The arrival of foreclosure paperwork from the bank is the final straw for a family that is on the brink of financial ruin. Either through short-term financial woes or loss of employment, losing your home has a devastating effect.
While borrowers might be able to apply for assistance it is imperative to understand how the foreclosure process works in your state. For example in Maryland, the Notice of Intent(NOI), must be sent by certified mail at least 45 days BEFORE, filing it in court. Consequently, it is important to keep in mind that the NOI is not the foreclosure paperwork. It is a warning that the mortgage company can file to reclaim the property in court if swift action is not taken.
The NOI might also include paperwork for homeowners who are interested in working with their lenders. This is called the Mitigation of Loss application. The paperwork must be filled out in its entirety and sent back before remedial actions will be considered.
From there the process continues to the courts. The very first filing is called the Complaint to Foreclosure. It may also be called the Order to Docket or Notice of Foreclosure Action. This can only be done after 90 days if the first missed payment. Or 120 if the loan is federally backed.
While this is happening there other actions taking place as well. Your mortgage lender will review the Mitigation of Loss application and determine if you are eligible or worthy of granting assistance to. It is important to keep an eye out as any communication from the mortgage holder will mailed or hand delivered. If they decide that the borrower is worth helping, foreclosure procedures will be placed on hold in lieu of negotiations. If not then the process will continue. However, there are steps that be taken that may turn the tide.
1. Speak with your bank/lender
In most cases it really is in the banks best interest to talk with you about your current mortgage. They may be willing to enter into a forbearance agreement. This is where they agree to “hold off” on foreclosure proceedings to allow additional time to make up the missing payments. However, the loan amount may still accrue interest. This plus the missing amount must be paid by the time the forbearance period ends, or risk going into foreclosure.
Refinancing may be another option the bank/lender is willing to grant. Especially, if the borrower is employed and the financial issues are short term. By working with the current lender, it is possible to avoid the additional fees that were assessed during the initial mortgage process, such as inspections, title searches, appraisals, etc.
2. Foreclosure Mediation
This happens if the lender believes there is no other option other than to proceed with the process of foreclosure and eviction. Both the lender and the borrower will meet with an administrative law judge to discuss what terms can be offered to stop the pending foreclosure process. To qualify the homeowner must be living on the property in order to be considered for mediation.
Keep in mind that the main purpose of the mediation is to find an alternative to the foreclosure. In order to help the mediation go smoothly, homeowners should bring all available documents to the meeting. If an agreement can be reached, then the home may be saved.
Homeowners typically receive about 25 days after the Final Mitigation of Loss is completed to request mediation. Failure to request or appear at the mediation will result in the foreclosure moving forward.
3. Apply for a loan
Provided that you are currently employed with a decent credit rating you may qualify for a loan. There are several options available that allow borrowers to consolidate their debt into one lump sum. Thereby allowing them to get a little breathing room and catch up on overdue payments.
Your current lender may offer this option, as it is in their best interest to have borrowers that can make payments. Again this will depend on current proof of income and credit worthiness.
4. Seek additional assistance
There are many programs available on local, state and on federal levels designed to assist homeowners in staying in their homes.
Seek experts in foreclosure law in your local area. For example, we recommend our friends at Oklahoma Foreclosure Attorney to our readers in Oklahoma.
Charities or Churches- Typically a charity can extend a helping hand only if they have the donations on hand to be able to assist. While worth looking into, do not hold your breath on receiving financial aid from them. Churches on the other hand, are generally a members only club. However, they might be willing to help non-members to a certain degree. Speak to the pastor or bishop to see what assistance may be available. Keep in mind some organizations will only issue payments on the basis of a loan.
Still being employed may mean that you could qualify for Home Affordable Modification (HMA)programs. Federally backed loans such as FHA or VA, have their own programs. Also mortgages under Fannie Mae or Freddie Mac will have assistance programs as well.
It is important to remember that each state has its own framework on how lenders can start the foreclosure process. Consequently, you may have more or less time to, make payments or access additional resources to put a stop to it. In addition federal loans come with their own parameters. Understanding where you fall in the process is essential in what resources that may be available.
Communication is the key. It may be possible to stave of foreclosure with early and continued communication with the lender. Also be sure to take early action on items suggested by the lending company. Remember, it is better for them that the payments continue to be made. It may also make you look better to the lender to be an active participant in the process if the situation comes down to mediation.
Should the process end in the borrowers favor, there are additional steps and resources that may help get them back on firm financial footing. Consider credit counseling or even family budgeting classes. All states offer family services benefits and those free or reduced cost classes are usually part of the available options.
Foreclosure may not have to happen. However, if it does there are resources in place to assist, if found soon enough.