You can't fix a problem you don't know you have, and foreclosure is a very serious problem indeed. Home loans are valuable investments for a lender, and you can bet that if you stop payment on yours, you will be hearing from them asking you where their money is and if you intend to catch up, and eventually telling you to get out so they can sell the property to someone else.
You probably assume that your lender is required to give you some kind of notice in writing before they kick you out, change the locks, and sell your furniture. You're right to assume that. This is not Vietnam, there are rules. You should get multiple notices related to the foreclosure process, such as:
Missed-Payment Notice
If you miss one payment, your lender may send you a missed-payment notice that tells you to make your payment soon to avoid action. Missing even one payment can negatively affect your credit, but will probably not start the foreclosure process. However, missed payments are the origin of all foreclosures. So, if you receive a missed-payment notice and do not take care of it, you can be sure that you will be hearing more from your lender.
Notice of Default
Typically, after more than one missed payment the lender will send you a notice of default. This is like Tony Soprano giving you a final warning that, if you don't pay now, he'll break your legs. Except your lender is much scarier than a mobster, because they can take your home legally.
Foreclosure Summons and Complaint Notice
If you didn't get on your bank's good side when they sent the previous letters, you will eventually be served a forelcosure Summons and Complaint. This means a lawsuit has been filed against you and the legal process has begun. Should you continue to ignore the legal documents, and do not file a response in the court, a sale date will be set and you will lose your home. If you want to keep your home or stay in it for as long as possible at this point, you should hire an experienced attorney to represent you.
You should receive many notices and warnings that tell you if your home is in danger of foreclosure, but sometimes mail doesn't get opened, or it falls behind the kitchen counter. And notices taped to the front door can be blown off by a strong breeze. If you're behind on your mortgage payments but unsure about whether or not you are in foreclosure, or where you are in the process, how do you find out?
- Call your lender: Your lender should be able to tell you if they have asssigned an attorney for your foreclosure. If they have not, you may be in pre-foreclosure.
- Go to your county's website: Many, but not all, counties are offering an online system to search for Civil and Chancery lawsuits. You can search your county's website for public records to help you find out if there is a lawsuit against you. The county website is not a substitute for legal advice, and you should always consult with an attorney if you do not understand what you find or don't find online.
- Check the newspaper: Lenders are required to run notices in your local newspaper if they are unable to locate you and send you the foreclosure summons personally. Your newspaper will also list upcoming foreclosure auctiions.
Things to Remember
There are two types of foreclosures, judicial, which requires foreclosures to go through court, and nonjudicial, which does not. As a homeowner, you have many more options if you live in a judicial foreclosure state. In judicial foreclosure, the lender must file a lawsuit in court and notify you by serving you with a summons and complaint. You must respond to the complaint within a certain period of time if you plan to contest the action.
Your lender didn't give you a mortgage because they wanted your family to have a place to call home. The lender wants to make a profit. They don't care that wages have been falling for American workers. If you stop making payments, you will be hearing from them. The way you hear from them differs depending on which state and jurisdiction you live in, but all states require some kind of formal notice be given to the homeowner. If you receive notice that something is not right with your mortgage, pay attention to it. You should be aware that, should you choose to ignore the missed payment, default, and foreclosure notices, you are likely to lose your home more quickly than if you acknowledge receipt and contest the action.
It's important to be proactive when facing something as life-altering as foreclosure. If foreclosure goes through, you and your family will be evicted from your home, and your credit will be negatively affected for years. If you want to keep your home, you will find that the services of a qualified attorney are very useful, and can help you file a loan modification application that, if successful, can bring your payments to an affordable level. But it's important to begin the effort to keep your home as early in the foreclosure process as possible. Even if you do not wish to keep your home, an attorney who understands the process can assist you in taking action that gives you as much time in your home as possible before moving on.
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