Q.
What Happens When I Miss My Mortgage Payments? Top
Foreclosure may occur. This is the legal means that
your lender can use to repossess (take over) your home. If
this happens, you must move out of your house. If your property
is worth less than the total amount you owe on your mortgage
loan, a deficiency judgment could be pursued. If that happens,
you not only lose your home, you also would owe an additional
amount. Both foreclosures and deficiency judgments could seriously
affect your ability to qualify for credit in the future. So
you should avoid foreclosure if possible.
Q.
How does the foreclosure process work? Top
In California, a lender can start the foreclosure
process as early as 15 days of your fist late payment, but
since most lenders want to avoid foreclosing on you and would
rather you pay the note, normally they start the process
when you’re about 30-90 days behind on your payments.
Foreclosure proceedings vary by lenders, so please check with
your lender for details.
1. Notice Of Default (NOD). This is the first
legal step that your lender takes to notify you that they
are trying to collect the debt or otherwise auctioning off
your home, by filing a NOD which is recorded with the County
Recorders office and assigning a Trustee (usually a Title
Company) to handle the auction. Call us and we could help
you avoid foreclosure at this stage.
2. Notice Of Trustees Sale (NOTS). 90 days
after the NOD is filed, if the arrears (back payments, interest and
other fees) are still not paid off, a NOTS will be filed,
announcing the date of the public auction of your house. We
may still be able to help you avoid foreclosure at this stage,
but you are running out of time and options. If you are near
this stage you should contact us IMMEDIATELY.
3. Trustees Sale. This normally is about
21 days after the NOTS was filed. The highest bidder
will take possession of your house and you will have
to vacate your home. Until 5 days prior
to this date you can still STOP FORECLOSURE, however you have
very limited options and running out of time. Call us
BEFORE you get to this stage. you may still have a chance.
Q. How do I know who my lender
is and how to contact them? Top
Look at your monthly mortgage coupons or billing statements
for the name of your lender and contact information.
Q.
I do not remember what type of mortgage loan I have, how can
I find this information? Top
Look on the original mortgage documents or call your
mortgage lender.
Q.
What type of information should I have ready to discuss with
a lender? Top
Typical information requested by lenders in a workout
package include:
1. Brief explanation of circumstances
2. Recent income documents
3. List of household expenses
Q.
What Are My Alternatives? Top
We may be able to assist you with these options and more.
Call us today and we can discuss it in details. You may be
considered for the following:
Special Forbearance. Your lender may be able
to arrange a repayment plan based on your financial situation
and may even provide for a temporary reduction or suspension
of your payments. You may qualify for this if you have recently
experienced a reduction in income or an increase in living
expenses. You must furnish information to your lender to show
that you would be able to meet the requirements of the new
payment plan.
Mortgage Modification. You may be able to
refinance the debt and/or extend the term of your mortgage
loan. This may help you catch up by reducing the monthly payments
to a more affordable level. You may qualify if you have recovered
from a financial problem and can afford the new payment amount.
You can use our numerous resources to access reputable lenders
who may be able to refinance your loan to an affordable amount.
Partial Claim. Your lender may be able to
work with you to obtain a one-time payment from the FHA-Insurance
fund to bring your mortgage current.
You may qualify if:
1. your loan is at least 4 months delinquent but no more than
12 months delinquent;
2. you are able to begin making full mortgage payments.
When your lender files a Partial Claim, the U.S. Department
of Housing and Urban Development will pay your lender the
amount necessary to bring your mortgage current. You must
execute a Promissory Note, and a Lien will be placed on your
property until the Promissory Note is paid in full.
The Promissory Note is interest-free and is due when you pay
off the first mortgage or when you sell the property.
Short Sale (or Short Pay). This will allow you
to avoid foreclosure by selling your property for an amount
less than the amount necessary to pay off your mortgage loan.
This Option may have Tax Ramifications for you, so make sure
to speak to your tax adviser prior to exercising this option.
You may qualify if:
1. the loan is at least 2 months delinquent;
2. you are able to sell your house within 3 to 5 months;
3. and a new appraisal (that your lender will obtain) shows
that the value of your home meets HUD program guidelines.
Deed-in-lieu of foreclosure. As a last resort,
you may be able to voluntarily "give back" your property to
the lender. This won't save your house, but it is not as damaging
to your credit rating as a foreclosure.
You may qualify if:
1. you are in default and don't qualify for any of the other
options;
2. your attempts at selling the house before foreclosure were
unsuccessful;
3. and you don't have another FHA mortgage in default.
You should consult with an attorney and/or
a financial adviser before acting upon any information or suggestion
you receive from anyone in regards to your homeownership, such
as your tax consequences. We are not attorneys nor lenders
and the information presented here are solely for educational
purposes.
