In fact, what happens after foreclosure involves several factors completely within your control. In fact, there are many ways to get through a foreclosure and become a homeowner again in the future. None of the following content should be taken as legal advice, but this article describes the process of foreclosure and how someone can come out on the other side with relatively good prospects.
Foreclosure is a legal process that requires several steps before your home may be seized. When a mortgage borrower fails to meet the terms of their mortgage agreement, it goes into default.
More often than not, however, default occurs when a homeowner fails to pay his or her mortgage for several months. If a lender believes you have defaulted on your mortgage, it must provide you with notice. This notice is a legal document that must precede a foreclosure action and meet certain requirements to be valid. Several days may be provided to allow the occupants sufficient time to leave and remove any personal belongings.
Then, typically, the local sheriff or law enforcement will visit the property and remove them and impound any remaining belongings. Mortgage lending discrimination is illegal.
If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. As part of legislation providing relief from the COVID pandemic, borrowers may be able to avoid foreclosure if their loans are backed by the federal government—getting up to 12 months in forbearance if you are just not applying for initial forbearance. If your mortgage is backed by Fannie Mae or Freddie Mac, there is currently no deadline to apply for initial forbearance.
Throughout the foreclosure process, many lenders will attempt to make arrangements for the borrower to get caught up on the loan and avoid foreclosure.
If there is a chance the borrower can catch up on payments—for instance, they just started a new job following a period of unemployment—it is worth speaking to the lender in hopes of making arrangements or modifying the current loan. Department of Housing and Urban Development.
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However, you should watch out for mortgage scammers that prey on desperate homeowners. Make sure anyone you talk to is calling from a number you can verify. To find a legitimate housing counselor, you can visit the U. A foreclosure is a severely negative credit event, knocking off points or more from your credit score, according to FICO. Additionally, it stays on your credit report for seven years.
The missed payments prior to the foreclosure will also have a damaging effect on your credit. Because missed payments top the list of negative events, your credit score will suffer before the foreclosure process even begins.
Natalie Campisi is a Los Angeles-based reporter who covers mortgages and housing news for Forbes Advisor. Previously, she was the senior mortgage reporter and analyst for Bankrate. Select Region. United States. United Kingdom. Natalie Campisi. Forbes Advisor Staff. Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn't affect our editors' opinions or evaluations.
What Is Foreclosure? In a judicial foreclosure, the lender files a lawsuit to initiate a foreclosure. The borrower goes to court to fight the lawsuit; if they lose the house will go into foreclosure and can be sold at auction. Non-judicial foreclosures rely on power-of-sale clauses in the mortgage or deeds of trust to recoup the balance owed if the borrowers stop making payments.
There is no court hearing, and the process generally is faster than under a judicial foreclosure. The mortgage clause authorizes trustees who are appointed by the lender to sell the home to pay off the balance.
The lender is obliged to follow out-of-court steps laid out by the state and the mortgage agreement to begin the foreclosure process. When Does Foreclosure Begin? Foreclosure Timeline In both judicial and non-judicial states, the initial process is typically the same, beginning with your first late monthly mortgage payment.
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