When you sign your mortgage papers, you aren't
planning on loosing the home. But things happen. Medical
bills pile up, you could lose your job or get a divorce. Interest
rates could send your ARM upwards while the market lowers the value
of your home. Small things happen that leave you facing
foreclosure.
Your lender does not want to foreclose on your home.
They want your mortgage payment and the interest that accrues over
the life of your loan. They don't want to have to sell your home. If
you are a low risk, the lender will work with you to keep your
mortgage working. But if you are a high risk, your lender could just
cut you loose, foreclose and evict you from the property.
What you have to do is contact your lender before your
mortgage is in trouble. The sooner the lender knows you are
struggling, the more it can help you.
When your mortgage payment is 16 days overdue, you are
at risk of foreclosure. At this point, the lender will contact you
to work out a plan to bring your mortgage current.
If your payment becomes 30 days delinquent and your
next month's payment is doubtful, collection attempts could become
serious. If you are 90 days behind on your mortgage, you may be
contacted by an attorney who is initiating formal foreclosure
proceedings.
If you miss a payment and want to avoid foreclosure
your lender may offer:
" A repayment plan: If you are experiencing a
short-term financial problem, such as a medical emergency, your
lender may work with you. You could be allowed to pay off your
missed payment in two installments over the next two months.
" A loan modification: Your mortgage terms could be
modified. This usually includes the lengthening of your amortization
schedule, lowering of the interest rate or adding the missed payment
into the principal balance and re-amortizing the new balance. This
will bring your mortgage current.
" A short sale: The lender allows you to sell the
house for less than you owe, take s the proceeds and calls it
even.
" A short refinance: You are forgiven of a portion of
your debt and the rest is refinanced into a new mortgage.
" A refinance with a loan: This is a refinance with an
additional loan that has high interest rates and steep fees. But it
buys you time to sell your home and avoid foreclosure.
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