What You Should Do If Served with a Foreclosure Notice?

As the unemployment numbers increase and the economy stalls, many homeowners who have missed multiple mortgage payments have received notices of default on their home . If you are behind on your mortgage, you know that you are served various papers from your lender constantly and it’s hard to determine what documents you should pay attention to.

This post is intended to guide you through the foreclosure process so you don’t lose your home without a fight. If you have already explored all of the options given below, go through the steps again to make sure you didn’t miss anything. This is your home and if you truly want to keep it then you need to educate yourself on how to do so. If you have tried for a loan modification under the Making Home Affordable Plan (also known as HAMP or the Obama Plan) and been rejected, try to find out the reason for the denial and submit another loan modification application correcting what was wrong with your initial application. It might take multiple calls to find out why your application was rejected but keep calling your lender until you get some insight.

There are some things you need to know to prevent unnecessary stress in your life. First, I recommend finding out and researching the foreclosure laws in your state. Every state is different as to how they process homes in foreclosure. That being said, you should know that no one will lose their home if they only miss one mortgage payment. There is a process and procedure in place for states and banks are required to follow the legal guidelines in your state. For example in California, if the lender follows the guidelines, this is what happens…If a homeowner misses three mortgage payments in California, a bank will issue a Notice of Default on your home. This notice is public record and that is why you receive so much junk mail asking to assist you or sell your home for you. After the notice of default is recorded, you have 90 days to reinstate your loan. After 90 days, you will be given notice that your home will be sold at the courthouse in 21 days. This is the fastest your home could be foreclosed so don’t panic and please continue to read this post to get more guidance on this.

Now if any homeowner in any state is already in line for a loan modification and you have a sale date set on your home, you need to call your bank right away and ask for the sale date to be postponed. They will agree to continue to postpone your sale date until they make a decision on your modification application. Applying for a loan modification does not stop the bank from accelerating the foreclosure but they will not take your home if they are still reviewing your application for a modification. However, you need to stay on top of them to make sure they have the documents they need and to confirm there is no sale date or they have postponed any sale date.

You will receive all kinds of letters in the mail from your bank or lender. If the paperwork sounds scary or threatening, that is the intention of it. Banks are trying to get your attention and sometimes the only way to do this is by sending you documentation that gets your attention by telling you they will take your home if you don’t pay your mortgage.

If you are behind on your mortgage and you have been issued a notice of default or received paperwork that is unclear to you, the first thing you need to do is call your lender to get status on your account. Yes, your lender calls you multiple times a day asking for you to make a payment but that is just collections calling you. You need to reach out to your lender to let them know you want to keep your home and you need their help. They will ask if you can make a payment and I recommend making a payment if they will take it. You don’t have to make more than one monthly mortgage payment even if they put pressure on you to. Just make one payment and this will help stall any foreclosure proceedings. If you don’t have the money to make a mortgage payment, then there is nothing you can do about that but you still need to call your lender. Do not ignore their calls because they could interpret this as you not wanting to work with them to save your home.

Typically, when you talk to a representative at your bank or lender, they will ask if you have applied for a loan modification or a loan workout. If you haven’t applied, you need to submit an application to them right away. Loan modifications can take an average of 4-6 months to get approved right now so you need to complete your application right away so you can get in line and get reviewed for a lower payment option. Again, even if you are behind many months or in foreclosure, you can apply for a loan modification and your lender will postpone any sale date if one is set.

You have a lot of options when you are in foreclosure. If you want to keep your home, you can do it but you have to be proactive and work with your mortgage company. Whatever you do, don’t ignore your lenders calls. Some homeowners in trouble have a tendency to agonize over their hardship but they don’t do anything to aid their cause. Ultimately, it’s up to you whether or not you save your home and improve your situation. Obviously, it’s a stressful experience but if you stay focused on the goal of saving your home by exploring all of your options then you will put yourself in position to be successful.