Foreclosure can be stressful. You may not know what to do. You may feel helpless, afraid, ashamed or even, angry. You may feel tempted to just ignore the problem and hope it goes away. The reality is, as soon as you decide to stop paying your mortgage, you start down a road that could eventually lead to losing your home and ruining your credit. In this article, I give you 3 tips for avoiding foreclosure, and turning your situation around, no matter where you are in the process.
What is Foreclosure?
Foreclosure is the process by which your mortgage lender reposesses your home, and sells it at auction due to non payment of the mortgage. In Orange County, the process is non-judicial which simply means that the lender will assign your case to a trustee, and the trustee will file foreclosure documents directly with the county recorders office.
Foreclosure Timeline and Credit Impact
- With a typical mortgage, you have a 15 day grace period in which you can pay your mortgage every month.
- After day 15, you become past due on your payment, and a late fee can be assessed.
- After 30 days of non-payment, the delinquency can be reported to the credit bureaus and your credit score will begin to go down.
- With each successive month of non-payment, your credit score takes a hit.
- After 120 days of non-payment, a Notice of Default can be filed and a foreclosure record appears on your credit. This record will remain for 7 years and make it difficult to obtain another loan.
- After 180 days of non-payment, a Notice of Trustee sale can be filed. which states the date in which the home will be auctioned off.
- After 200 days of non-payment, the Trustee Sale can happen, and you will no longer own your home.
In all practicality, foreclosures can take longer than 200 days, but if you are somewhere in that process there are a few things you can do to help change directions. I have outlined three of those steps below:
- As soon as you know you won’t be able to make the mortgage payment on-time, contact the lender and let them know about your situation.
- This could seem scary, however the reality is that lenders love sticking to lending and collecting interest on loans. It is expensive for them to foreclose on a home. If you can work with the lender to find a win for them – loan modification, forbearance, repayment plan, etc. It could save your credit, and your home.
- Timing is everything. There are various “check points” in the foreclosure process that begin to diminish your credit – 30 days past due on your mortgage, Notice of Default Filed, Notice of Trustee Sale filed, among others. The farther along in the foreclosure process you get, the more negatively it affects your credit. By working with your lender as soon as possible together you may be able to come up with a plan that works for you both, save your home, and limit the impact to your credit.
- Contact a HUD approved housing counselor
- This is a free service provided by HUD through the Making Home Affordable program www.makinghomeaffordable.gov
- A housing counselor can take a look at your financial situation, help you to establish a budget, talk you through options, and help guide you in your journey toward keeping your home.
- Sell your house fast for cash
- If you have exhausted all other options, and you come to the conclusion that you won’t be able to work with the lender to keep your home, and you want to walk away with cash in your pocket, consider a quick sale with Liberation Home Solutions. We can make you a cash offer, close on your timeframe, we’ll pay closing costs, and you’ll avoid realtor commissions. No repairs, no cleanup. Simply walk away on your terms with cash in your pocket. We buy houses fast for cash in Orange County.
At Liberation Home Solutions, we believe that if we can offer someone a merciful solution to their situation, then we should. We hope that you have found this article informative, and that you will take some of these steps to help you in your journey. If you’d like to hear about what we can offer, you can call or text us at 949-41-MERCY or (949)-41-63729, or go to our website www.LHSMercy.com fill out the form and we will be in touch with you.
Remember, mercy leads to freedom, and freedom comes from Liberation.