By: Matthew Hick
So you’ve been having a bad-luck streak in life lately. Without getting too specific, it just seems that no matter what circumstances brought you to it, the fact is that you cannot budget your money appropriately. At one point, you thought you could have fixed this problem. But ultimately, you could not. Now you are facing foreclosure. A million terrible and scary thoughts are flying through your mind. But the biggest question still remains: How can you resolve your problem? Let’s take a closer look at foreclosure and how you can work to better your situation.
There are two types of foreclosure. They are judicial and non-judicial. In a judicial foreclosure, the lender files a lawsuit against the borrower. If the borrower fails to answer this lawsuit, the lender will get the judgment by default. The lender will advertise notice of sale of the property in the newspaper for four to six weeks. If the amount is not paid, then a public sale will be conducted. A court appointed official presides over the auction. The lender will bid up to the amount owed. If he is the highest bidder, the lender will get title to the house and eventually sell it. If someone else bids higher, the highest bidder gets the title and the lender gets his money.
In a non-judicial foreclosure, there is no lawsuit. There is still a possibility you can work your way out of this situation. At this point, the lender and borrower would like to reach a compromise, which will be in each other’s best interest. Ideally, the borrower gets to keep his property and the lender continues to receive the mortgage payments. If your financial crisis is a temporary one, you may be able to work out a repayment plan with the lender, or possibly delaying payments for a period of time. There is also the possibility of refinancing the loan or extending it. If you meet qualifying criteria, you may also be able to obtain a loan from HUD to get you current on your mortgage. Or, you can sell your property to repay the loan in full, which although not an ideal situation, will eliminate a bad credit rating for you.
If the loan default cannot be resolved, then the foreclosure process will begin. It will start with a letter from the bank called the Notice of Default (NOD). This occurs when the borrower is in three months default on his loan. It is basically a threat that the lender is intending to take your property, sell it, and kick you out. Then the house will ultimately go to auction, with the bank receiving the proceeds.
Foreclosure is a very serious situation for a homeowner, since, not only, is there the possibility they will lose their house, but their credit will be badly marred. This will deter institutions from lending to them in the future. It is in everyone’s best interest to avoid this difficult situation and find a solution. Ask for help and search for alternatives. There are agencies, which can help you and provide you with information to work things out. Above all, don’t ignore the lender. They can actually be willing to provide alternatives.
