When you’re facing foreclosure of your home, it can feel completely overwhelming. But you’re not alone.
Over one million American homeowners are going through a foreclosure, or are at serious risk of facing one.
If you are facing a foreclosure, there are a number of things that you can do either to stay in your home or make the loss easier. In this article, we will go through the steps you need to take right now to get ahead of the foreclosure process.
Know Your Lender’s Obligations
The foreclosure process is very strict. Though the exact rules differ by state, there are certain rules the lender must follow in order for the foreclosure process to be legal.
First, they must provide you a notice of foreclosure. This notice must explain that you have defaulted on your loan, and therefore the lender is starting the foreclosure process.
They must provide adequate notice, as well as instructions on how you could cure the default and cancel the foreclosure.
The lender must also have records or statements of the money that is owed. However, they don’t necessarily have to send copies of these records to you. They simply must have them in their own records.
The lender must also certify that you are not an active member of the armed forces or navy. If you are, then you may be able to stop the foreclosure process under the Servicemembers Civil Relief Act.
Know Your Rights and State Legislation
When you signed your mortgage, it contained provisions about the foreclosure process, defining your rights and obligations. It also would have described the process that the lender needs to take. This way, you will know what can and cannot happen during the foreclosure.
The foreclosure process differs greatly state by state so you also need to familiarize yourself with local legislation. You need to know what rights you have all throughout the foreclosure process so you can best defend yourself.
You also do not need to understand all this legislation on your own. It can be dense and difficult to read. If you contact a foreclosure expert, they will be able to explain what you need to know.
Contacting the Lender and Getting Help
With foreclosures, it is important to react as quickly as possible. There’s always a chance that you will be able to stop the foreclosure process before it starts. The sooner you reach out, the better.
When you call the number on your mortgage statement, you should ask for the loss mitigation department. You should be directed to the department who will be handling your foreclosure.
Ask what you can do to remedy the default on your account. Sometimes the lender will be willing to work with you rather than going through the foreclosure process. You might be able to stop the process and work out a new deal.
This could involve modifying your loan to lower your monthly payments or temporarily halting payments.
You should also contact a government foreclosure avoidance counselor, who will be able to provide you some advice and help.
Understandably, many people don’t know how to react when they receive a foreclosure notice and put off taking action. If your foreclosure date is fast approaching, there are still ways you can stop a foreclosure at the last minute.
Fighting Against Foreclosure
If the lender isn’t willing to negotiate, it is time to take action to avoid foreclosure.
There are a few different ways you can do this, and a foreclosure expert will be best equipped to find the best option for you.
First, there are technical defenses. In a technical defense, you would argue that there was an error in the foreclosure process. Maybe the lender didn’t give you enough notice, or they sent the wrong form.
A technical defense relies on errors the lender made to render the entire foreclosure process invalid. However, with this defense, the lender can always restart the process.
Second, in a substantive defense, you will argue against the foreclosure based on facts about the situation. You will use a legal defense to prove the foreclosure must stop. For example, you could prove that according to your lease, you aren’t actually in default.
Third, there are government grants available to help you avoid foreclosure. These can help you stay in your home and stop the foreclosure process.
Short Sales Can Avoid Foreclosure
If you are unable to keep your home, it can be better for your credit score to turn your property over to the bank for a short sale before the foreclosure process finishes.
A short sale means you will sell the property for less than the value of the mortgage. This means that the bank will lose some of their investment; however, many lenders will accept this because it saves the effort and expense of the foreclosure process.
If the lender rejects your request for a short sale, don’t give up. There is still room for you to negotiate by sending a counter offer.
What If You Don’t Believe You’re in Default?
Did you receive a notice of foreclosure when, according to your understanding, you are up to date on your payments?
If you believe you’ve wrongfully been sent a foreclosure notice, it is important that you contact the lender immediately. You need to explain that you are not in default and provide any proof or documentation that prove it.
Try to respond as quickly as possible. Stopping the process before it gets any further along will save you a lot of stress and work.
Just make sure to keep records of any communication. If you need to build a substantive defense, this communication could be proof in court.
If you have received a foreclosure notice, the most important thing is not to panic.
By following the steps on this list and taking action, you can protect yourself against foreclosure. You can hopefully avoid the foreclosure altogether; if not, you can make the process less damaging.
While going through a foreclosure is never easy, don’t lose hope! Instead, take action!