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How Fast Can A Foreclosure Happen?
In most states, a foreclosure begins within 60 days of the first missed payment and proceeds to a conclusion, with the lender taking the property, within four to six months.
Note: The speed at which a foreclosure can be completed is usually governed by state law. In some states a foreclosure can be completed very quickly. Ask your real estate agent, or an attorney, what the legal procedures and timelines are in your location.
How Can I Stop The Foreclosure?
The best way to stop the foreclosure is to bring the loan current. To do that you would need to pay all delinquent amounts as well as the costs and fees incurred by the mortgage company to file and process the foreclosure.
Many borrowers are not able to bring the loan current and are forced to look at other alternatives to avoid foreclosure. Even if you are well into the foreclosure process, most lenders are willing to grant you additional time to remedy the situation if they believe it is reasonably likely they can avoid acquiring your property through foreclosure.
Among the alternatives the lender might be receptive to:
- Get the property sold so you can save your equity.
- If you don't have equity, cooperate in a Short Sale and accept a discounted payoff as "full payment" on the loan.
- A forbearance agreement in which you agree to both stay current on the loan going forward and to a schedule of repayment on delinquent amounts.
What Options Do I Have To Avoid Foreclosure?
There are several things you can do to avoid Foreclosure. It is usually best to let your lender know, right away, that you intend to solve the problem so they won't have to get the property in Foreclosure.
Here are some of your options:
- Sell Your Property
- Refinance
- Do Nothing
If My Lender Forecloses, Can They Come After Me For The Loss?
In most cases the answer is no. If the loan was originated when the property was purchased, and is secured by a primary residence, most states have anti-deficiency statutes to protect homeowners who lose their home to foreclosure.
Note: In some states lenders have the ability to pursue deficiency judgments. Frequently, particularly on refinance second mortgages and home equity lines of credit, lenders have fairly broad collection rights. It is wise to consult with an attorney about the potential for liability for repayment after a foreclosure.
Can I Just Deed My Property To Someone And Avoid Foreclosure?
Deeding your property to a third party does not eliminate your obligations related to the loan. Unless the mortgage is paid off when you deed the property, you will almost certainly remain as the party primarily responsible for the repayment of the loan. If the lender eventually forecloses, it will be on your credit record.
If you deed your property to a third party you also give up control of the property. It is nearly always a bad idea to simply deed your property to a third party.
Do not deed your property to someone without paying off the loan unless you have consulted with an attorney.
What will a foreclosure do to my credit?
By almost any measure a completed Foreclosure is the most damaging event your credit status can encounter – worse than bankruptcy. A Foreclosure on your credit record will negatively impact your ability to borrow money for years.
For most people, it is well worth the time and effort to solve the problem before the Foreclosure is done.
What does a Notice of Default mean?
A Notice of Default is a legal notice indicating a foreclosure action has been commenced and the lender is proceeding to gain legal title to the property. The Notice of Default is normally recorded and published after the lender has sent to the homeowner a Notice of Intent to Foreclose.
In most cases the Notice of Default is signal that the legal process of foreclosure, and the timelines mandated by state statute, has commenced.
Can I try a Forbearance Agreement to avoid foreclosure?
Yes, you can and you should look at a Forbearance Agreement as an option to avoid Foreclosure.
FORBEARANCE AGREEMENT: An agreement between a mortgage company and a borrower in which the borrower promises to stay current on the mortgage going forward and agrees to a repayment plan for delinquent payments and costs and fees associated with the foreclosure action. A Forbearance Agreement is a tool that allows the borrower to keep the property.
The lender will expect you to show that the delinquency was due to circumstances out of your control (injury, illness, job loss) and that the financial difficulties have been corrected.
I Have Heard Of Foreclosure Scams, What Should I Look For?
Unfortunately there are quite a few people that might try and take advantage of your temporary misfortune. These people will try and convince you that they can provide a quick and easy solution to your mortgage problem. As a general rule, if it seems too good to be true, it usually is.
Here are a few examples of the scams you could encounter:
- You need to sell your property fast or you will be ruined.
If you have equity, these guys want it by providing fast cash they solve your problem and they get your equity. On occasion they offer a small amount of money to you – which is normally a signal they are getting lots of your equity.
- Sign the deed to the property to us and we will take care of everything.
Sometimes called the “Bailout” scam, the investor tells the homeowner that he will be allowed to stay in the home and pay “rent” to the investor until a long term solution can be worked out. Once the owner signs the deed to the property over to the investor, big trouble usually follows. If the investor has the deed, the investor has control.
Here is the big kicker – the homeowner who signed over the deed is still responsible for the loan. The investor nearly never makes the mortgage payments and the homeowner gets hit with the Foreclosure.
- Pay us a fee and we will accept your deed and take on the problem of your mortgage.
There are those that offer, for a fee (often as much as $1500 to $2500), to accept the deed to your home, claiming they can force the lender to report the foreclosure on their credit – as the owner of record. Note: The lender made the loan to you, and will report any derogatory information connected with that mortgage on your credit file.
See California Civil Code Sections 2945-2945.11 for details.
Your lender will work with you directly if you want to make arrangements to make up past payments and keep your property. This would normally involve a Forbearance Agreement.
Will A Short Sale Stop A Foreclosure?
While the Short Sale itself does not stop the Foreclosure, lenders normally work with a homeowner and delay the Foreclosure if necessary, if they receive a legitimate Short Sale proposal. The key here is to submit a complete, well organized, Short Sale proposal.
The lender does not want your property, and would rather resolve the situation before the Foreclosure is complete.
If My Lender Has Started A Foreclosure, Can I Still Sell My Property?
Absolutely, In fact, your lender would rather you sell the property than allow the Foreclosure to continue.
Your lender does not want to take your property through Foreclosure. Even if you have no equity in the property, the lender wants to find a solution.
This is precisely why lenders agree to a Short Sale and accept a discounted payoff to fully satisfy the loan. In a Short Sale, the lender in nearly all cases pays all the closing costs – including title fees, escrow fees and the real estate commission.
Should I speak with my lender when they call?
It is best that you not avoid calls or letters from your mortgage company, particularly if a foreclosure is pending. Your mortgage company does not want to take your property through foreclosure. The mortgage company would rather look for options to avoid foreclosure.
When speaking with your mortgage company, be honest about your circumstances and listen for them to possibly suggest options. The mortgage company knows the best way for them to limit losses on a delinquent mortgage is to work with the homeowner.
Be sure to keep notes of all conversations you have with the mortgage compoany including dates and times of calls, the name of the representative with whom you spoke and the details of the conversation.
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