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What to do if facing foreclosure

First off, don’t panic. It’s not the end of the world. A foreclosure can be handled satisfactorily, or even stopped, if you respond in a timely manner. What you do not want to do is ignore the letters or calls from your lender thinking that it’s not real or it will just go away on its own. You do have to take the necessary steps to get things back under control. Believe it or not, your lender wants to work with you. They don’t want to lose money by taking the property back. The longer you keep your property, the more money they make. It’s that simple. They stand ready to help in any way they can, to get you back in good standing. Here are a few things to keep in mind:

There are typically 6 Phases of a foreclosure

Phase 1 - Payment Default

A payment default occurs when a borrower has missed at least one mortgage payment. After missing the first payment, the lender will reach out by letter or telephone.

After the second month of missed payments, the lender will likely follow up by phone call. They may  still be willing to work with you to make arrangements for catching up on payments, which may include making just one payment to prevent falling further behind.

Once you go three months without making a payment, the lender generally sends a demand letter (or notice to accelerate) stating the amount in delinquency and that the borrower has 30 days to bring the mortgage current.

A mortgage in default can have three outcomes—return to good standing, be modified, or the property is repossessed or sold via foreclosure or voluntary surrender.

Phase 2 - Notice of Default

A notice of default (NOD) is sent after the fourth month of missed payments (90 days past due). This public notice gives the borrower 30 days to remedy past due payments before formally starting the foreclosure process.

Phase 3: Notice of Trustee’s Sale

Depending on the state, the process for initiating foreclosure is different. In some states, nonjudicial foreclosures can be done that only requires filing paperwork with the necessary court to start the process. With this, the foreclosure process can move rather quickly. Other states have judicial foreclosures, which require court approval for each step—meaning the process takes a bit longer.

Once forms are filed with the court or necessary approval is met, the lender's attorney or foreclosure trustee will schedule a sale of the property. A notice of trustee's sale (also known as a notice of sale) is then recorded in the county where the property is located—stating the specific time and location for the sale, as well as the minimum opening bid for the property.

Phase 4: Trustee’s Sale

The property is now placed for public auction and will be awarded to the highest bidder who meets all of the requirements. The lender (or firm representing the lender) will calculate an opening bid based on the value of the outstanding loan and any liens, unpaid taxes, and costs associated with the sale.

Once the highest bidder has been confirmed and the sale is completed, a trustee’s deed upon sale will be provided to the winning bidder. The property is then owned by the purchaser, who is entitled to immediate possession.

Phase 5: Real Estate Owned (REO)

The lender will set a minimum bid, which takes into account the appraised value of the property, the remaining amount due on the mortgage, any other liens, and attorney fees. If the property is not sold during the public auction, the lender will become the owner and attempt to sell the property through a broker or with the assistance of a real estate-owned (REO ) asset manager.

Phase 6: Eviction

As soon as the auction ends and a new owner is named—either the auction winner or the bank if the property is not sold—the borrowers are issued an order to evacuate if they are still living in the property. This eviction notice demands that any persons living in the house must vacate the premises immediately.

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.

The Bottom Line

Throughout the foreclosure process, many lenders will attempt to make arrangements for you to get caught up on the loan and avoid foreclosure. Things happen in life that we don’t always foresee. For instance, you lost your job and are just starting a new one. Maybe the unexpected death of a spouse causes a chain of events to take place, which causes you to miss some payments. It is worth at least speaking to the lender in hopes of making arrangements or modifying the current loan. If that doesn’t work, there are other options, such as: 

  • Filing bankruptcy - to give yourself more time to work with your lender (see a qualified bankruptcy attorney for more information)

  • Selling your property before its sale date 

Getting cash for your house doesn't have to involve the hassles of a traditional home sale. 

Think About This: You get to skip the process of finding a real estate agent, you can sell without making house repairs, no cleaning, and nothing to pay in commissions and fees... Sounds great, right?

Big and Small Properties understands that you're busy. You don't need a stressful home sale to add into the mix! Let us help alleviate the stress of selling your home, allowing you to focus on living and getting your life back in order. Our goal is to simplify your home sale so you can get paid quickly without any hassles.

If you want to talk about a Cash Offer for your property, contact Big and Small Properties at (877) 260-5566 and we’ll walk you through our simple process. The main thing to remember is that you must respond in a timely manner to avoid foreclosure and risk having this unfortunate situation show up on your credit for the next 10 years. Call Big and Small Properties at (877) 260-5566 TODAY!

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