Foreclosure is the legal process of taking away your real estate and selling it to someone else at an auction. It is a way to repossess real estate. But unlike a repossession, the right to foreclose is controlled by state law, not by a contract. A Lender with either a mortgage or deed of trust can foreclose on real estate by following the state laws. Most often, the Lender financed the purchase of real estate. However, a Lender that made a “home equity line of credit” also can foreclose.
Your Home Owners Association and the County Tax authority can and will also foreclose and sell your property by following state law. In addition, IRS can also foreclose on your property. Finally, other creditors can also foreclose and force a sale of your property unless a “Homestead protects it.”
Although your Lender is not required to work with you to prevent a foreclosure, if you have a good history of paying your mortgage in the past, your Lender might work with you if you contact them as soon as you start missing payments.
The rule is “money talks!” Offer a cash down payment and commit to future payments. Be able to explain how you got behind and why things are different now. Don’t lie because you will never get a second chance with your Lender if you are not completely honest. Once your Lender goes to the trouble of recording a “Notice of Default” against you, most will refuse to take any partial payment from you and will require you to pay the entire past due amount.
When someone defaults on their mortgage, they won’t feel ignored. Realtors will contact you to sell your house immediately. You will receive telephone calls, letters, and even postcards with offers of help, often from those looking to take advantage of you. Beware of high-pressure offers of assistance, especially from those with no professional qualifications.
It would be wonderful if you could stop a foreclosure with a mortgage modification program. But unfortunately, many lenders will waste your time asking you to get past unrealistic barriers.
At A Fresh Start Law, we have experience negotiating with creditors, including mortgage companies. So our team can contact your Lender to see if they will work with you “in good faith” or if they are playing games and wasting your time.
If negotiations fail, A Fresh Start Law has one final way to stop a foreclosure –Chapter 13 Bankruptcy.
In Chapter 13, you and your attorney offer a Plan to the Court that lets you resume making ongoing mortgage payments. Your Plan will also describe how you will pay off the unpaid portion of your mortgage. A Fresh Start Law can customize a Chapter 13 Plan to work with your unique circumstances. Each one is different. The Plan will let you take up to five years to pay off the past due mortgage payments. Loopholes are available in Bankruptcy law to stop late fees. You could also eliminate many other debts, giving you more money to save your property from foreclosure.