Foreclosures are to the real estate industry what repossessions are to the auto industry. It is the taking back of property by a lender when a borrower defaults on a loan. Since foreclosure laws vary from state to state, the time between first notice and public auction will also vary. Even though each state has different laws governing foreclosures, there are simple steps that a person can take to slow down or even stop the process of foreclosure before it’s too late:
Learn the rules: If you feel that foreclosure may be in your future, it would be wise to educate yourself on foreclosure laws in your state. With the power of the Internet a person can educate themselves on the foreclosure process in their state in a few hours or less. Educating yourself to the rules will help you know what to expect from the foreclosure process, can show you what questions to ask of lenders and attorneys, and can instruct you on what information should be gathered before entering negotiations with lenders.
Learn your rights: Both parties of a mortgage contract have certain rights under the law. These rights can’t be taken away. For example, some states offer homeowners the “Right of Redemption”. This allows a homeowner to regain ownership of their house after foreclosure by paying the lender the foreclosed sale price plus a statutory interest rate. An attorney that practices law in the state of the foreclosure would be the best reference for homeowner rights during a foreclosure, but any licensed attorney would be qualified to explain homeowner rights or explain to the homeowner where to find the answers they need.
Estimate a new payment: If the lender is willing to modify the terms of the original mortgage for a lower monthly payment, the homeowner should have an idea of how low they would like that payment to be. If a homeowner can show a lender that they will be more likely to make their payments for the requested lower amount, the lender may be more likely to approve a monthly payment at or around the requested figure.
Let your partner know: Trying to hide an impending foreclosure from a spouse is perhaps the worst move any person can make. Not just because of the foreclosure, but because spouses have a way of being far less forgiving than lenders. When two people get married, the financial practices of each partner begin to have an impact on the credit scores of the other. A good spouse owes it to their significant other to explain what is going on so that they can formulate a plan together, and so that each partner can plan for their financial future.
Following these four simple steps will help ease the anxiety that can come with a foreclosure. While no person can guarantee the outcome of foreclosure attempts by lenders, many industry professionals agree that homeowners have much higher chances of foreclosure survival when they make conscious efforts to follow simple steps like the ones above.