Category: foreclosure

The Bank Foreclosed On Your House Now What?

You are caught in the messed-up economy like so many of your friends and neighbors. You’ve been struggling to make your mortgage payments for months. But now you’ve been laid off, or took a cut in pay to keep your job, or have extra bills (credit card, medical, etc.) that are swallowing more than you can make. And your mortgage holder has been threatening to foreclose on your house the bank wants their money. You’re scraping by, week after week, and trying to make it all work. But it isn’t. Now the bank has foreclosed on your house it’s in black and white on a notice you got in the mail. Now what should you do?

Backing Up…

If you’re just worried it will happen to you, before you get that notice from the bank, give them a call. Explain your situation and why you’ve been making your payments late (or not at all). They’ll appreciate knowing the facts, and sometimes they have some wiggle room on whether the bank will foreclose on your house at all. Often they want your situation written down and faxed to them, with your signature, so that they can put it into your file. If so, explain your situation as best you can, and especially include information about why you’re in the difficult situation you are in (lost your job, business is slow, extra medical bills…whatever has changed such that you’re struggling). They will also want to know when things will get better and how (getting a new job, commission check due to you soon, selling the home, etc.). Talk with them, work with them, be grateful for whatever good graces they grant you, and stick to the deal you carve out with them. Whatever you can do to keep from the bank foreclosing on your house is important to do (other than selling your soul to the devil or offering them your firstborn son…). The bank holds all the cards, and you need them to work with you. Be cooperative.

Once It Happens…

If the bank has foreclosed on your house, they can’t just undo it if you ask pretty please, or even if you pay the amount your mortgage was behind. There will be extra fees as soon as the foreclosure has begun. Once the bank has foreclosed on your mortgage, the best thing to do is to act as soon as possible. Every week you delay adds to the fees not just in your regular, monthly, mortgage payment, but in foreclosure fees, attorney’s paperwork, etc. The sooner you resolve the situation, the less fees will be.

Talk to the lender to know exactly how much money is needed to get you caught up. They will tell you how much it is, and when it would need to be paid by before it increases again (for a new month or additional foreclosure fees, etc.) It will likely be more money than you expected, so don’t faint when you hear the amount. That’s the price you have to pay for allowing the bank to foreclose on your house.

It’s no secret that our country’s economy is having problems. There are many people who have lost their jobs. They find themselves unemployed or underemployed, struggling to pay their bills. When so many people were one paycheck away from the streets, there are folks all over who are finding themselves wondering how they will make their house payment this month not to mention the month after that. Banks are foreclosing on properties everywhere maybe even next door to you.

What Can You, The Homeowner, Do?

First of all, have the habit of paying your mortgage on time. Try to never have any late payments. If you need to, find a way to get ahead so that your mortgage can come out of your check before the one it comes out of now, so that late payments are something you never have to pay. Not only are they expensive, but they show up on your credit report, hurting your credit and affecting how willing your lender will be to work with you if you have a reason to need a bit more time to pay your mortgage payment. Even if the bank could begin foreclosure on your property, they are more likely to cut you some slack if you tend to pay on time but are just temporarily struggling.

If you do find you are struggling for a bit, consider juggling which bills you pay when. Many utilities will gladly give you an extension on an overdue bill, often even through an automatic phone system, rather than having to talk to a person and feel like you’re begging for a stay of execution. Other bills, like payments of credit card bills, etc., may have a firm due date, but the late fee (for delaying a payment) is better to pay than the late fee for a late mortgage payment. If the bank foreclosed on your house or property is much worse than a few late fees here and there, so it is usually smart to do whatever you need to do to to continue making your mortgage payment.

Another option for helping avoid a bank foreclosure on your property is to refinance your property. Refinancing can help in a couple of ways. First, you can usually get your new mortgage payment to be less than your current mortgage payment. That can ease the crunch of monthly bills in many ways. What would you do with a few extra hundred dollars a month? The other way a refinance can help is that with some refinances you can get a bit of cash out of your equity when you get the new loan. This can give you some money to catch up on bills, and hopefully some to keep in reserve for when times are tight. Remember, though, that you are paying interest on that money that you’ve borrowed, so using it to keep the bank from foreclosing on your property is the best use of the money not just taking a vacation. Remember, though, that all properties are not going to be eligible for a refinance…it depends on your own situation money owed on house, amount of current loan, prepayment penalties on current loan, etc.

If you’re getting notices threatening foreclosure from the bank about property, there are things you can do to protect your home. But taking measures before they foreclose is the smarter way to keep your home, even in difficult times.