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Foreclosure,Eviction and Repossession

Want to discuss a nightmare? Foreclosure, eviction, or repossession may be at the top of the list. What is involved in foreclosure, eviction, or repossession? How long does the process take? Does a consumer have recourse?

Foreclosure

Foreclosure can take from 6-18 months to wrap up depending on state laws and the homeowner circumstances.

If you have missed one or two payments, the creditor will write you a letter requesting payment of the outstanding amount plus a penalty of 5 % or so of the monthly payment. If the consumer ignores these communications, a formal notice called "Notice of Default" is sent. This is the first official step in the foreclosure process. The consumer at this point has 90 days to correct the default or "cure" the debt by making all back payments plus penalties.

If the back payments are not made up or contact not made, a second formal notice is sent by mail. This is the "Notice of Acceleration". Basically what this mean is that the total amount owed is now due and payable to avoid foreclosure. Some states require an actual court order to remove the consumer from the house delivered as a summons. At court the consumer can raise a defense to try to overturn the foreclosure. If the homeowner does not respond, a foreclosure judgment is rendered and a "Notice of Sale" is sent to the house with the date and time the foreclosure is in effect.

Avoiding Foreclosure

Obviously avoiding foreclosure means staying up with mortgage payments and taxes. But what if a person can't? The first course of action is to make contact with the mortgagor and ask for a temporary or even permanent reduction of the interest rate or even a short-term moratorium on the payment. But if this cannot be done, there are other options depending on whether the condition is temporary or permanent.

If the condition is only temporary, it is possible to obtain a "Mortgage Workout" as described below. However, if the conditions are long term, it may be wiser to sell the home before a foreclosure sale when the owner has no control.

But if the mortgage payment is only temporarily difficult, the homeowner can negotiate a workout with the mortgagor for an easier schedule. This can be either permanent or for the short term. A common workout is to "cure" the default by adding a percentage of the mortgage in arrears to the regular payments until the debt is current. "Recasting" is another option. If the homeowner can make the current payments but cannot

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