Reality of Foreclosure
One out of every 200 homes in the country will undergo foreclosure this year. Even though you are not alone in this, your credit score will be effected if the foreclosure takes its full course.
Fact One: Foreclosure Can Take An Emotional Toll
It has been long proven that owning ones own home gives them pride, stability, and a feeling of greater satisfaction with their lives in general. Conversely, the reality of foreclosure can take a toll on both the financial and emotional state of the homeowner.
Many people faced with foreclosure will find themselves scared, depressed, angry and or embarrassed. To make matter worse, most homeowners are facing foreclosure due to a traumatic event such as job loss or a health crisis. 52 percent of employees live paycheck to paycheck with little opportunity to save money. 43 percent of the households in America spend more than they earn each year which can make a job loss even more devastating.
Fact Two: The Process of Foreclosure Takes A Lot of Time
The process of foreclosure is not an overnight event. It actually takes a lot of time. The average length of time for a foreclosure to run its course is between two and 12 months. This depends on three things:
- The policies of your lender;
- The state you live in and the associated state laws;
- How motivated you are to keep your home.
Once you have missed one payment, the letters and phone calls will usually begin once that first payment is over 30 days past due. Missing one payment does not mean that a foreclosure is an absolute. Most lenders will work with you to catch up if you have been timely with all your other payments.
You will need to read the fine print of your mortgage contract. You need to know if there is something called a “power of sale” clause which gives the lender the authority in an the event of a foreclosure to sell your home quickly once you miss payments.
Even after the process looks to be over, some states have “right of redemption” laws that will give you a grace period and therefore time to reverse the foreclosure process. In any event, the timeline should give you enough time to figure out your next steps.
Fact Three: Federal Programs Can Help
If your lender is unable to help you, there are still programs available to you that can provide assistance in most situations. These programs fall under the Making Home Affordable (MHA) program. A Housing and Urban Development (HUD) option may also be available to you if your find yourself in a position of short term hardship.
If your hardship is long term, HUD and various state and county programs may be available to help you with some supplemental rent monies.
Fact Four: Three Types of Foreclosure
There are three stages to the foreclosure process: Pre-foreclosure, Foreclosure Stage, and Post-Foreclosure. You have more options in the Pre-foreclosure stage when the lender will most likely work with you. During the Foreclosure stage, there are still options if you can catch up on your payments. During the post-foreclosure stage, there are no more options. The lender has already taken possession of the property and even repair items like AC units or sprinkler systems before going to market.
Once you realize that you are having trouble with your house payments, you need to call your lender. Many homeowners will end up in foreclosure because they are too embarrassed by their situation to make that first phone call. Discussing your concerns with your mortgage company gives the lender the opportunity to present you with possible options.
Fact Five: Rights Of A Tenant If Property They Are Renting Is Foreclosed
Tenants have rights if the property that they are renting owners has their mortgage foreclosed upon. There are new laws that state that the bank needs to give the tenants of a foreclosed property 120 days to move. Even if the house is sold at auction, the new owner needs to comply with this law.