Due to many factors, the foreclosure rate in Texas has skyrocketed. The three main reasons are job loss, divorce and unforeseen family medical situations. There has also been a nationwide mortgage crisis, which has contributed to the spike in foreclosures. Many lenders have gone out of business due to the backfiring of their aggressive financing practices. In dealing with some of the homeowners that are in this predicament, we have found that they are unaware of what steps to take. They often become overwhelmed with frustration and wait until the last minute to find a solution. We would like to share some information on the Foreclosure Process that will assist homeowners who find themselves in this predicament.
First and most importantly, DO NOT PROCRASTINATE, because time is of the essence. We cannot say it enough: Do not wait, act now. It is understandable that the feeling of failure or embarrassment overcomes the reality. Too often, homeowners believe that if lenders know they are in trouble, the lenders will automatically rush to a collection agency or begin to foreclose. Because foreclosure proceedings are very expensive for lenders, mortgage insurers and investors, we have found that most lenders are more than willing to help borrowers explore different options to keep their homes. The Department of Housing and Urban Development (HUD), mortgage insurers and investors require lenders to work aggressively with borrowers facing foreclosure. Lenders have workout options to help you. These options work best when you are only one or two payments behind; the further behind you are on your mortgage, the fewer options you have available to you. Do not make the mistake of believing your problem will correct itself. Do not lose valuable time; contact your mortgage lender as soon as the problem arises. Do not ignore calls or letters from your lender. If you do not get in touch with your lenders, they will try to contact you by mail or by phone soon after they stop receiving payments. It is very important that you respond to the letters and phone calls; when lenders call you, they are usually trying to offer assistance. If lenders do not hear from you, they will have to start the process that leads to foreclosure.
There are three stages of the foreclosure process. Stage one is the Default Period, stage two is the Acceleration Period and stage three is the Foreclosure Period. Here is an in-depth look at all three stages.
Stage One: In the Default Period, the mortgage company will send borrowers a default letter informing them that they have missed their first payment and, in most cases, that their 15-day grace period has ended. This letter will say that the lender is requesting payment immediately. At this point in the process, homeowners have the highest number of options available to them; however, the number of options will only decrease as the clock continues to tick. Now is the time to begin the communication process. Talk to your lender, your counselor or your trusted real estate professional.
Stage Two: The Acceleration Period typically begins around 30 days following the default letter. The first letter, or the intent to accelerate letter, is sent by the mortgage company and says that the acceleration period has begun; it also says that if you do not come current with your loan plus any additional fees, the lender will accelerate your mortgage. After repeated attempts to cure the default, the mortgage company will send the borrower the letter of acceleration and hire a local law firm to prepare documents to exercise its rights to foreclose the sale. In most cases, this is the last opportunity to communicate with the mortgage company directly. After this point, the borrower will only be allowed to communicate with the lender through the attorney that the mortgage company has hired to assist in the foreclosure process.
Stage Three: The attorney handling the foreclosure process for the mortgage company will send the borrower the notice of trustee’s sale. This is the final notice that will tell the borrowers that their loans are now in the foreclosure status. If the debt is not brought current, paid off or worked out with the lending institution, the trustee (representative of the lender) will auction off the property to the highest bidder for cash at the courthouse steps.
If you are facing foreclosure, have tried to negotiate with your lender and do not feel that you are getting the response you need, ask to speak to a supervisor. If all else fails, get some advice from a licensed real estate professional. We have built a network of licensed real estate professionals with a mission to educate and assist people when they are faced with the possible loss of their home. Let us discuss the Foreclosure Process with you.
