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Mortgage foreclosure is the process a bank or mortgage company uses to take back ownership of real estate when the homeowner hasn't complied with the mortgage agreement. Most often, that simply means that the homeowner couldn't keep up the mortgage payments.
The foreclosure process may differ depending upon your state. Generally, the downward spiral into foreclosure begins when your loan payment becomes 16 days overdue. At that point, your mortgage lender may try to contact you to work out a repayment schedule to bring your loan current. If your mortgage payment becomes 30 days late and the next month's payment looks suspect, the collection calls will come on a regular basis. If your payments fall 90 days behind, the mortgage company will likely refer your mortgage to an attorney that will start formal foreclosure proceedings.
Again, the foreclosure process varies by state, and the best source of information about how the foreclosure process might proceed in your case is a local attorney. Generally, the lender must serve a notice of default on the homeowner after a certain time period from when the payment becomes past due. This time period varies by state. The notice will give the homeowner a time period and an amount necessary to be paid in order to "cure" the default and avoid foreclosure. If the homeowners cannot pay the delinquency and costs of foreclosure within this time, then the lender will set a foreclosure sale date. The lender will then sell the property at public auction. If the sale price isn't enough to cover the outstanding debt and costs associated with the sale, the mortgage lender can and probably will pursue a deficiency judgment-a court order requiring you to pay the remaining balance to the lender.
The property may be "redeemed" by the homeowner by paying all delinquencies and costs, up to the time of sale and in some states, for a period after sale. This redemption period varies by state. The law in most states gives the homeowner every opportunity to stop the foreclosure process. As a matter of fact, homeowners have options right up to the minute that the auctioneer's gavel comes down.
Some of the most common options include refinancing to roll in past-due payments and "start fresh" with your mortgage debt, a debt workout plan, or Chapter 13 bankruptcy. Refinancing is usually not an option since mortgage companies will generally not lend to someone that is currently delinquent on their mortgage payments. Many people facing foreclosure find that Chapter 13 bankruptcy removes the immediate threat of foreclosure and allows them to catch up past due mortgage payments over time. If you're facing foreclosure, use this website to learn about your options, and then contact us for a FREE CONSULTATION so that we can help you determine the next steps toward saving your home. |
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| Foreclosure Options |
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Most people facing foreclosure are most concerned about saving their homes. If your primary goal is to stop foreclosure in order to keep your house, then you'll most likely want to consider Foreclosure Mitigation Services which usually result in a restructuring of your current delinquency. Other options may include refinancing or Chapter 13 bankruptcy. However, if you know that you can't afford to keep your house and you are looking for a way to avoid a deficiency judgment and minimize damage to your credit, other options to stop foreclosure are available. We will gladly give you a FREE CONSULTATION where we can assess your options. If we can't help you, we will let you know right away and point you in the right direction.
Facing mortgage foreclosure is scary, and it can be hard to make informed decisions to stop foreclosure when under pressure. Make sure that you understand all of your options to stop foreclosure, which may include:
- Restructuring Your Delinquency (Mitigation)
- Turning over the Deed in Lieu of Foreclosure;
- Selling the Property; and
- Surrendering the Property in Chapter 7 Bankruptcy.
Learn more about these options to stop foreclosure, and be sure to carefully consider which is best for you and your family.
Restructuring Your Delinquency
This is our specialty and the most desired strategy if you would like to stay in your home and protect your credit. Our Foreclosure Experts have over 30 years combined experience in dealing with the Collection/Foreclosure Departments of most lenders. In order for you to be able to qualify for this option, you must be able to afford your mortgage. In other words, your current income must be sufficient to meet your financial obligations. If your delinquency was caused by a one-time event like illness, loss of job or financial mismanagement, this my be your best option.
Get Your FREE Consultation with one of our Foreclosure Experts!
Deed in Lieu of Foreclosure
May Be an Option to Stop Foreclosure. If you're sure that you can't afford to keep your house, you may be able to reach an agreement with the mortgage holder whereby you simply give it back and stop foreclosure. The mortgage holder would agree to accept the deed as full settlement and cancel the remainder of your debt. We can help negotiate this option on your behalf.
Whether or not this is a good option to stop foreclosure for you depends upon your equity in the house, the amount of outstanding debt, and what other options are available to you. Of course, the mortgage holder won't always be willing to enter into such an agreement, but if there is little likelihood that you'll be able to pay a deficiency judgment, the lender may decide that it's better to avoid the costs of a foreclosure proceeding, stop foreclosure and accept the deed as full settlement.
Get Your FREE Consultation with one of our Foreclosure Experts!
Sell the Property to Stop Foreclosure!
If you have significant equity in your house, selling it is a good option because it may allow you to stop foreclosure and walk away with money in your pocket. Where equity is limited (or non-existent), it can be difficult to sell the property because of the need to cover the mortgage and the other associated costs of a sale. This is especially true if you're working with a realtor, since you'll have to cover a commission as well.
In some cases, the mortgage holder may agree to a short sale. That means the lender will agree to accept less than the full amount of the mortgage. This allows you to stop foreclosure and avoid a deficiency judgment, while the lender recovers the bulk of the amount due without having to pursue foreclosure proceedings. Once again... we can help negotiate a Short Sale for you that will bring you the most value.
Get Your FREE Consultation with one of our Foreclosure Experts!
Surrender the Property in Chapter 7 Bankruptcy & Stop Foreclosure!
Unlike Chapter 13 bankruptcy, Chapter 7 bankruptcy does not provide a means to save your house from foreclosure. The automatic stay entered in most bankruptcy cases will stop foreclosure proceedings, but the Chapter 7 process does not provide a mechanism by which you can catch up on your past-due payments and keep your home.
However, if you've been unable to work out an alternative and you know that you cannot afford to keep your house, Chapter 7 bankruptcy has some advantages. First, the automatic stay will temporarily stop foreclosure proceedings, giving you time to make necessary arrangements. Second, a Chapter 7 bankruptcy will eliminate most of your unsecured debt (credit card debt, outstanding medical bills, etc.), so that you may be more able to meet your regular living expenses. Finally-and perhaps most importantly-Chapter 7 bankruptcy can eliminate any deficiency judgment, so that you don't end up losing your house and still making payments to the lender.
Get Your FREE Consultation with one of our Foreclosure Experts!
A Foreclosure Expert Can Help You Determine Which of These Options Makes Sense
Ready to learn more about these other options to stop foreclosure? If you're wondering whether any of these options can help you stop foreclosure, please complete the request for a FREE CONSULTATION and an Expert will call you right back. |
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| FAQ |
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| Does consultation cost money? |
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| No. Consultation is FREE of charge as like most of our services. |
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| How does a home go into foreclosure? |
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| Foreclosure proceedings usually begin after a borrower has skipped three mortgage payments. The lender will record a notice of default against the property. Unless the debt is satisfied, the lender will foreclose on the mortgage and proceed to set up a trustee sale. |
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| When does foreclosure begin? |
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| Lenders will initiate foreclosure proceedings when homeowners become delinquent in their mortgage obligations, usually after three payments are missed. The lender will then notify the buyer in writing that he or she is in default. The lender can request a trustee's sale or a judicial foreclosure, in which the property is sold at public auction. A borrower can cure the default by paying the overdue amount and the pending payment after the notice of default is recorded, usually no later than a few days before the property's sale. Some sales allow the successful bidder to take possession immediately. If the former owner refuses to vacate the premises, the court can issue an unlawful detainer that allows the sheriff to come out and evict them. Borrowers should do everything they can to avoid foreclosure, which is one of the most damaging events that can occur in an individual's credit history. |
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| How long do bankruptcies and foreclosures stay on a credit report? |
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| Bankruptcies and foreclosures can remain on a credit report for seven to 10 years. Some lenders will consider a borrower earlier if they have reestablished good credit. The circumstances surrounding the bankruptcy can also influence a lender's decision. For example, if you went through a bankruptcy because your employer had financial difficulties, a lender may be more sympathetic. If, however, you went through bankruptcy because you overextended personal credit lines and lived beyond your means, the lender probably will be less inclined to be flexible. |
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| Can a home seller sell a home for less than its mortgage? |
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| Yes, in some case you can sell your home for less than what you still owe on the mortgage. But it is complicated and depends on the lender. This situation is known as a "short sale." Sometimes a lender will be willing to split the difference between the sale price and loan amount, which still must be paid. A short sale may be more complicated if the loan has been sold to the secondary market because then the lender will have to get permission from Freddie Mac, the two major secondary-market players. If the loan was a low down payment mortgage with private mortgage insurance, then the lender also must involve the mortgage insurance company that insured the low-down loan. |
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| What is a Short sale? |
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| A short sale is when the seller finds a buyer for a price that is below the mortgage amount and negotiates the difference with the lender. |
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| What is a Deed-in-lieu? |
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| In a deed-in-lieu-of-foreclosure situation, the lender agrees to take the house back without instituting foreclosure proceedings. The latter are radical options. Your simplest, and in many cases most effective, option is to lower the price. |
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| What does Forbearance mean? |
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| In Forbearance, we are allowed to delay or reduce payments for a short period, with the understanding that another option will be used at the close of that time to bring your account to a current status. Your lender, if in agreement, will then temporarily cease legal actions. Lenders may agree to combine your Forbearance with Reinstatement or a Repayment Plan if you know you can provide the needed funds to bring your account current by a specific date. This plan works for people who have just experienced a sudden living expense increase or income loss. |
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| What is a Loan Modification plan? |
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| The term "loan modification" refers to a readjusting of your current mortgage. If you can currently make your regular payment, but you can't catch up with the past-due amount, we will negotiate with your lender to fold any past-due amounts, including interest and escrow, into the unpaid principal balance. This new amount will be re-amortized over a new period of time. Or, if you are unable to make payments at this rate, it is possible to negotiate with your lender to extend your loan for a longer period of time, modifying the loan amount to a more affordable level. A Loan Modification or Loan Restructuring will change your existing mortgage note and give you a fresh new start in managing your home. Your account will be brought up to date immediately. |
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| Can't I just go down to my branch or mortgage broker and talk to them about reducing my mortgage? |
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| Unfortunately, things don't work that way anymore in the banking business. Once you obtain a mortgage, it typically gets bundled with other mortgages and sold to other banks or investors. Oftentimes, the company to which you make your payments is not even the bank who holds your mortgage; they are simply paid to "service" the loan. Also, once you mortgage lender begins the foreclosure process, the file is turned over to a loss mitigation company so the "lending" departments or the branch no longer have anything to do with the loan. All negotiations regarding the short sale are done between the buyer/investor and whatever loss mitigation or asset management company works for the lender. |
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| Will a short sale "save my credit"? |
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| The short answer is yes and no, a short sale can save you from the worst credit disasters. By defaulting on mortgage payments and having a foreclosure filed against your property, you have already done damage to your credit. Your credit score has declined and those negatives will stay on your credit report for some time. However, it will get much worse if you allow the foreclosure to continue and do not try to short sale the property. Once a foreclosed property is sold at auction, your credit score is further reduced and when the foreclosure is completed via eviction and repossession of the home, your credit will be even further damaged. If you can complete the short sale BEFORE either of these takes place, then you can prevent that further damage to your credit. In addition, when the short sale is completed, it shows up on your credit as a "Paid" mortgage and a canceled foreclosure, which shows future creditors that you did take care of your obligations. If your situation eventually winds up in bankruptcy, then that is the worst item that could appear on your credit report and it will remain there for years and cause numerous difficulties in getting future credit. A short sale can help avoid this. |
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| Can I short sale my own house? |
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| No, this would be illegal. A short sale must be an "arms length" transaction. You cannot short sale your own house nor can close members of your family or friends do one for you either. In a short sale, the lender is agreeing to discount the mortgage amount due to legitimate hardships; but not so that the homeowner can make a profit. No money from a short sale transaction can be paid to the homeowner (seller). Lenders will not approve any short sale in which they suspect the foreclosed homeowner will profit. |
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| Are short sales guaranteed to work? |
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| No. Even though short sales are increasing they are still fairly rare, as I have stated. All the criteria MUST be met for a bank to even consider a short sale. It is not easy to convince a bank that the market value of the home is lower than what they are owed. They do not like to take a loss on a loan. Then the bank must be convinced to discount the mortgage enough to make it viable for an investor to make a profit for his work and risk. The discount must cover all repair costs, closing costs, broker commissions, taxes and still allow for a profit for the investor. In many cases, we do all the paperwork and wait several weeks only to be denied. Again, in those cases, we eat all costs of the failed short sale and the homeowner continues to own and live in the house if he chooses. If the lender does not approve the short sale, Mohawk Capital has no rights at all to the property and no transaction occurs. The purchase agreement we have signed becomes void. |
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| How long does a short sale take, I need to get out now! |
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| A short sale takes approximately 45 days to complete and sometimes longer. This is very important. This complicated process takes time so to have the option of a short sale, you must act soon. If you wait until 1 week before eviction, no one can help you do a short sale. It is simply impossible. DO NOT WAIT. |
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Glossary of Foreclosure Terms
Banks will often shower you with confusing terms and legal language. It's important that you be an informed consumer. below is a list of commonly used terms that you should be familiar with when dealing with your lender and/lawyer. Of course, you could always hire HomeAssure.com to represent you and help save your home. We deal with these same lenders on a daily basis and know how to get the job done.
Acceleration Clause
A provision that allows the lender to demand the entire balance of the mortgage loan when the borrower fails to make some installment payments.
Affidavit
A written statement, usually given while under oath or in the presence of a notary.
Annual Percentage Rate (APR). The annual interest rate covering the interest and other costs. The Truth in Lending Act requires announcement of APR by lenders.
Appraisal
The process by which a licensed person gives an estimate of property value.
Appreciation
The difference between the increased value of the property and the original value.
Assignment
The transfer of property to be held in trust or to be used for the benefit of the creditors (lenders).
Balloon Payment
Large installment payment required at the end of the term of the mortgage note to pay off the entire mortgage balance.
Bid
The amount for a foreclosed property for sale at auction.
Certificate of Sale
A document issued to the winning bidder at a foreclosure sale stating their rights to the property once the borrowers redemption period has expired.
Clear Title
A title that is not burdened with defects.
Credit Bid
A bid on behalf of the lender at a foreclosure sale. The bid amount must be less than or equal to the balance of the loan in default.
Decree
A judicial decision.
Deed
A signed document that shows ownership in property and allows the transfer ownership of property from one party to another.
Deed-in-lieu of Foreclosure
A voluntary transfer of title by the borrower to the mortgage company to avoid foreclosure action.
Deed of Trust
An instrument signed by a borrower, lender and trustee that conveys the legal title to real property as security for the repayment of a loan. The written instrument in place of mortgage in some states.
Default
A mortgage is in default when the borrower fails to make the payments as agreed to in the original promissory note.
Deficiency Judgment
A judgment against the borrower for the balance remaining after the property is sold at auction or foreclosure sale.
Encumbrance
Mortgage, lien, tax, or any restriction on the use of land.
Equitable Title
The present right to possession with the right to acquire legal title once a preceding condition has been met.
Equity
The value of real estate less the outstanding mortgages and debts pledged against the property.
Fair Market Value
The price a property would sell for on the open market.
Fee Simple
Common term used to indicate complete legal ownership of a property.
FHA
Federal Housing Administration under U.S. Department of Housing and Urban Development (HUD).
Foreclosure
The forced sale of property pledged as security for a debt that is in default.
Free & Clear
Ownership of property free of all indebtedness.
Grace Period
Period between the due and the overdue date during which no late payment penalty applies to the mortgage payment.
Hazard Insurance
Insurance against the destruction of the property.
Judicial Foreclosure
A foreclosure that is processed by a court action.
Lien
A charge upon real or personal property for the satisfaction of a debt.
Legal Description
A formal description of real property so that one can locate it by reference to government surveys or approved recorded maps.
Lender
A person who lends money for temporary use on condition of repayment with interest (i.e., the bank, mortgage company, etc.).
Lis Pendens
A recorded notice of pending lawsuit.
Mortgage
A written pledge of property that is used as security for the repayment of a loan.
Non-judicial Foreclosure
Non-judicial foreclosure is when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of their default.
Notary
A public officer licensed by the state to attest to and certify the validity of signatures of others. A notary is often referred to as a notary public.
Notice of Sale
A notice giving specific information about the loan in default and the proceedings about to take place. This notice must be recorded with the county where property is located and advertised as stated in the security document or as dictated by state law.
Personal Property
Property other than real property consisting of things temporary or movable.
Posting
To publish, announce or advertise by physically attaching a notice to an object.
Postponement
Postponement means to put off to a later time. In the case of a foreclosure sale, this is generally done by announcement at the original sale or by posting notices establishing the new date and time the foreclosure sale will take place.
Refinance
Paying off one mortgage loan by obtaining a new mortgage loan.
Right of Redemption
A borrower's right to reacquire property lost due to a foreclosure. This right allows the owner to recover property lost to a foreclosure judgment, or sold after a foreclosure sale, within a certain period of time. The redemption period varies among the states.
Request for Notice
A recorded document requiring a trustee send a copy of a Notice of Default or Notice of Sale concerning a specific deed of trust in foreclosure to the person who filed the document.
Short Sale
A sale where the lender will agree to accept less than the full amount of the mortgage. This allows you to sell the house to an investor or other buyer for a good price, while the lender recovers the bulk of the amount due without having to pursue foreclosure proceedings.
Subject To
The purchase of a property with an existing lien against the title without assuming any personal liability for the liens payment.
Title
The instrument that is evidence of a person's right in real property (i.e., a deed).
Trustee
A neutral party who advertises the foreclosure property for sale and conducts the auction to sell said property to the highest bidder.
Trustee Sale (Sheriff Sale)
An auction of real property conducted by a trustee. Also known as a Sheriff's Sale.
Upset Bid
A recorded bid placed after a foreclosure sale has ended that is higher than the highest bid received at the actual foreclosure sale.
Writ
An order or mandatory process in writing issued in the name of a court or judicial officer commanding the person to whom it is directed to perform or refrain from performing a specified act. |
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