What is a foreclosure?
A foreclosure occurs when you fall behind on your mortgage loan payments. If you have enough money to make the mortgage current and make up the back payments, fees, penalties, then you can take action to stop the foreclosure process.
Once the money is accepted by the bank, the foreclosure is stopped immediately. If the full amount needed to bring the loan current is not available, there are two options:
- A repayment plan can be worked out to increase the monthly amount paid every month after a lump sum is paid to the bank
- A forbearance plan can be worked out, which is a written agreement between you and the bank that may reduce, suspend, or pause some monthly payments.
In either case, a specific program for how the back payments will be paid or added to the loan balance will be set up by the bank. Remember, it is important to stay in contact with your lender. Be completely honest with them about your financial situation.
At this moment in California, as indicated by Zillow, there are 34,760 houses in some condition foreclosure. How far can you be behind your mortgage payment before foreclosure? In the event that you are 30 days late on mortgage, 60 days late on mortgage, or 90 days behind in mortgage payments, your lender can take action against you and file a notice of default because you are in default. How can you stop a foreclosure? Stay current on your payments.
There is a way to get help. You can:
- First, contact your lender. They will demand you take steps to fix the problem like majorly cut your spending or get rid of unnecessary items.
- Second, don’t ignore your mail. Some envelopes may contain helpful suggestions on how to get things under control. Ignoring notices can cause you to lose everything.
- Finally, contact a professional. When being honest about your financial situation with your bank, the loan may be able to be modified, or you may be given repayment options or offered forbearance.
Loan modification can include a decrease in interest rate, a conversion from variable interest rate to fixed interest rate, or an extension of the term length of the loan.
A forbearance agreement provides short term relief. The lender agrees to reduce or stop mortgage payments for a time period. And, the lender agrees to not initiate foreclosure during this period.
Prepayment options could include a plan to pay back missed payments on top of making monthly payments, especially in the case of temporary hardship.
Acknowledge nearing distress, contact your lender, and seek professional help.
Check out this document for several strategies to stop foreclosure in 48 hours or less. You will also find some strategies that take slightly longer. After reading all the strategies you can see which best fits your needs.
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