When Does Foreclosure Start
Foreclosure begins when you head to court for a hearing on the lenders desire to be paid current or in full. After that, you have a time period when you can redeem the property by satisfying the entire balance due, along with associated fees, but if foreclosure proceeds without payment, the lender can potentially obtain title of the property, and the borrower must move out.
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How To Stop Property Tax Foreclosure
Once we can assess where you are in the process, we can understand the best way to stop property tax foreclosure for your situation. If youre facing forfeiture or property tax foreclosure you still have options to save your home: you can pay off all the owed taxes, or sell your home in order to stop property tax foreclosure.
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How Long Can I Stay In My House Payment Free
Usually, you can stay in your home until the foreclosure sale is concluded. Foreclosure is not a short process and entails a number of steps. In fact, if you decide to fight the matter in court, you can stay in your house until the matter is resolved and not make a single payment during that time.
However, that does not mean you will not have to pay attorney and courts costs after all is said and done. Nevertheless, as long as you are involved in the foreclosure process, you can stay inside your house
The Notice Of Trustee Sale 21 Day Doomsday Clock
The next document you receive is the Notice of Trustee Sale. This document will also be sent to you via regular mail and certified mail. Dont assume you can just not sign for the certified mail and somehow avoid the notice. This is foolish as there are several ways your lender can still send you your Notice of Trustee Sale if you dont respond to the certified letter.
It will also be posted on the property in a very conspicuous place so the occupants cant miss it. In California, this starts the final 21 day clock before your lender can officially sell your property. This document will also be recorded in public records as well and will include the date, time and location of the scheduled auction.
You may have heard of people living in homes for several years while they were in default. This is the exception, not the rule. Ive seen houses sold at auction within days of reaching the minimum 111 days. We have bought scores of houses at auction and I can tell you there seems to be no rhyme or reason as to when the lender chooses to actually sell your house.
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Ways To Stop A Foreclosure
Once youve missed 3 or more months of payments and are in default or in preforeclosure, your options for stopping the foreclosure process will depend on how far along you are and what your financial situation looks like. Its best to speak with your service or about options as soon as you know that youre going to miss payments so they can see what they can do to help you get back on track and possibly refinance to avoid foreclosure.
What Happens To Your Credit After Foreclosure
Homeowners facing foreclosure might also wonder how the process will affect their credit, even if they manage to stop the foreclosure process before its finalized.
It depends how the foreclosure is stopped, Richardson says. Credit scores are based on late payments, among other things. A loan modification and short sale will both stop late payments.
That said, your credit will repair faster on a short sale because you will be paid in full for less than the amount owed, Richardson says. Still, a short sale will leave you without a home, so its up to you to determine which option is the lesser of two evils.
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What You Need To Sign
If you are approved for this foreclosure prevention method, the lender will require that you sign certain documents. These documents include the following:
- A deed that transfers the ownership of the real estate to the lender
- An estoppel affidavit
- In some instances, a deed in lieu agreement may be included
The estoppel affidavit establishes the terms of the contract and will feature a provision that the homeowner is acting of his or her own free will. It might also contain a provision that states that the transaction covers the complete debt satisfactorily.
A deficiency in a deed in lieu of foreclosure agreement is the difference between the entire debt and the propertys fair market value. In most instances, completing a deed in lieu of foreclosure will release a borrower from all liability and obligations. California law protects homeowners from receiving a deficiency judgment from a lender, or seeking the difference of the fair market value and the amount owed. Nevertheless, you can still incur a tax liability for your forgiven debt.
Avoiding Deficiency judgments
If you decide to sell your house in a foreclosure sale, but you still owe a balance, that balance is considered a deficiency. Even if your house sells for the exact amount owed, a lender could still claim that you are deficient. He may want money owed for the costs associated with foreclosure.
Income tax liability for deficiencies
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How To Facilitate A Deed In Lieu Of Foreclosure
The application must be filled out in full and submitted with the following paperwork or information:
- A financial statement in questionnaire form that offers details about expenses and monthly income.
- Proof of income, if it applies
- The current or most recent tax returns
- Two recent bank statements for all your accounts
- A hardship statement or affidavit
The lender may ask that you attempt to sell your home first before he or she accepts a deed in lieu of foreclosure. The copy of the listing agreement will show that you have already taken this type of action.
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How To Avoid A Notice Of Default
If youve not received a notice of default, that doesnt mean your lender is ignoring missed payments. However, there remain ways at this point to avoid foreclosure and get back on track with your mortgage. Follow these steps to make payments as best you can, and communicate clearly with your lender.
File For Bankruptcy To Stop The Foreclosure
If a foreclosure sale is scheduled to occur in the next day or so, the best way to stop the sale immediately is by filing for bankruptcy.
The automatic stay will stop the foreclosure in its tracks. Once you file for bankruptcy, something called an “automatic stay” immediately goes into effect. The stay functions as an injunction prohibiting the bank from foreclosing on your home or otherwise trying to collect its debt. So, any foreclosure activity must be halted.
The bank may file a motion for relief from the stay. The bank will probably attempt to have the stay lifted by filing a motion seeking permission from the court to continue with the foreclosure. Even if the bankruptcy court grants this motion and allows the foreclosure to proceed, the foreclosure will be delayed at least a month or two. This should provide you with time to explore alternatives to foreclosure with your bank.
Learn What to Doand What Not to DoIf You’re Facing a Foreclosure
For tips on what to do, and what not to do, when facing a foreclosure, see Foreclosure Do’s and Don’ts.
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A Notice Of Default Begins The Process
The Notice of Default or NOD is the first phase of the foreclosure proceedings. The NOD in California is recorded after a borrower fails to meet the terms of the mortgage loan. Usually, the NOD timeframe spans 90 days before the lender takes the next foreclosure step.
At this juncture, the property is deemed to be in pre-foreclosure. The property owner receives a notice by mail with the estimated sale date. Usually, this notice is delivered after the homeowner has missed four months of payments.
When It Makes Sense To Keep Your House
It makes sense to keep your current home when you are only a couple payments behind. If you can streamline your debt through bankruptcy proceedings, you can begin anew and start making more affordable payments. You need to speak to a skilled foreclosure attorney or an attorney who is well versed in both foreclosure and bankruptcy laws.
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Make Monthly Mortgage Payments
Obviously, prioritizing your monthly mortgage payments is important. However, while most people who end up in foreclosure understand the importance of making those payments, they often simply dont have the funds to keep doing so.
This is why having an emergency savings account or other liquid assets is so important. If youre able to do so, saving up a few months worth of living expenses can go a long way in ensuring that if something bad happens, youll have some cash to keep yourself afloat for at least a little while.
If you lose your source of income, for example, this emergency money can give you enough time to find another job without having to worry about losing your home.
If your mortgage payment is starting to stretch your budget a little too thin, it might be a good idea to look into whether refinancing your mortgage would lower your monthly payments.
This can be a helpful solution for those who are still able to make payments on their mortgage but, due to a reduction in income, added household costs or a monthly payment increase on an adjustable-rate mortgage, are starting to feel overly burdened by their monthly housing payment.
Its also always a good idea to keep in frequent contact with your lender if you anticipate issues with making payments. In most cases, your lender would much rather work with you to find a solution that keeps you in your home rather than having to go through the process of foreclosure, which can be lengthy and expensive for them.
Talking To Experts For Foreclosure Help
Clearly, avoiding foreclosure is complicated, and there are potential pitfalls that the average person is ill-equipped to navigate by themselves. You may need a lawyer to employ the strategies suggested on this page. This is especially true if your case goes to court, but an attorney may be able to keep you out of a courtroom in the first place.
The U.S. Department of Housing and Urban Development has a list of counseling agencies in each state who can help you avoid foreclosure. You could be eligible for a special Making Home Affordable loan modification or refinance to lower your monthly payments and stay in your home. HUD has a search tool to help you find a HUD-approved counselor.
Nonprofit housing counseling agencies partnering with the federal government provide foreclosure prevention counseling services free of charge.
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Save Your Home With A Property Tax Loan
The good news is that a property tax loan may be able to save your home from foreclosure, but how soon can you get one? The answer depends on where you are in the foreclosure process, but most people who apply for a Johnson & Starr property tax loan can be approved within the same day of application.
A Johnson & Starr loan means no credit checks, no application fees, no home inspections, and no money due at closing. We understand your time is valuable, which is why we offer the option to come to you for the closing, so you dont have to worry about missing work.
Were here for you every step of the way. If you need to act fast to save your home, please dont hesitate to contact us by calling 800-203-9157 and one of our helpful team members will walk you through any questions you may have. If you decide to apply for a loan with us, you can count on our team to guide you through this process even after you close the loan. Were here to help.
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Refinance With A Hard Money Loan
Your lender may refuse to refinance your loan if it considers you to be a high-risk borrower. In this case, you can contact a private lender to refinance with a hard money loan to stop foreclosure. Such loans generally have astronomical interest rates and fees, but one could allow you to buy the time you need to avoid foreclosure.
Bankruptcy will usually not buy you enough time to catch up on your debts more often than not, it merely postpones the inevitable.
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If You Are Behind On Payments
Do notignore the problem. Open the letters from your lender or servicer and answer their phone calls. Be honest about your situation. The earlier you talk to your servicer, the better your chances of working together for a solution. If you fall behind and don’t take action, your lender will take steps to foreclose on your home. If that happens, you may lose your home and all of the money you have already invested in it.
File A Lawsuit To Stop The Foreclosure
If your bank is using a nonjudicial process to foreclose, where the foreclosure is completed outside of the court system, then you might be able to delay or stop the foreclosure by filing a lawsuit against the bank to challenge the foreclosure. You’ll need to include a motion for a temporary restraining order and preliminary injunction to enjoin a foreclosure sale while your claims are being litigated.
To prevail, you’ll need to prove to the satisfaction of the court that the foreclosure should not take place because, for example, the foreclosing bank:
- can’t prove it owns the promissory note
- didn’t act in compliance with state mediation requirements
- violated a state law, like a Homeowner Bill of Rights law
- didn’t follow all of the required steps in the foreclosure process , or
- made some other grievous error.
The downside to suing your bank is that if you’re unable to prove your case, you’ll only delay the foreclosure process, perhaps briefly. Lawsuits can be expensive and, if you have no reasonable basis for your claims, you could get stuck paying the bank’s court costs and attorneys’ fees.
Ask the Servicer to Postpone the Sale
If a foreclosure sale is at hand, you might consider asking the servicer to postpone it. Usually, the servicer won’t agree to reschedule a foreclosure sale, but it doesn’t hurt to ask.
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How Does The Foreclosure Process Work
Foreclosure becomes possible when your loan is in default, usually after one or more mortgage payments have been missed. At this point, the lender begins to see your property as a potential foreclosure, but it cant legally begin the process yet.
The time before a foreclosure can be initiatedfrom first missed payment until legal foreclosureis at least 120 days. You should use this time proactively to figure out how to stop the foreclosure, if possible.
Ideally, contact your lender about the situation before you miss even one paymentyoull have more options available at that point. Even if youre two or more payments behind, contacting the lender may help you avoid an actual foreclosure by giving you time to get caught back up or creating a payment plan.
If the 120 days have passed, the foreclosure process can look different, depending on where you live, but many states at that point still have ways to stop a sale or even cancel it if you can pay back what you owe in sufficient time. This time frame is known as the redemption period.
Discuss Options For Forbearance Or Loan Modification
Realistically, some financial obstacles create longer-term issues than just one missing payment. If you have a situation that means you might skip two or more payments, it is still best to talk to your lenderit doesn’t want the difficulties associated with repossessing your house. Your lender can review your situation and discuss options for either forbearance or loan modification.
In a loan modification, you might have longer to pay down your mortgages total balance in exchange for a more affordable monthly payment. With forbearance, you would get time, usually a few months, in which youre allowed to pay nothing, with all the missed payments due at the end of the forbearance.
Sometimes, just getting rid of the pressure to pay every month is enough to assess your whole financial picture and marshal the resources you have to keep your home.
There are companies that promise to help you out of foreclosure for a fee, but many of these could be a foreclosure rescue scam. Focus on speaking with a HUD-approved housing counselor or your lender/loan servicer first to understand your options.
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