Here is some helpful information regarding Foreclosure.

What is mortgage foreclosure?

When most people purchase real property, they do not have enough money to simply purchase the property outright. In order to make the purchase, they are required to borrow money from a lender. In exchange for lending the money, the lender will hold a lien against the property. If the borrower does not make the required payments, then the loan goes into default and the lender can exercise the lien against the property, in order to take legal possession of the property for the purpose of selling the property to pay off the borrower's loan. This process is called mortgage foreclosure.



How does mortgage foreclosure work?

The first step in the mortgage foreclosure process is that the loan becomes delinquent because the borrower has not made a required payment or payments. When the loan becomes delinquent, the borrower goes into what is called default. Often, the loan will remain in default status for ninety days while the lender contacts the borrower to inform him or her of the situation and give the borrower an opportunity to pay the overdue balance.Once a mortgage is in default, the lender may then begin the foreclosure process by filing a Notice of Foreclosure. This means that the lender will file documents in court or with the county recorder, depending on the state, stating an intention to foreclose on the mortgage. There are a number of steps before this process can be completed, and the typical time period that elapses from the filing of foreclosure until sale of the property by the sheriff is anywhere from 120 days to 9 months. The borrower can also extend this process even longer by challenging the proceedings in court. This method will not usually prevent the sale of the property, but it can extend the amount of time the borrower can remain in the property. It is important to be aware that once the lender has filed for foreclosure, the borrower will receive a great deal of mail offering to refinance the property or provide other assistance. The reason the borrower receives this mail is that the Court filing is a public record, and anyone can access the information. It is best to be very skeptical about these offers and claims, as many of them are fraudulent. It is best to ignore these offers and work with your lender or another reputable financial institution to resolve the situation.

Steps to prevent foreclosure

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?If you are unable to make your mortgage payment:

Don't ignore the problem.
The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

Contact your lender as soon as you realize that you have a problem.
Lenders do not want your house. They have options to help borrowers through difficult financial times.

Open and respond to all mail from your lender.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

Know your mortgage rights.
Find your loan documents and read them so you know what your lender may do if you can't make your payments.

Understand foreclosure prevention options.
Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at www.fha.gov/foreclosure/index.cfm.

Contact a housing counselor.
Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Contact a housing counseling agency near you.

Prioritize your spending.
Review your finances and see where you can cut spending in order to make your mortgage payment. After healthcare, keeping your house should be your first priority. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.

Use your assets.
Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

Avoid foreclosure prevention companies.
You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a housing counseling agency will provide free if you contact them.

Don't lose your house to foreclosure recovery scams!
If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or housing counseling agency.

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