5 Steps to Take After Your Home Has Been Foreclosed

Mortgage burdens have reached historic levels, exceeding previous records set in 2008. When borrowers fail to maintain timely payments, lenders can utilize the foreclosure process. This allows them to recoup lending costs, repossess the property, and prevent losses. However, a homeowner’s perspective will be different, as they are losing their home. Here are five steps to help anyone who has gone through a foreclosure.

1. Halt Foreclosure Proceedings by Reinstating the Loan

First and foremost, a borrower should try and stop the lender from repossessing the home. Once the courts are done issuing a verdict, reclaiming the house becomes much harder. Fortunately, foreclosing requires a substantial amount of time in most instances. States vary how these procedures are handled, but they usually come in two flavors. Judicial acts require legal action to be taken by the lender before anything happens. In nonjudicial states, they can employ the power of sale clause found in the signed agreement.

Many jurisdictions let homeowners reinstate a loan provided that they repay missed payments. In addition to the usual payment schedule, any legal penalities incurred must be paid. Generally, you can save the house up until the foreclosure date, assuming payments are up to date.

2. Anticipate Eviction and Prepare Accordingly

When you are unable to stop repossession, the property goes to auction and is sold to the highest bidder. If this occurs, the area’s court or sheriff’s office will manage the auction. However, many properties go unsold during the auction, and the bank takes possession.

If you still reside in the home, local law dictates how long you can stay there until being evicted. Thus, you should be searching for accommodations to house your family afterward. Ask the lender if they possess any cash for key incentives, as these may ease the transition.

3. Authorize a Redemption if Available in Your State

In many cases, state law stipulates what is known as redemption, which lets you reclaim the home. Typically, details about this process are in the Notice of Sale, so check it out to get informed. Repaying the missed bills and accumulated legal costs is usually a requirement.

Nevertheless, four months can elapse between missing a payment and going into default. As a result of this extended timeframe, accumulating the needed cash may be possible. Additionally, timeframes differ between locations, so you should research which ones apply.

4. Request a Loan Modification to Revitalize Payment Ability

Finalized foreclosures adversely impact someone’s ability to borrow additional funds in the future. Consequently, purchasing another home may be almost impossible until months have passed. Speaking with a local HUD housing counselor can be beneficial, as they can tell you about local laws. Foreclosure-avoidance programs extend generous terms to delinquent buyers, giving them some hope.

By extending the loan’s term length, the overall monthly payment size decreases. Therefore, the burden is lessened, and maintaining the recurrent cost is more bearable. Similarly, refinancing the loan at a lower rate can lessen ongoing expenses. Since less interest accumulates each month, total payment sizes shrink in correlation.

A traditional approach would be to request a consultation with the mortgage issuer. Discuss potential programs to reconfigure loan terms at this meeting, comparing all options. Sometimes, the lender can tack on missed payments to the end of the loan’s term. Extensions are worth attempting if you have lost a job or been subject to surprise medical expenses.

5. Contemplate the Merits of a Bankruptcy Filing

Filing for bankruptcy should be considered a last-ditch effort, as the consequences can be severe. Nonetheless, declaring bankruptcy can immediately pause the process, keeping you in the home. Likewise, the resulting changes to your financial picture may alter your repayment ability. As a consequence, staying current will be less difficult. Talk to a local attorney to retrieve accurate information about your situation. They will also understand local stipulations and relevant information for your state. After discharging past-due debts, make sure to hire an emergency cleaning service to come out and clean out past belongings, junk, and trash. Cleaning the property will ingratiate you with the lender, as it improves the home’s value and can help you sell it faster.

How Homeowners Should Handle the Foreclosure Process

Being issued a notice of foreclosure can be frightening, stressful, and confusing. On the contrary, saving the home will be a welcome reprieve, ensuring there is always a roof overhead.