No one wants to go through foreclosure. This is one of the worst experiences any homeowner can go through, but almost no one knows what the foreclosure process looks like.
Mortgage Bankers Associations estimates that every three months, 250,000 new families go through foreclosure. As the consequences of COVID-19 pandemic are yet to be seen, this number is only expected to rise.
Most homeowners know very little about the foreclosure process. How does it work? Is there a way for you to save your house?
What Is Foreclosure?
Foreclosure happens when you don’t have the money to make monthly payments on your mortgage. Typically, you can be late for up to six payments before the foreclosure process starts. When you take a loan from the bank, your home serves as collateral; if you can’t make the payments, you risk losing your house.
Foreclosure isn’t a fast process. If you are late a few days, you likely won’t face any consequences. Anything longer than 15 days may result in fees. The foreclosure process depends on your lender and the state laws, however below is a brief overview of what you should expect. The entire process may take you several months, if not more.
Step 1: Notice
A bank can’t start the foreclosure process whenever it wants. First, it has to deliver you a notice of intent to let you know that you might be in danger of losing your home. Generally, lenders won’t start with the foreclosure until you’ve missed your payments for four to six months. However, at about half that time, you may be delivered a “Notice to Accelerate” or a “Demand Letter”, in which you will be requested to deliver payments in 30 days or less. If this isn’t completed, most lenders will refer you to their attorney, as they will consider your loan is in default. If this happens, you are in trouble. Before you do anything, make sure you are in contact with your lawyer or a counselor from US Department of Housing and Urban Development (HUD).
Step 2: Foreclosure Process Begins
If you haven’t paid your debts 90 days after the notice of default, the bank may initiate the foreclosure process. When you’ve been given the notice of sale, this means the foreclosure process has started, and you have 21 days before your house is sold in auction. A notice of sale will be sent to you in a certified letter. Other than that, it has to be published in a local newspaper weekly for three weeks until the auction date. This will help potential buyers know your house is up for sale. In most states, however, you’ll still have the option to reinstate your mortgage until five days before the sale date. Keep in mind that you’ll have to pay in cash.
Step 3: Auction
On the auction, your house will be sold to the highest bidder, who will be demanded to pay the full amount immediately, in cash. The buyer will be given a trustee’s deed, which will make him the official property owner. After this, you will be given a three-day notice to move out. If you refuse, the buyer has the rights to go to court and request you are evicted. Keep in mind that if the house is sold for less than your debt is, you may still be forced to pay the remaining amount.
What If the House Doesn’t Sell at an Auction?
As with every sale, there is a chance your house won’t find the right buyer. If this occurs, your property will become a real estate owned property, also known as REO. This, however, doesn’t mean that you are safe and that you’ll be able to stay in the house. The bank will likely arrive in a few days and you will be forced to leave your property. You might be given relocation assistance or ‘cash for keys’ – a certain amount of money to help you with your leave. This isn’t guaranteed, however you should always request it and then agree to move on.
Can You Stop the Foreclosure Process?
The easiest way to prevent your bank from foreclosing your house is to find a way to repay your debts. When you are late with your payments, you may experience certain fees, but if you want to stay in your house you should understand that you need to repay everything.
Work with Your Lender
Some lenders will work with you to help you find a way to repay your debt rather than start the foreclosure process, as this can end with them experiencing loss, as well. This is why you should contact your lenders as soon as you realize you may be experiencing financial struggles. There is a chance you will be given the opportunity to create a repayment plan. However, if you think there is no way you will be able to repay your mortgage, there is only one thing you can do if you intend on keeping a good credit score, and that is to sell your house.
Make a Quick Sale of Your House
A fast sale of your house can help you to quickly pay off your mortgage, without any negative marks on your credit. Listing your house in Milwaukee doesn’t necessarily guarantee your house will be sold quickly. Selling in this manner can take months, allowing the bank to foreclose on the house while it is listed. On the other hand, a direct sale to Sparks Property Investors LLC will allow you to sell your house quickly and for a great price. Working with our team will let you choose the closing date that works best for you so that you can sell the house outright before the bank comes knocking. Our process is fast, convenient, and always fair!
Use A Short Sale
Another way to sell your house fast in Milwaukee to avoid foreclosure is by using a short sale. A short sale occurs when your lender agrees to take a lower offer for the house, just to save them the time and money of reselling it themselves. To do this you must apply to your lender’s short sale program and meet the necessary requirements. You’ll need to run a BPO or Broker Price Option, to help you determine the fair market value for the property.