Understanding The Right Of Foreclosure
Foreclosure occurs because when a person obtains a mortgage to buy a home, the home itself serves as the collateral for the loan. Since the property acts as collateral, the homeowner agrees that they will forfeit ownership of it if they default on their payments. When a home is foreclosed upon, the lender will generally sell the property to recoup money lost on the loan.
Foreclosure takes different amounts of time depending on the terms of the mortgage, the lenders motivation to foreclose, and local regulations. In many cases, it may take six months or more.
Once a home has been foreclosed, the lender will likely announce a foreclosure sale. These sales often put the property up for auction to the highest bidder. If the homeowner still lives at the home, they will likely face eviction through an unlawful detainer suit.
Homeowners associations may also have a right of foreclosure, which they can exercise if a homeowner fails to pay their homeowners’ association fees or special assessments.
Requirements For Exercising The Right Of Foreclosure
Lenders must abide by specific procedures for a foreclosure to be legal. Due to protections for homeowners’ legal rights in foreclosure, lenders must provide a default notice, alerting borrowers that their loan is in default because of missed payments and notifying them of alternative loss mitigation options.
Homeowners then must be given a specified amount of time to make good on any missed payments or appeal against the foreclosure. They will likely also be required to pay late fees in addition to any outstanding balance.
The Foreclosure Process In 5 Steps
From the time of your first missed mortgage payment to the foreclosure sale of your home, there are several steps in the foreclosure process. These phases can vary by state, but generally follow this timeline. Each state has its own laws pertaining to the process of foreclosure and foreclosure sales. These can govern the borrowerâs relief options if already in foreclosure, how to go about posting a Notice of Sale, the sale timeline and other parts of the process.
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Phase : Real Estate Owned
The lender will set a minimum bid, which takes into account the appraised value of the property, the remaining amount due on the mortgage, any other liens, and attorney fees. If the property is not sold during the public auction, the lender will become the owner and attempt to sell the property through a broker or with the assistance of a real estate-owned asset manager. These properties are often referred to as bank-owned, and the lender may remove some of the liens and other expenses in an attempt to make the property more attractive.
How Do I Get Forbearance
Forbearance is when your servicer pauses or lessens your payments. Ask your lender or mortgage servicer about this option. Most mortgages are eligible for some form of forbearance.
Many private lenders and servicers will work with you if you ask for forbearance. It is best to ask before you miss any payments.
Servicers of certain types of government-backed mortgages are required to give forbearance upon request. You must initially apply for this forbearance by September 30, 2021, if you have a USDA or VA mortgage. There is currently no deadline for FHFA and FHA mortgages.
Most government-mandated forbearance periods are for six months or less. However, borrowers with Fannie Mae, Freddie Mac, or FHA mortgages are allowed extensions of up to six months upon request. Be aware, though, that there is a cap on a borrower’s total months in forbearance. This cap depends on when you first entered forbearance, so ask your servicer for more details.
To find out if you have an FHA mortgage, call HUD at 1-877-622-8525 or look up your lender on the HUD website. Many reverse mortgages are FHA mortgages.
You can also ask your loan servicer if you have a federally-backed mortgage.
See this FAQ from Lone Star Legal Aid for more details about the foreclosure moratoriums, including tips on how to ask your loan servicer if your mortgage qualifies.
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I Have A Foreclosure Case Pending In A Maine Federal District Court What Will Happen And What Should I Do
Be on alert for letters from the Court! No matter what the general court date changes and cancelations outlined below are, the Court will tell you individually if your court date is being canceled or rescheduled. Staying on top of your case is very important with all the uncertainty about the COVID-19 crisis.
Some court dates and deadlines have been changed:
- All foreclosure hearings and mediations previously scheduled between March 19 and April 30, 2020 are cancelled and will be rescheduled. Check your mail for a new date.
- If you were recently served with a foreclosure complaint and have not yet filed a response with the court, take this time to mail an Answer to the Court and send a copy to the lawyer for your lender.
- Pay attention to your mail. If the court sends you a date, you must attend. You should reach out to the clerk’s office about attending by phone or video.
- For the court in Portland: 780-3356
- For the court in Bangor: 945-0575
- You must wear a mask in court.
- You should expect to be screened for COVID-19 before going into the court. Read about Maine Courts COVID-19 Entry Screening
What Sort Of Financial Hardships Count
The definition is broad, covering anything pandemic-related that materially reduced your households income or increased your living expenses, including temporary changes.
Examples of income reductions include being laid off or having your hours cut when your employer was required to close its stores or limit in-person services. Examples of higher living expenses include COVID-related medical bills and higher food costs because you had to take in relatives who lost their jobs.
You dont have to back this up with any specific proof or paperwork instead, you simply have to attest that you suffered a hardship because of COVID and describe it. But be forewarned, false statements can result in you being prosecuted for perjury.
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What Is A Forbearance Of My Mortgage Payments Under The Cares Act
A forbearance means your lender gives you permission to not make your monthly payments for a set time period. During this forbearance period, your lender will not treat your loan as delinquent or in default. Your lender will not charge you late fees or report your loan as delinquent to credit reporting agencies.
But, a payment forbearance is not payment forgiveness or payment deferment. When your forbearance period ends, all the payments you missed will be immediately due and payable. This is true unless your lender agrees to modify your loan or offers a repayment plan for you to pay off the missed payments over time, in addition to your regular monthly payments. For this reason, you should not request a forbearance if you can afford to make your loan payments.
If you can afford to, and your lender allows, make partial payments during your forbearance period to lower the amount you will owe when it ends.
If you request a forbearance under the CARES Act and affirm to your lender that you are experiencing a COVID-19 related hardship, you will be granted a forbearance for up to 180-days.
- If you need to extend your forbearance period, make sure to tell your lender before your original forbearance period ends.
- You can extend your forbearance for up to one year by simply requesting it. Some home owners may be able to extend it for more than one year.
- You can end your forbearance period any time by requesting it.
Federal Foreclosure Suspensions Aid Homeowners
The federal Coronavirus Aid, Relief and Economic Security Act enacted in late March contains a number of measures that aim to relieve financial strain on Americans affected by the crisis.
One component of the CARES Act was a 60-day moratorium, or suspension , of foreclosure proceedings against homeowners with federally backed mortgages who are behind on payments. The moratorium order covers borrowers with FHA loans, USDA loans, VA loans and conventional loans backed by Fannie Mae or Freddie Mac.
The moratorium prohibits lenders and servicers of federally backed mortgages from conducting foreclosure-related evictions and from taking legal action that leads to foreclosure.
If you were facing foreclosure before the CARES Act was passed, it’s possible that state or local laws will continue to protect you from foreclosure for the foreseeable future. If you enrolled in a mortgage forbearance program established under the CARES Act, you’re also likely protected for a time.
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What Federal Protections Do Homeowners Still Have
When the coronavirus pandemic began to take hold of Americans lives in March, Congress was swift to pass the CARES Act. In addition to providing stimulus checks and expanded unemployment benefits, the bill aimed to keep people from becoming homeless during the health crisis. Homeowners with federally-backed mortgages could not be foreclosed on and could claim forbearance, freezing their monthly payments for up to 12 months.
For homeowners with mortgages backed by government-sponsored enterprises Fannie Mae or Freddie Mac, the Federal Housing Finance Agency has extended the foreclosure moratorium through the end of the year, meaning lenders that hold the loans cannot begin the foreclosure process before then Borrowers who have suffered financial hardship due to the pandemic can also apply for forbearance, temporarily pausing their mortgage payments.
The GSEs and other government loans cover about 70% of all mortgages. The remaining 30% of homeowners with private mortgages are not technically protected under federal law. Some banks are following federal guidelines, but they are only legally obligated to stop foreclosures in seven states.
Nj Residents Facing Foreclosure Would Get Help Under Bill Now On Murphys Desk
FILE – In this March 15, 2008 file photo, a realtor’s sign is seen on the lawn of a foreclosed home in Egg Harbor Township, N.J. The ongoing mortgage foreclosure crisis has sparked a cottage industry of so-called “foreclosure rescue” companies. But advocates and government officials warn that a significant number are little more than fraudulent operations designed to separate distressed homeowners from their money, and sometimes their houses as well. ORG XMIT: CLE2013081218142732 ORG XMIT: CLE1308130213344452 ORG XMIT: CLE1403110315415171 The Plain DealerThe Plain Dealer
A bill that would create a fund to assist New Jersey residents facing foreclosure is headed to Gov. Phil Murphys desk after it passed the state Senate Friday.
The measure, S3244, would create the New Jersey Foreclosure Prevention Act, which allows the New Jersey Housing and Mortgage Finance Agency to purchase properties facing foreclosures to help residents in retaining control of their homes. It would also allow the agency to work with homeowners for a more affordable mortgage.
New Jersey has consistently ranked the highest in the nation for foreclosures, and was 4th highest in the nation for mortgage delinquencies in July. A 2018 report conducted by the states judiciary found New Jersey averaged 25,000 foreclosure filings in 2006 before shooting up to 65,000 per year in 2009.
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What Is The Right Of Foreclosure
The right of foreclosure describes a lender’s ability to take possession of a property through a legal process called foreclosure when a homeowner defaults on mortgage payments. The mortgages terms will outline the conditions under which the lender has the right to foreclose. State and national laws also regulate the right of foreclosure.
When Will The Program End
There is no set date instead, the state will continue to offer help to homeowners who became delinquent in 2020 and 2021 until it has spent all $1 billion from the federal government, a process thats expected to take three years. The state estimates that the money will be enough to help 20,000 to 40,000 borrowers.
The money will be awarded on a first-come, first-served basis, with one important exception: Forty percent of the aid must go to socially disadvantaged homeowners. Those are residents of the neighborhoods most at risk of foreclosure, based on the Owner Vulnerability Index developed by UCLAs Center for Neighborhood Knowledge.
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What If I Have A Reverse Mortgage And Cant Afford My Property Taxes Or A Repayment Plan I Have
Normally, not paying your property taxes or repayment plan can put you in danger of foreclosure. For reverse mortgages backed by the federal government and HUD, foreclosures and post-foreclosure evictions were suspended through July 31, 2021. Most reverse mortgages are backed by the federal government and HUD.
If you are having trouble making your property tax payments or repayment plan payments and your servicer is threatening to put your loan into “due and payable status,” or if it is already in “due and payable status,” you can ask for a forbearance. Forbearance means your payments are not due until the end of the forbearance period. You have until to ask your reverse mortgage servicer for a forbearance. If you had your forbearance on or before June 30, 2020, your forbearance can last up to 18 months. If you got your forbearance after June 30, 2020, you can get up to a 12 month forbearance.
Call Legal Aid if your servicer is refusing to do this for you.
Federal Foreclosure Moratorium Ended On July 31 2021
The federal Coronavirus Aid, Relief, and Economic Security Act initially imposed a 60-day foreclosure moratorium for federally backed mortgage loans starting March 18, 2020.
“Federally backed mortgage loans” include:
- loans the Federal Housing Administration insures
- mortgages the U.S. Department of Veterans Affairs guarantees
- U.S. Department of Agriculture loans, and
This moratorium was extended many times during the COVID-19 pandemic but finally expired on July 31, 2021.
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Where To Look For Help
If you’re facing the possibility of foreclosure today or at the end of a moratorium or forbearance period, or if you’re a tenant facing eviction, consider tapping the resources below for information and assistance.
- The first step in pursuit of foreclosure relief should be to reach out to your lender or loan servicer . If you need help identifying your mortgage servicer, you can find it by searching the Mortgage Electronic Registration Systems online database.
- Contact a HUD housing counselor. HUD can refer you to a local counselor for free advice on how to avoid foreclosure.
- Consult an attorney with housing expertise. If you can’t afford to hire one, look for help at the website of the Legal Services Corporation, a nonprofit that funds local and regional legal aid organizations, or at LawHelp.org, a referral site for private law firms that provide pro bono assistance in their communities.
- Check your state’s housing finance agency for guidance on foreclosure-prevention measures that may apply to you. You can find yours using this directory, maintained by the National Council of State Housing Agencies.
- MakingHomeAffordable.gov, the website set up to help homeowners after the 2008 housing crash, offers good advice and resources for avoiding foreclosure.
- Nonprofit housing advocacy organizations such as the Homeownership Preservation Foundation and NeighborWorks America offer advice and support for homeowners trying to avoid foreclosure.
Your Loss Mitigation Rights In A Foreclosure
Under federal mortgage servicing laws, the servicer must contact, or attempt to contact, you by phone to discuss loss mitigation options no later than 36 days after you miss a payment and again within 36 days after each subsequent delinquency. No later than 45 days after missing a payment, the servicer has to inform you in writing about loss mitigation options that might be available and appoint personnel to help you try to work out a way to avoid foreclosure. A few exceptions are in place for some of these requirements, though, like if you’ve filed bankruptcy or asked the servicer not to contact you pursuant to the Fair Debt Collection Practices Act.
Also, the servicer usually can’t officially begin a foreclosureuntil you’re more than 120 days past due on payments. This preforeclosure period should provide you with ample opportunity to submit a loss mitigation application to the servicer.
State law might provide you with even more loss mitigation and preforeclosure protections. Check out our Summary of State Foreclosure Laws and talk to a local foreclosure lawyer to learn more about your state’s laws.
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How Do I Know If My Mortgage Qualifies For Federal Covid
Fannie Mae: You can check to see if you have a Fannie Mae loan at www.knowyouroptions.com/loanlookup or call 800-2FANNIE .
Freddie Mac: You can check to see if you have a Freddie Mac loan at or call or call 800-FREDDIE .
Federal Housing Administration: The FHA is a program under the Department of Housing and Urban Development, so you likely have an FHA loan if your loan statement mentions HUD. You can look up your lender or servicer on the Department of Housing and Urban Development’s site at to see if your loan servicer is in the FHA list.
Others: If your loan statement does not make it clear whether any of the qualifying federal agencies have an interest in your loan, contact your loan servicer.
Will Getting Forbearance Hurt My Credit
Getting forbearance under federal COVID-19 protections should not hurt your credit rating. Under these protections:
- If you are current on payments and get forbearance, your credit report will show that you remain current until forbearance ends.
- If you are delinquent and get forbearance, your credit report will show that you remain at the same level of delinquency until you catch up on payments or forbearance ends. For example, if you are 30 days late and you get forbearance, your credit report will show you as 30 days late until you catch up or forbearance ends.
- If you are behind on payments but catch up during your forbearance period, then your credit report should update to reflect your account status as current.
Although forbearance does not hurt your credit score, there will still be a note on your credit report that says you received forbearance. This could impact your ability to refinance in the future.
Even if you are protected, be sure to check your credit report often to make sure that it is accurate. Transunion, Experian, and Equifax will all provide free weekly credit reports through April 2021.
For more information about forbearance and credit reporting under the CARES Act, see Enforcing the CARES Act Credit Reporting Protections from the National Consumer Law Center.
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