Foreclosure

Answer 1

Many Americans are facing foreclosure today due to the declining economy. Foreclosure is when a mortgage company terminates the borrowers right to the mortgaged estate. The foreclosure process begins when the borrower fails to make the mortgage payments at the specified time the loan is due. Often this occurs because of divorce, unemployment, medical issues, death, and even being sick of property management.

The foreclosure process begins usually with the demand of payment sent out in the form of a written letter. This written letter is known as the Notice Of Default. The process doesn't typically start until the borrower is three months before on the mortgage. This notice is considered to be a threat to sell the borrowers property and evict them from the premises if payment arrangements are not made. If payment arrangements are not made or agreed upon between the borrower and the mortgage company, then the foreclosure process will preside.

Foreclosure laws differ from state to state. In some states the borrower could remain within the dwellings for up to a year. In other states the borrower has less than four months to vacant the premises. During the prefilling phase of foreclosure, the mortgage company may still offer options to the borrower so that they can keep their customer and the borrower can keep the property. Some of the options offered is loan modification, refinancing, and forbearance. Forbearance is the agreement to suspend or reduce monthly payments over a period of time. Terms and conditions of the loan do not change and forbearance only last for a year. After that year is over, the borrower must cure the delinquency through a lump sum reinstatement or repayment plan.

Foreclosure Timeline

Below is a foreclosure time line showing the complete foreclosure process from start to finish. This gives an individual an idea of what the process is and what happens at various points within the process.

Day 1-15

Mortgage payments are due generally at the first of the month. If payment is not received by the due date of the loan then the account is seen as delinquent.

Day 16-30

By this time a late fee is added on the account because payment has not be received. The borrower will get phone calls from the lender and also a late payment notice from the lender.

Day 31-45

By the 30th day, the loan enters into default. A second notice is then sent to the borrower. The lender then reports to the credit bureau which will have a negative impact on the borrowers credit history.

Day 46-90

Lender sends letter to the borrower stating a breach in contract and violation of the loan terms. By day 60, the lender may start up the accelerated procedure notifying the borrower that foreclosure is in process. By this time the lender can refuse any partial payments toward the delinquent accounts.

Day 91-415

Loan is sent to foreclosure office within the lenders establishment. There they hire an attorney, to start the proceedings. Foreclosure can start anytime after the acceleration notice has been sent. This occurs when the loan has reached 90 days past due. House is then sold at an auction.