Foreclosure is basically the legal procedure used by lender to take possession of a property when the homeowner has not made their mortgage payments on time. The lender determines what specified period of time they are willing to wait before they claim default on the loan. Most contracts state more than 30 days late on a payment can be considered in default.
When you purchased your home, you placed a mortgage on the home. In that contract you agreed to make timely payments. Therefore when you fail to make your payments to the lender, the latter has only one remedy and that is to take back ownership of the property and sell it to recoup its money. That remedy is called Foreclosure.
CAN'T MAKE A PAYMENT?
Although you may feel embarrassed, please get in touch with your lender before this happens. Explain what happened and why you are in this situation. They may work out a plan with you to help you during this situation. If the problem persists, they are less inclined to work out a plan.
If you choose not to contact your lender, you may contact a HUD approved counseling agency in your area and get some assistance. These agencies are equipped to handle these situations as they have valuable resources. They may have or be aware of programs and services offered by Government agencies and other organizations that could help you.
WHAT IF I'M LATE ON MY PAYMENT?
Your bank may be able to modify your mortgage. They may be able to extend the loan so you are able to catch up on the arrears. If you are not in a position to bring your payments current you might be able to sell your property before the foreclosure process is completed. What ever you do, don’t ignore the letters from your lender. They are willing to help those who ask for it and deserve it.
A Special Forbearance may be arranged with your lender. This Forbearance plan arranges a repayment plan based on your financial situation. It may even provide for a temporary reduction or suspension of your payments. Proof of reduction of income or increase of mortgage payments must be shown to qualify and your lender must accept the plan.
It is very important to remember that once you are in the foreclosure process, time is your enemy even when you’re negotiating with your lender. Although you are gathering information on what options are available to you in your current circumstances and searching for help, the foreclosure process has begun and every day brings the pending sale of your property closer.