This information is for educational purposes only. The writer is not an attorney or accountant or realtor. For legal advice please speak to your attorney. For tax advice please speak to your tax professional. For advice regarding real estate please speak to your realtor.
What is Foreclosure?
As a practical matter foreclosure is a legal process in which, you, as a homeowner, lose your home due to a violation of your agreement with your bank (or other lending institution).
You are required to leave your home. Your home becomes the property of the bank.
Most commonly a foreclosure occurs because you fail to make your monthly payment. But a foreclosure may occur for a number of other reasons too, as an example, your failure to pay your taxes or condominium homeowner association dues to name two.
The process starts when you fail to make a monthly payment. Typically this is due to you experiencing some kind of hardship. Hardship examples are job loss, divorce, injury or death to name a few.
Whatever the reason the payments stop being made to the bank.
The bank then notifies you repeatedly for 90 days, at which time, if some kind of workout agreement with the bank has not been made; you receive a Notice of Default (NOD).
A notice of default is a document that makes it clear the bank intends to take your home forthwith, if certain conditions are not met. Whatever the problem is–if it is not quickly corrected to the banks satisfaction–you could loss your home. In the documents are the time table to either pay-up completely, workout some kind of agreement, or loss your home.
Understandably most homeowners panic at this point. But the thing to do is to make a decision! And what should that decision be?
The homeowner has to decide whether or not they want to stay in their home or leave. Then they must come up with a plan of action to make what they want happen. This is crucial, because many of us wait until the last minute when a decision will be made for us.
Talk to somebody! Talk to your spouse, a trusted family member or friend. Your attorney, a government or other nonprofit agency or a foreclosure consultant. Speak to several of them. You definitely need help at this point.
If you are in trouble and want to keep your home, you are going to have to fight for it. And if you decide for whatever reason that you can no longer afford to keep your home, there is a right and wrong way to do that, too.
Again most people panic…we do not quickly enough focus on our options and solutions. That is why it is so important for you to decide what it is that you are going to do–before a potentially very costly decision is made for you.
But what are your options if you want to stay in your home–and I’m sure you do? You have several–but I will not burden you with more details. The bottom line is:
Did you experience a hardship and can you show proof that you now can afford the monthly payments–if given another chance by your lender?
And if your answer to those questions is yes, then you are in a strong position to save your home!
Should you decide you can no longer afford your monthly payment or certainly you will not be able to, when there is an adjustment to your loan, then, you may still have several options which I encourage you to speak to a professional about. In anycase, it may not be in your best interest to simply walk away from your home–especially if you are in California–as I am.
Contrary to what many people may tell you, a deficiency is not a straightforward judgment; it can be sneaky in the way you get trapped by it. The point I am trying to make is that you may not simply want to walkaway from your house without first understanding the probability of you getting one.
In summary, foreclosure is a process in which you loss your home because you violated some part of your agreement–typically, with your bank. And you must confirm and reaffirm your decision that you want to save your home–and then figure out a plan of action to do just that.
Tags: Foreclosure, Foreclosure Help, Foreclosure Information, Foreclosure Process, foreclosure questions, understanding foreclosure
