As
anyone who has watched the news or picked up a newspaper in the last half
decade can tell you, foreclosure is a major problem facing homeowners in this
country currently. Foreclosure is a specific legal process
in which a lender attempts to recover the balance of a loan from a borrower
who has stopped making payments to the lender by forcing the sale of
the asset used as the collateral for the loan.
The foreclosure process
as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property (immovable property) after the owner
has failed to comply with an agreement between the lender and borrower called a
"mortgage" or "deed of trust." Commonly, the violation of
the mortgage is a default in payment of a promissory note, secured by a lien on
the property (Wikipedia).
Basically,
there are two major types of foreclosures – foreclosure by judicial sale and
foreclosure by power of sale or nonjudicial foreclosure. There are other minor
types, but they are in such limited availability it isn’t prudent to mention
them. Judicial foreclosure involves the sale of the
mortgaged property under the supervision of a court, with the proceeds going
first to satisfy the mortgage; then other lien holders; and, finally, the
mortgagor/borrower if any proceeds are left. Nonjudicial foreclosure is
authorized by many states if a power
of sale clause is included in
the mortgage or if a deed
of trust with such a clause was used, instead of an actual mortgage.
In some states, like California, nearly all so-called mortgages are actually deeds of
trust. This process involves the sale of the property by the mortgage holder
without court supervision (Wikipedia).
So what should you do if you are
being foreclosed on? First and foremost, you need to seek out help. You cannot
go through this process alone. There are many nonprofit agencies that can help
you. NHs of South Buffalo has a wonderful housing counselor on staff. In order
to be eligible for foreclosure counseling, you must attend the foreclosure
orientation or The Truth About Foreclosure. We keep our website and Facebook abreast of the
schedule of our workshops, so don’t hesitate to check. Or call us at 823-3630.
Next, you must get organized. Gather things like:
- Any and all communications from your lender
- Foreclosure notices and/or court or sheriff's sale complaints
- Your two most recent mortgage statements
- Your homeowner's insurance policy if your pay this directly
- Two months worth of pay-stubs
- Two most recent tax returns for everyone listed on the mortgage
- All bank account statements for the previous two 2 months
- Proof of any other income (child support, alimony, SSI, disability, rental income, etc.) (ABC News)
This
will make it easier for the housing counselor to help you.
Our particular foreclosure
process begins with the client calling. The client is then scheduled for a
foreclosure orientation workshop, and the information package is sent to them
via email or snail mail. They are asked to bring copies of the documents to the
workshop. Afterwards, they are scheduled for an appointment approximately seven
to ten days after the workshop to come in and sign the paperwork to apply for a
loan modification. The paperwork is scanned to the client file and a HAMP
package is sent to the lender for consideration. After that, it can take up to
30 days for a decision of yes to the modification or that more information is
requested by the lender and/or investor. The length of time to get a
modification can vary greatly from 30 days to longer.
Do not fall for scams that say they’re going to help
you. Look at
registered nonprofits that deal with housing. Most importantly,
you do not need to feel shame over this. It is a stressful situation but not
one that is completely lost. There are people and organizations out there that
can help you. Please do not be afraid to reach out.
