Why All The Foreclosures
Millions of Americans are going through the foreclosures process and it's believed that 2007 & 2008 will result in the highest foreclosure rate since the depression. Much of it was brought on by overzealous lenders who lured borrowers into high-risk, teaser or also know as exotic loans containing low front-end payments that later adjust to much higher rates, thus yielding higher monthly payments.
For those looking to refinance their homes, the falling values of homes and reduction of available equity have pushed many homeowners into foreclosure and even bankruptcy.
Debt and Depression
Financial trouble is very hard to isolate, it's is often initiated by the loss of job, injury or divorce. Keeping in mind that money trouble is temporary, it usually passes although it may feel that it lasts forever.
If you find yourself depressed, or feeling hopelessness, don't wait to get help. If may be a good time to contact a healthcare professional to assist you through the crisis. If you or your spouse is talking about ending your marriage, take a deep breath and consider the consequences of such an action. It is never a good idea to make a life-changing decision in time of a crisis. Consider turning to an experienced marriage counselor, good friend, or therapist to help you through marital stress caused by the threat of foreclosure. It is a time to reach out for professional help and find emotional support amongst friends and family. You may be surprised of how many people understand and are supportive.
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Foreclosure Process
Foreclosure occurs when you fall behind in your mortgage payments and your financial lender proceeds by taking legal action to reclaim the property and sell it on a public auction.
There are two basic types of foreclosures. Most states, like California, follow the non-judicial foreclosure process while other states will follow the older more traditional process of judicial foreclosure. Each state has slightly different rules and procedures so it is strongly advised to check your states for specific foreclosure rules.
Non-judicial foreclosure: Is the process by which your mortgage lender, under the terms expressed in your mortgage, will claim legal right to your property and proceed with having your property sold at a public auction without a formal judicial hearing or proceeding. The authority and responsibility lies with the trustee to follow strict foreclosure and sale processes.
The major advantage of non-judicial process is that the lender is most cases, is not permitted to pursue a deficiency judgment against you in the event that the property sells for less than what you owe on your home loan.
How long does non-judicial foreclosure take?
A non-judicial foreclosure starts when the trustee, at the request of your lender, prepares and mails to you a legal document known as a “Notice of Default and Election to Sell”. This document, in most cases, is your official notice that because of your non-payment and default of your loan, a non-judicial foreclosure process has commenced and that the lender intends on proceeding with the sale of your home at a public auction. The proceeds of such a sale will be used to payoff your loan with the lender.
In most cases, the non-judicial foreclosure process will take between two to four months to complete leading to the sale of the property. This is your window of opportunity to attempt to stop the foreclosure process. You should know that the time period could turn out to be longer if the trustee fails to fully comply with the terms of mortgage documents or if the trustee violates any of the many rules governing the foreclosure process in your state.
Notice of Default and Election to Sell
The trustee must comply with the laws governing recording, mailing, posting and publishing the Notice of Default and Election to Sell. However, in most cases, there is no legal requirement that you receive “actual” notice of the foreclosure. Most courts have ruled that a foreclosure is valid so long as the trustee carried out the notification procedures in compliance with your states law, irrespective of whether you were unable to learn of the notice because you were out of the state or engaged in other matters when the notice was sent to you.
What is the Reinstatement Period?
Depending on your specific state law, reinstatement normally commences upon the mailing of the Notice of Default to your home and ends sometime before to the trustee’s sale of your property. The critical feature of the Reinstatement Period is that it provides you with a way to stop the foreclosure process by bringing your mortgage payments fully current again. The lender may also request that you that you reimburse them for attorney and trustee fees that they incurred in the foreclosure process.
How do I reinstate?
It is recommended that you contact the trustee immediately and inform him of your intention to reinstate and bring your loan current. You will first need to obtain from the trustee the exact amount you will need to pay to bring your loan current again. The trustee by law must provide you with this information promptly. Should you pay that amount to the trustee, he must by law immediately stop the foreclosure process. You should then receive the trustee’s notice of termination of foreclosure, which is your proof that the foreclosure proceedings have ended. The notice should also be officially recorded to protect your title to the property.
What about partial repayment?
Most lenders will NOT accept partial payment within the reinstatement period. However, you should consider this option if your lender is open to it and agrees to postpone the foreclosure and you are able to convince the lender of your ability and intention to bring the loan payments current again. Be careful though, you don’t want to be making partial payments if you think you will not be able to bring your payments current again. You could end up losing more money and still end up getting you’re home foreclosed. It is important to be both realistic and candid with your lender. Also keep in mind that partial payment will not by itself operate to extend the reinstatement period or terminate the foreclosure process. To accomplish these concessions, your lender must agree to do so expressly and in writing.
What is the Notice of Trustee Sale?
After the Notice of Default is issued, and assuming you have not brought your loan current during the reinstatement period, the trustee will issue a Notice of Trustee Sale. The purpose of this document is to notify you and others of the exact time and date your property will be put up for sale by auction. The date of sale is typically about two-to-four weeks after you first received the Notice of Trustee Sale. You might be able to stall the process by a few weeks if you notice any material inaccuracies in the Notice of Sale and you communicate the same to the trustee in writing.