Know Your Rights In Terms Of Foreclosures

admin | December 1, 2013

English: Foreclosure signs, Mortgage crisis, (Photo credit: Wikipedia)

Nobody wishes to experience financial instability, but the stress of declining income and rising debt are especially alarming when there’s a threat that those factors could result to losing a home. The U.S. is facing an unparalleled housing dilemma, in which thousands of American families today– many of whom bought their homes using subprime mortgages– are unable to finance their mortgages and are losing homes their homes to foreclosure. A foreclosure is a legal proceeding in which a bank, mortgage broker or other lender is allowed by the state to end the borrower’s or homeowner’s right to redemption.

The Stages of Foreclosure

Bank foreclosure isn’t necessarily a singular event, but rather a complex process with many stages and steps. Seeking the help of an experienced foreclosure attorney early on in the process would help increase your chance of reaching a “clean” and satisfactory recovery. To get the ball rolling, it is very important to have an understanding of the following basic stages of foreclosure.

•Pre-foreclosure–At this stage, a borrower might recognize that he or she is having trouble making his or her home mortgage payments and possibly have received letters or notices from the lender indicating that he or she is in danger of defaulting on a home mortgage.

•Foreclosure–Foreclosure and real estate laws vary from state to state. This means that the process of foreclosure depends on the state’s laws and whether the state is a title or lien state. The lender will usually file a notice of default which indicates that a borrower or homeowner has defaulted on their home mortgage.

•Post-foreclosure–At this point, the lender has seized control of your home and has sold the property to a new investor or owner through an auction or turned it over to the Real Estate Owned department of the lender.

Judicial and Non-Judicial Foreclosures

The foreclosure process typically depends upon the real estate law of the state where you reside, and whether your foreclosure is judicial or non-judicial. Your real estate lawyer is familiar with the state laws that could affect your foreclosure. Here’s a basic explanation of the differences between judicial and non-judicial foreclosures.

•A Judicial foreclosure is related to mortgage and it is a much longer process.

•In a non-judicial foreclosure, the process is shortened to a few months and is usually handled by a third-party trustee.

The outcome for either process is almost the same; once the process is completed, your home is no longer in your possession and it’s now ready for sale through auction to interested buyers or investors.

How to Avoid Foreclosure

Lenders usually work with you to avoid the foreclosure process. They will help you deal with your case on a personal level, and your situation will be taken into consideration. If you fall one or two payments behind, the mortgage holder will send you a loan workout package that will help you catch up with your loan. The package contains forms, instructions and information about your ability to pay back. However, if your situation is temporary, you may try some other solutions:

•The Federal Housing Authority (FHA) can help anyone who faces foreclosure. If your loan is FHA-approved, you can contact the FHA housing counselor who can help you learn more about possible solutions. This counselor can create an agreement with the lender for you and will even help you create a monthly budget plan.

•If the place where you live or work has been declared a natural disaster zone by the federal government and you are facing foreclosure, the FHA can provide a relief plan to help you. In most instances, an individual can get a relief of up to three months from his or her monthly loan payments while working out with his home or work situation.

•Forbearance is when the lender agrees to postpone your payments temporarily if you agree to another option to cover your loan amount. The option is often reinstatement—you reimburse the outstanding amount in one lump sum. If you have a considerable amount of money coming your way soon, these options are great ways to avoid foreclosure.

•Mortgage modification is when the lender agrees to modify the terms of the mortgage to make it more affordable to the borrower.

•If it’s impossible to keep your home, you can sell it to repay your loan. If this is the case, contact your lender. Your lender can suspend your loan payments while you sell your home and may even agree to take less than the loan amount if you sell it as soon as possible. Your last resort is to give your deed-in-lieu of foreclosure. This is when you simply surrender your rights on your home to your lender.

Author Bio

Joshua Turner is a writer who creates informative articles in relation to business. In this article, he describes the laws surrounding foreclosures and aims to encourage further study through a NOVA Southeastern Master of Science in Law Online.