What Happens If They Foreclose On My House – If you can’t keep up with your mortgage payments, the prospect of foreclosure — and possibly losing your home — can be terrifying. However, foreclosure is a strict legal process and you have certain rights based on state law along with the mortgage documents you signed.
Knowing your rights can help you navigate the foreclosure process easily or avoid it if your creditor violates the terms of the foreclosure. Here’s what you need to know.
What Happens If They Foreclose On My House
Simply put, foreclosure is a legal process that allows a creditor to recover unpaid loan balances by taking possession and selling the property pledged as collateral. Non-payment usually results in default, but it can also occur if the borrower does not meet certain conditions in the mortgage agreement.
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Your loan provider is the company that manages your mortgage account and may not be the company that originated or currently owns the loan. The loan provider must contact you (or attempt to) by phone to discuss “loss mitigation” 36 days after you miss the first payment—and 36 days after the next missed payment. Loss mitigation is a process that you and your lender work together to try and prevent.
Within 45 days of payment, your servicer must notify you in writing of loss mitigation options and refer you to someone who can help you avoid foreclosure. In general, your provider can’t start planning until you’re at least 120 days pregnant.
Foreclosure notices are sent by mail. If you don’t have a mortgage, read the letter carefully, and make sure you get a certified or registered letter.
Mortgage agreements usually contain a provision that requires the lender to send you a written notice called a “default letter” to tell you when you are in default. The violation letter must contain:
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To cure the default and avoid foreclosure, you must pay the entire amount due by the due date shown on the letter, plus back interest, late fees and penalties. If you don’t—and you don’t pursue many other options—the foreclosure process will begin. In general, you must pay at least 120 days before foreclosure can begin, so your lender will send you a letter of intent within 90 days.
You have the right to view pending foreclosures regardless of where you live. If it is a judicial foreclosure, you will receive a complaint and summons to notify you that the foreclosure has begun. If the seizure is not judicial, you may receive two notices:
If you do not receive proper notice under your state law, you may have a defense against foreclosure. While this doesn’t mean you can avoid foreclosure, it may force the service provider to issue a new notice and start the foreclosure process all over again. This can potentially give you plenty of time to catch up on payments or arrange other options. An FDCPA confirmation notice may be included with the violation letter.
Discrimination in mortgage lending is illegal. If you think you have been discriminated against based on your race, religion, gender, marital status, use of public assistance, national origin, disability or age, there are steps you can take. One such step is to file a report with the Consumer Financial Protection Bureau or the US Department of Housing and Urban Development (HUD).
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Depending on state law, you may be able to foreclose if you pay a deposit to renew your loan, including fees and charges. After that, you continue with the normal payment.
Generally, you must repay the loan by a certain deadline, such as 5:00 p.m. On the last business day before the property is sold.
Your mortgage agreement may also give you the right to repayment. Check your mortgage or deed of trust for a section known as a reinstatement clause, titled “Borrower’s Right to Reinstate After Foreclosure” (or similar language) to find out if and how you can repay your loan. can restore
If you do not have the right to refinance according to state law or the mortgage agreement, the lender may allow you to refinance after considering your request. If the debtor refuses, you can ask the court to allow recovery. Generally, judges prefer to avoid foreclosure if you have the money to get the loan.
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All states allow lenders to pay off the loan (including fees and charges) and “trade in” the property immediately before selling it. Some states also allow borrowers to buy back properties after a foreclosure sale. To get the property, you must pay the entire balance before the foreclosure sale or return it to the person or entity who purchased the property at the foreclosure sale, depending on the circumstances.
Some states, counties and cities offer property owners the right to participate in arbitration. In foreclosure mediation, you meet with the borrower (or servicer) and a neutral mediator to discuss options such as a loan modification, short sale, repayment plan or action in lieu of foreclosure.
Homeowners are given rights and protections to help them in the event of foreclosure. Most lenders will create a plan before closing on your home.
No matter where you live, you have the right to challenge it immediately in court. You can join an existing foreclosure claim if it is a judicial foreclosure. However, if the possession is extrajudicial, you must file a lawsuit. In general, if you think the server is at fault or breaking the law, it may be appropriate to challenge it immediately.
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If the property sells at a foreclosure sale for more than you owe (including fees, charges and liens on the property), you are entitled to additional proceeds – called the surplus. Of course, depending on state law, if the foreclosure sale does not cover the debt, you may receive a lower penalty.
The Fair Debt Collection Practices Act (FDCPA) is a federal law that covers when, how, and how often third-party debt collectors can contact debtors. The FDCPA may apply to a foreclosure, depending on whether it is judicial or non-judicial:
Foreclosure occurs when your mortgage payments are 120 days or more late. If you default on your mortgage, the bank (or lender) will begin a legal process called foreclosure. You can lose your home if you can’t foreclose.
If your home is in foreclosure, it means your mortgage lender has issued a pending foreclosure notice and you are at risk of losing your home. When the home is pre-owned, you can work with your lender and other agencies to try to keep your home.
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The best way to protect your home from foreclosure is to pay your mortgage bills on time. If you start having trouble paying your bills, contact your lender right away and ask if they will help you. Most loan providers do not want to foreclose on their home immediately and often try to help borrowers.
Your legal rights depend on state law, your mortgage agreement and your situation. To learn more about your rights, consult with a local foreclosure attorney who can help you navigate the process and ensure your rights are protected.
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Written by Jeanne Lee Written by Jeanne LeeArrow Senior Contributing Writer Jeanne Lee writes about mortgages, personal finance and enjoys finding ways for people to hack their finances. Jean Lee
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