What’s the scariest word to a homeowner?
Even if you don’t fully understand what it means, you know it is something terrible that you want to avoid at all costs. If it happens to you, we understand how scary and stressful it can be. But, don’t worry, you have options. The best thing you can do is learn about the situation you are facing and what you can do to brighten your prospects.
The first step is to keep reading this article. Please note that the following is not legal advice but simply information that will help you better understand foreclosure.
Learning About Foreclosure
Part of what makes foreclosure so scary is that people don’t really know exactly what it is. Nor are they sure what will happen to them during and after the process. The unknown element 0makes it seem scarier than it really is. This article will answer several common questions about foreclosure, including:
- What is foreclosure?
- What is the foreclosure process like?
- Can you sell when you are in foreclosure?
- How can you stop foreclosure?
- How long does it take to sell a house in foreclosure?
You might not walk away an expert, but by the time you finish this article, you should have a better idea of how to handle your situation. So let’s get started!
What Is Foreclosure?
When you take out a loan, the lender is expecting that you will pay back the money you borrowed with interest. For mortgages, the house and property become automatic collateral. This means the lender has the right to take possession of the home if you stop making your
They then sell the home and take the money as recompense for the mortgage you defaulted on. If they cannot sell the home for enough to cover the remaining amount on your loan, you will likely be on the hook for paying the difference. Thus, “letting the house go” as you might have heard it called, isn’t always the best financial option. Furthermore, there can be up to a 7-year waiting period before you become eligible to take out a Fannie Mae loan again after a foreclosure.
What Is the Foreclosure Process Like?
Foreclosure is this whole process. It starts with you missing a couple of payments and finishes with your home being sold for whatever price can be got at a public auction. Lenders are within their rights to begin legal proceedings once you miss 4 payments. In other words, if you realize you are going to have trouble making your payments, you should take action immediately to look for a valid alternative option to foreclosure for you.
The Six Stages of Foreclosure
Foreclosure works a little differently depending on where you live. However, there are six basic stages of foreclosure that apply in most cases.
Stage 1: Missing Payments
What is considered payment default? The definition varies slightly among lenders, but technically, once you’ve missed one payment, payment default occurs. To make things simple, most mortgage payments are due at the beginning of the month. Most lenders offer a 15-day grace period after the due date. If the payment is not made during this period, the lender will typically mail a notice or call you to talk about the missed payment. At this point, they may also charge a late fee.
If you miss two months of payments, you can generally expect to get a phone call from your lender about the default. Lenders are typically just as eager as you to avoid the foreclosure process, so they will often accept even one month’s payment to stall the process. However, if time goes on and you miss a third payment, you will probably get a demand letter, also called a notice to accelerate. This is your official notice that the account is delinquent and you have 30 days to pay what you owe.
At this point, things can go one of three ways. You can bring the account current, negotiate with the lender to modify the payment terms, or the foreclosure process will continue until the property is sold (either by you or the lender).
Stage 2: Providing a Notice of Default
The next stage begins with the notice of default. This is when you have 30 days to bring the account current before legal foreclosure proceedings begin. Generally, lenders won’t send this notice until you are 90 days past due (3 missed payments).
Stage 3: Notice of Sale
The foreclosure process is in full swing once you reach this stage. The process works differently depending on which state you live in but there are two basic types of foreclosure. Nonjudicial foreclosure is not supervised by a court. The foreclosing party simply files the required paperwork to begin the process. Without the court’s involvement, this type of foreclosure can move along pretty quickly. Judicial foreclosure is slower. A court must approve each step of the process, which can slow things down considerably as you might imagine.
Once this paperwork has been filed, the notice of sale will be recorded with the county in which the property is located. This sale will take place at a public auction and the minimum opening bid as well as at the time and location of the sale must be included. How long this stage lasts varies depending on the state and other factors. But keep in mind that it can be relatively quick — only 2 or 3 months. This can be stressful for a frantic homeowner trying to get current on their payments. However, at any point in this process, you can stop it by bringing the account current or negotiating another payment arrangement.
Stage 4: The Sale
The next stage is the sale itself. The property will go to a public auction where buyers will duke it out to buy your home. The lender calculates a minimum bid based on your outstanding balance, liens, unpaid taxes, or sales costs. Once a buyer purchases the property at the auction, they decide when the homeowner must vacate the premises. Technically, they are entitled to immediate possession, but many buyers will offer the homeowner a few days to move out.
Stage 5: REO Asset
What happens if no one buys the property at the auction? Don’t rejoice just yet, that doesn’t mean you’ll get more time to bring the mortgage current. Instead, the lender, usually the bank, becomes the owner, which now makes the property a eal Estate-Owned asset or a “bank-owned property” as it is commonly known.
The bank/lender will then try to sell the property on their own. Typically, this means lowering the price to more readily entice buyers. This generally means they won’t include liens, unpaid taxes, or other expenses in the final sale price. Unfortunately for you, if the bank/lender is unable to cover all those costs with the money from the sale, you could still be responsible for paying back that money. So, not only will you lose whatever equity you’ve built up in the home, but you’ll still be paying for it. It’s starting to make sense why homeowners fear the word “foreclosure” isn’t it?
Stage 6: Eviction
When the auction ends, regardless of the outcome, you’ll have to vacate the property if you haven’t already done so. Typically, you’ll receive an eviction notice demanding that you leave immediately. Even so, the-notice generally will grant you a few days to get your stuff together and move out. Once this time period has passed, local law enforcement will pay a visit. If you or your stuff is still there, you will be removed and your stuff will be impounded.
Can You Sell When You Are in Foreclosure?
Yes! One of the best ways to avoid reaching the end of the foreclosure process is to sell your home first. We here at Mrs. Property Solutions have helped many people out of this tight spot by buying their homes. Because we pay for houses in cash, we can close transactions much faster than a typical real estate sale with an agent.
We don’t have to ask a bank for permission nor wait a few weeks for approval. Thus, we can make an offer on your house and buy it within a week! We also have a creative numbers guy whose specialty is finding solutions that help you out as well. In other words, we endeavor to ensure that you get enough from the sale to cover all the costs. That way you won’t still be stuck paying off a portion of your debt on a home you no longer own.
Struggling to move because you don’t have the cash to do it? We can help with that too! We often offer a certain amount upfront for that very purpose.
How Can You Stop Foreclosure?
You basically have two options for stopping foreclosure. Either you can get the money to bring the mortgage current, or you can sell the home.
1.) Catch Up on Payments
There are a few things you can try to catch up on payments. Start by talking with the bank/lender and explaining your financial situation. Lenders generally want to avoid foreclosure as well so they are often willing to work with you.
2.) Restructure the Loan
They may restructure the loan and allow you to pay off the missed payments over time. Others might allow you to reduce the interest rate to bring your monthly obligation down.
Another option is forbearance. This means the bank/lender will reduce or suspend payments temporarily until your short-term financial difficulties are resolved. For example, starting a new job.
4.) Selling a house with an Agent
If none of that works, you may want to sell your house. Selling a house the traditional way with a real estate agent is a viable option, but may be tricky. Selling a house is expensive and if you don’t have enough equity in the home to cover the closing costs, you could still be paying out of pocket.
5.) Short Sale
What if the sale price must be less than your outstanding balance? Don’t despair just yet! Your lender may be willing to let you do a short sale. This means they’ll agree to take a lower amount than what you owe to avoid the hassle and expense of foreclosing.
How Long Does it Take to Sell a House in Foreclosure?
Selling a house is a fantastic option for getting out of your troubles. The only problem is how long it takes. The foreclosure process tends to be drawn-out, but so is selling a house the traditional way. Your realtor will put the home on the market at a competitive price, hoping to attract buyers quickly. However, you never know how long you will have to wait before someone makes an offer.
Once you get an offer, there are usually a few rounds of negotiations. Since you are such a motivated seller, these negotiations may be short, but they’ll still take time. Plus, if you aren’t able to please the buyer, such as with making repairs or other concessions, they may move on and you’ll have to wait for a new offer.
Once you accept an offer, there is still a waiting period. It typically takes at least 30 days to close a real estate deal. Most of this time is eaten up by the buyer’s lender. Real estate deals also fall through often at this stage because the buyer can’t get financing. When faced with this situation, trying to sell your house on the open market is quite stressful.
Selling A House The Easy Way
By far, the easiest, fastest, and surest way of selling a house to avoid foreclosure is to sell your house to us! We pay cash for houses to ensure a quick sale. With no pesky lenders to worry about, there’s no waiting around for closing or holding your breath and wondering if they will approve the sale.
Plus, we buy the house as-is, which means you don’t have to worry about any expensive repairs. We cover all the closing costs and even give you cash upfront for moving expenses. Furthermore, we close on your schedule. There’s no better way to ease your mind when facing
Walk away with your credit intact, a great weight off your shoulders, and maybe even a little cash in your pocket if you had enough equity! Reach out to us here at Mrs. Property Solutions today to find out your options. Selling a house has never been this easy.