Laws And Procedures of The Foreclosure Process
Basically the foreclosure is a legal process by which a lender can get back the ownership of a home or a property because of the nonpayment of the mortgage loan. The homeowner who fails to make payments with time and full payments as it is specified by the mortgage loan agreement so these homeowners can be the subject for the foreclosure action. As well as the lenders should follow the specific legal procedures when they foreclose a home or property. Generally the foreclosure occurs when the owner of a property is not able to make principal or the interest payments on his or her loan typically when they are leading towards the property which is being seized and sold. Mostly people think that as soon as they receive the notice of the foreclosure they lost their house but it is not simply like this because the foreclosure process is the first step and it takes few months to unfold so by understanding the process of foreclosure homeowners can get control over the outcome.
Stages of foreclosure:-
It is not very difficult to understand the process of the foreclosure. There are many stages during which the homeowners have opportunity to bring out the loan current and to avoid from the foreclosure almost after three to six months of the missed payments the lenders orders a trustee to record a Notice of Record. By this notice the borrowers come to know that they are facing the foreclosure and they start the reinstatement period which particularly runs for the five days before the home is sell off.
Be realistic: – If the homeowner cannot afford to keep the home then he should sell it out. Homeowner should list the home with a respectable realtor who is familiar with the short sales. The process of short sale requires the approval of lender for the short sale. Homeowners should always ask for a waiver of deficiency from the lender.
Avoid rescue scams: – Homeowners are advised not to give money to any of the person who says that they can stop the foreclosure and can help the homeowner to get a loan modification. Homeowners should not sign any paperwork with they are not familiar.
Timeline of the foreclosure:-
- Day 2 to 36:- the deadline of the mortgage payment is on the 1st. If the mortgage is not paid on the first then it is considered lawless on the 2nd. If the payment is late by the borrower then the late charges are received from each of the missed payment. The lender or servicer should make a live contact with the homeowners who missed their payments so that they can inform the homeowners about the options of the loss if they missed the payments.
- Day 45:- The lender or servicer should assign a single point of the contact to the homeowners and provide them a written notification of the misconducting and loss reduction options.
- Five major servicers: – There are five major servicers who designate an agent to facilitate the negotiations and attend a meeting with the homeowners. These major servicers are bank of America, Chase, CitiMortgage, GMAC or Ally and Wells Fargo.
- During the Day 45 and during 121:- Homeowners can work with a lender to get a loan workout a modification or other options of loss reduction. If lender allows the homeowners to make the partial payment then he should make of it. But if homeowners cannot afford to make the payments then they should not workout the plan.
- Day 121:- if all of the attempts to resolve the default are unsuccessful and the hardship application is not received then the foreclosure process begins.
The non-judicial foreclosure occurs when a court action is not required under the state law. In some of states like California where deeds of trust are used. The documents of mortgage loan and deeds mostly contain language that gives the power to the lender to sell out the real estate if the mortgage payments are ceased. Most commonly it is called as a power to article. According to this foreclosure the lender should file a notice of default in the recorder office of the country where the property is locate and it should be 90 days before moving forward towards the non-judicial foreclosure process. After 90 days the lender should publish a notice of sale in the newspaper or at the public venues in the country where property is located for 14 days. This notice of sale has to contain a statement of the intent to the foreclosure, property address and also the name of the borrowers.
Judicial foreclosure is common in those states where deeds of trust are not used including New York. But this type of foreclosure is used in the California where deeds of trust do not contain any power of sale sections. In this type of foreclosure it is to be required that the lender o through legal proceedings in the court. As well as the lender should file a notice of the intent to foreclose for the purpose of opening a court proceedings. This document is known as a notice of pendency of action.