Facing the Events in Run-Up to Possible Foreclosure – Consider your Options

Real estate markets are still in dire straits, and homeowners are still desperately waiting for the time when things finally get into positive territory. The overall state of the industry is still volatile and negative indicators are still the daily fare for a lot of homeowners and stakeholders.



Home inventories and interest rates remain high. Home values remain depressed and mortgage qualifications are rigid. Homeowners continue to struggle with their monthly amortization. You don’t have to be a rocket scientist to understand the overall state of real estate markets.



Credit counselors are being kept busy by concerned homeowners who are having difficulties keeping up with their monthly mortgage payments. Appointments are definitely up, and if only to consider what is in store for us in down the road, homeowners are well advised to dig deep into their trenches, as the situation will remain difficult for some time before we can even expect a positive reversal.



Here are some important variables that we have to be aware of when assessing the condition. Nearly 25% of the existing mortgages are up for reset this year and in the next 12 months. This means higher mortgage payments for literally millions of homeowners. This is another negative variable to an already tight financial position of most homeowners. Will this bear heavily on the difficult situation in real estate markets? Are we looking at more delinquencies and foreclosures? Conservative estimates by experts predict a minimal uptick in both variables for this year until the following year.



If you teetering on the edge of a foreclosure owing to your delinquencies in your monthly payments, or in danger of becoming one with the impending upward adjustment in the applicable rates of your mortgage, then it is important that you understand your position and what lies ahead. It is extremely important that you weigh your options before things get really serious. The important thing is for you to be proactive in the way you manage your finances. You have to act fast. By doing so, you will have more choices in trying to manage your financial future.



Consider the Timeline



• First 30 Days



Your financial woes will start to rear its ugly head as soon as you fail to make your monthly payment for the first time. In most cases, your lender will not contact you until you fail to pay the second monthly amortization. However, you have to be aware that most banks and mortgage companies will submit a negative report on this as well as subsequent delinquencies to credit bureaus. This means a lower credit score. In addition to this, you will also have to contend with late payment fees of about 5% for each missed monthly amortization.



• 90 Days After up to One Year



If you fail to straighten out you delinquencies and payments are made within this period, then expect the filing of notice of default by your bank or mortgage company. You will receive the appropriate notice informing you that the process of foreclosure will commence unless you settle your delinquencies.



How soon this action is initiated will entirely depend on your lender. There are some lenders that defer action if you closely coordinate with them and work some sort of a repayment plan. Unfortunately, there are some lenders that take a more aggressive approach and file such notices as soon as possible in order to protect their interest.



• 90 Days After Filing of Notice of Default



This is your threshold, and the overall complexion of the situation is now totally different. You are normally given 90 days from the filing of notice of default to pay the deficit. After this 90-day period, your lender may opt to send out the "notice of sale." This in effect sets the date of sale for the property.



Possible Options



There are several options that homeowners can consider to resolve the situation. Banks and mortgage companies usually allow homeowners to retain their original loan in exchange for full payment of unpaid monthly amortizations in addition to late fees and incidental legal charges. You may also halt the foreclosure proceedings if you file a lawsuit or apply for bankruptcy. However, you are still required to present a payment plan for the deficit on both instances.



You may also explore other options with your lender to cover the deficit. These include:



• Waiving or reducing your payments for a specified time frame.

• Establishing a payment plan for cover the deficit

• Adding the deficit to the loan principal