Due to the hardships caused by COVID, the US government stepped in, creating policies to aid struggling Americans. One of these aid programs was a federal moratorium that prevented foreclosures and evictions. But as more people get vaccinated and back to work, aid programs are ending.
An estimated two million American homeowners are behind on mortgage payments. If you fall into this group, you may soon see a foreclosure notice from your bank and find yourself without a place to live.
So, what is a foreclosure, and what are your options if you are facing it? Read on to learn what to expect if you are facing foreclosure.
What Is a Foreclosure?
Foreclosure is the legal process where a lender repossesses a house when the owner is behind on mortgage payments. Since the mortgage agreement has been broken, lenders sell the repossessed home to recover the loan cost.
There are two types of home foreclosure, judicial and non-judicial. The main difference between the two is that in the judicial process, the court is involved. Here is the typical foreclosure process:
In most instances, after one missed payment, a homeowner is typically sent a notice that they missed a payment. After a second missed payment, the lender sends a demand letter, asking for the missed payments within thirty days. After 90 days of missed payments, a lender will send a notice of default, and owners will have another ninety days to settle the loan.
If the loan isn’t settled after that period, a notice of trustee sale is filed, and the foreclosure process begins. The home is then put up for auction and sold. Once the house sells, the current tenants must leave.
How to Prevent Foreclosure
Lenders incur costs from the foreclosure process, so they want to avoid foreclosure just as much as you. Lenders are often willing to work with homeowners to sort out the missed payments. These changes include restructuring the mortgage or lowering or delaying payments.
If you can’t pay off the debts, there are other actions you can take to avoid foreclosure affecting your credit. You can do a short sale where you sell your home, and the money from the sale goes to the lender to pay off your debts. You can also sign a deed in lieu of foreclosure where you sign over your home to a lender to be released from your mortgage.
In any case, it is best to act as soon as possible to prevent foreclosure. The closer your home is to being sold at auction, the fewer options you will have to reverse the process.
Do I Need a Lawyer for a Foreclosure?
A foreclosure is a long and stressful process that can leave you without a clear next step. You can go through the process alone or with the help of a foreclosure lawyer.
A foreclosure lawyer will go over all your options to help you get the best outcome for you and your family. They can also help you through a judicial foreclosure or the foreclosure mediation process.
Since you are likely missing payments on your home, you are probably worried about paying a lawyer. So, how much does a foreclosure attorney cost?
Foreclosure lawyers often charge an hourly rate for their time, ranging from $100 to $500 an hour. Others might charge a flat fee for their services. Lawyers might require you to pay a retainer fee, which is an upfront payment for their services.
Be Prepared if Your Home Goes Into Foreclosure
Now that you understand what is a foreclosure, it’s important to remember that you have options if you are facing one. When you know all of these options, you can choose the best one for you and your family. If you’re not sure what is the best action to take, a foreclosure lawyer can guide you to get the best outcome.
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