Foreclosure is mostly done when a lender tries to collect money from a debtor who is unable to continue servicing his/her obligations thereby warranting sale of the house which was taken as surety. The reasons for stopping payments on properties may include, divorce, realization by the home owner that the mortgage amount is more than the market pricing, lack of income, health problems, death etc. Of course the first instinct for the bank is to explore other favorable options available in order to save on costs and the hassle of an auction. If all other options fail, the lender moves in and the owner relinquishes all the rights to the house allowing for foreclosure auction to take place.
There is a period between the time you default on your loan and the time it is actually auctioned. After three to six months of non-payment, the bank gets a notice from the county recorder’s office showing that the home owner has stopped payments on the loan. Depending on your area of residence the notice maybe placed on the front door of your house. This is to make you aware that you could lose your home anytime if you do not pay up. After this, the homeowner is granted a grace period of any time between 30 to 120 days as permitted by law to work out a payment plan with the bank via a short sale or clear the debt. If payment is done during this stage, the bank resumes status quo. If not, the auction process takes place and money received from the sale is used to clear the outstanding debt.
In recent times however, banks have changed their way of thinking concerning foreclosures. This is because they are actually the ones who stand to gain the most by helping you manage your payments rather than sell your house before foreclosure. However, if the process of selling has already started, dealing with the bank can be draining and even unpleasant. There are some pointers however that can make the process easier to bear.
Firstly, keep in constant communication with the bank. Don’t overdo it. But always keep them in the loop on what is happening to show your commitment on getting things done.
Secondly, make sure that you are keeping your end of the bargain on timelines agreed. If there are any delays, call and inform them ahead of time.
Thirdly, keep written communications on interactions you may have with the bank. Nothing works unless its tangible evidence. Do not overlook any details. Including the names of the people you talk to and any agreements made concerning the matter.
Fourthly, weigh all your options before deciding. These may include bankruptcy and loan modifications. This will give you all possible outcomes and you will be able to make the smarter decision given the situation.
Fifthly, the earlier you deal with the situation the better. This is because the more you fall behind on payments, the fewer your chances of salvaging the situation.