It happens quite often…more than you realize…that a home in process of a short sale is foreclosed on. It is a common misconception that the lender won’t file a foreclosure lawsuit against you if you are currently in the process of negotiating a short sale or loan modification.
Debbie lists her home for a short sale in November and receives a contract from a buyer. While waiting for the bank’s approval, at the end of April gets served with foreclosure papers. How can this be if she has a contract on the property?
It can be. And again, it is quite common. You should expect to get served with a foreclosure lawsuit four months or so after you stop making mortgage payments. When you try to complete a short sale, it more often than not takes a month or two to get it under contract and 45 to 90 days to get approval from the lender. If you fail to respond to the foreclosure within 20 days, you will be in default and will have waived valuable rights in defending the lawsuit in case the short sale falls through. It is recommended that you see an attorney about responding to the lawsuit.
For more information on mortgage mediation, foreclosure, short sales, bankruptcy and all things related to personal finance, check out Bellevue Bankruptcy Blog. These topics and issues can be confusing and stressful, but help is available! Contact us today!
More tips on Short Sales:
- How Short Sales Work
- What could be trashing your home’s value now?
- 3 Common Real Estate Scams to Watch For
What If I’m a Year Behind in My Mortgage Payments?
You may be behind only two months in your mortgage payments or up to two years behind! Wherever you may find yourself on that scale, the question is, what do you do and what’s going to happen? First and foremost, let’s be clear that it is vitally important that you keep in good communication from the get-go or as soon as possible. The longer you avoid notices due to embarrassment or denial, the worse things can get.
Lenders are usually very willing to work with you UNTIL a Notice of Default is filed. Once one of these is filed, it is very hard to work with your lender as they are looking out to protect their interest. So, be sure to communicate early and often. Also, keep a clear record of every time you communicate with your lender: the day you called, the name of the person you talked to and what you talked about. This can only help you later down the road. Remember, lenders do not want to foreclose, so if you’re unable to fulfill your mortgage obligation, contact your lender immediately so they can give you options to help you.
Options may include:
- –time to make up your payments. You may be granted something called forbearance, an agreement from the lenders to not take action against you while you work out a repayment plan that is affordable for you.
- -forgiving a payment. The lender may grant you debt forgiveness, which means they may let you skip a payment or two if you can prove that you will be able to pay thereafter. However, this rarely happens.
- –repayment plan. Sometimes you can spread the missed payments out over a longer-term. For example, if your mortgage is $900, you may pay $200 more a month until you’re caught up, temporarily making your payments $1100.
- -change the terms of your loan. Maybe your interest rate can be adjusted or maybe your amortization period can be extended.
- –refinance. You may be able to add the back payments to the balance of your loan if you have sufficient equity.
- -partial claim. Some government loans have provisions that allow the borrower to apply for another loan to pay back the missed payments if they meet certain criteria.
The above are routes of action if a Notice of Default has not yet been filed. if one has been filed, your remaining options are to reinstate your loan, sell your home, consider a short sale or sign a deed in lieu of foreclosure.
To learn more, contact Advantage Legal Group.
Ready to schedule a consultation? 425-452-9797
Or Contact Us Here
- Is a Short Term Rental a Better Option?
- How to Say Goodbye to Renting and Hello to Buying
- Why do Mortgage Investors Deny Loan Modifications?