What Steps Lead A Borrower To Foreclosure?
Despite monthly notices that the mortgage is late, it is surprising how many people are caught off guard when they find out they are headed towards foreclosure. No one plans ahead of time to lose his home; they always think there will be more time to do something about the problem. Learn the steps to a foreclosure and you will see when the situation is getting bad.
The first step on this slippery slope is when the homeowner misses the first monthly loan payment. At this point, the borrower will receive a notice of reminder. In many cases, the borrower can get the payment made, albeit a little late. If there is some question about whether he can pay it quickly, he should contact one of the bank’s credit advisors.
Once the second payment is missed, the lender will usually try to make personal contact with the borrower. At this point, the bank does not know if there is a problem with the borrower, such as sickness, which may prevent him from responding. Do not ignore or avoid this call. The lender is still very willing to make arrangements.
The third month in a row that the loan is not paid will mean it is officially in default. This will bring about a more official notice, usually by certified mail. Banks call this notice a demand letter or a letter to accelerate, and if there is no reply, the foreclosure process will begin.
Most borrowers have given up on their home once they have reached this point, but the bank is still willing to make an accommodation.
Once the homeowner has missed the fourth payment, the terms outlined in the letter to accelerate have expired and the lender has pretty much given up on the borrower. Now lawyers will be called in, adding further to the total debt of the homeowner. The home will be placed on official sale.
The day of the foreclosure is the day of this sale. The lender posts the sale on the home, in a newspaper and by letter to the borrower. Until the actual date of the sale, the borrower still has time to make arrangements, but the outstanding debt has now been growing.
If you look at each of the steps leading to the foreclosure, you will notice a common element. Every one of them encouraged the borrower to contact the lender and talk about the problem. To avoid the final steps, the borrower should keep in touch with his lender to find any way he can to retain his home.
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