Knowing and understanding the basic mortgage foreclosure procedure can help you if you ever find yourself in this situation. I hope that you’ll never have to experience the emotional and financial devastation that mortgage foreclosure can cause. However, if you do, it will be beneficial to you and your family if you know the basic mortgage foreclosure procedure.
Your home is not going to be foreclosed and repossessed because you’ve missed one payment. However, when you’ve missed a couple of consecutive mortgage payments, you’re at a real risk of having your home repossessed. When you take out your mortgage to purchase your home, you sign a loan document, which is a legal binding agreement.
You’re agreeing to make monthly payments of a designated amount every month until the loan is paid in full. Many people believe this is all they are agreeing to because they don’t read the fine print. This fine print is telling you what the bank can do if you fail to make your payments as promised. When you fail to make these payments, you are putting your loan in default and risking losing your home.
The basic mortgage foreclosure procedure consists of certain steps that are routinely followed. When you’ve missed one payment, the bank will send you a notice in the mail, call you or do both. They’ll want to know what that problem is and when they can expect your payment. When you receive this phone call, this is the time to talk with your lender about any financial difficulties you may be having. The worst mistake you can make is to avoid your lender’s calls. This goes in your record as being uncooperative with the bank when they tried to help.
If you’ve missed two or three consecutive payments, the bank will start the basic mortgage foreclosure procedure. The bank will send a Notice of Intent to Foreclosure along with a court date. You will have thirty days from the date of the notice until your court date. During these thirty days, you can still contact the bank and try to arrange to bring your loan current and save your home. Banks will usually work with you, as they don’t like doing foreclosures because seldom do they get their money owed them.
If you don’t contact them or can’t come up with an agreeable solution, the court date will determine the date your home goes up for sale at public auction. You will be given so many days to leave the home or you will be evicted. This is all part of the basic mortgage foreclosure procedure. When the home is sold at auction, it is sold to the highest bidder. Proceeds will go to the lender to pay off the loan and all court and legal costs. Any balance left will go to the borrower, with your debt being paid in full.