Outside of bankruptcy, foreclosure is one of the most challenging financial obstacles. When you can no longer afford to pay for the home you live in, the mortgage company will foreclose to take control of the property. You must have many questions as you walk this scary path, and you must ensure you have a place to live after this massive loss.
The Foreclosure Process
First, you should know that foreclosures take time and don’t happen overnight. You’re not going to be kicked out after missing one payment. The average lender will wait until you’ve fallen seriously behind and haven’t worked with them to satisfy the past-due balance.
Remember that most lenders are willing to work with you as foreclosures are hard on you and very costly for the bank.
1. The Official Notice
Each state has different regulations and timelines for foreclosures, but the general guidelines are the same. A payment isn’t even considered late until it exceeds the grace period and hits the 15-day mark.
When you fall 30 days behind, you’ll be notified that they intend to put a “hit” on your credit report and charge you late fees. By law, a lender cannot put anything negative on your report until you reach this point.
The mortgage company will urge you to contact them and settle this deficiency. The law requires lenders to inform you of the process and their intent. They will drown you in paperwork to keep you in the loop, as they know simple errors such as a missed notice can have their case thrown out of court.
However, you must know they’re more than willing to work with you if you’ve lost your job or had other unforeseen events. The worst thing you can do if you don’t want to lose your home is to ignore their calls or notices.
2. Suit Filed in the Courts
The next step in the process is for the lender to file a lawsuit in court. They must be granted the legal right to take control of the property. Remember, you can still live in the home this entire time, but when the lawsuit is filed, it doesn’t mean it’s the end of the road.
You’ll receive notice of the court date, and in most states, you have 20-30 days to answer the claim against you. The paperwork will lay out the instructions. Some jurisdictions still have hearings, but others do the entire process by mail. If your circumstances have changed and you’re eager to settle the debt, you may still have a small window to fix things.
Now, once you’re this far behind, the lender doesn’t have to accept anything you might offer, but it doesn’t hurt to try if you’ve fixed your financial issues. If you don’t respond to the lawsuit, the lender will win by default.
Once they are given the right to take control of the property, the clock starts ticking for your family to evacuate. If you don’t live in the home at the time, the lender will come and secure the property. They will change locks and take other precautions to ensure their investment is protected.
3. The Sheriff’s Sale
The final step in the foreclosure process is the sheriff’s sale. The new owners will want you out so they can proceed with their intentions for the property. You’ll be notified about the sale and can even be there to purchase the home back from the lender for a significantly lower price.
Once the sale is final, the new owners will have the right to take over the home. However, you still also have rights. The sheriff will remove you from the house if you haven’t vacated. Typically, you’ll have between 12-20 days, but you’ll know what they’re doing every step of the way. It’s wise to vacate the property soon after the sale, if possible, to avoid your stuff being sat on the street corner.
Looking for Support and Resources
It’s not uncommon to feel hopeless and helpless after such an ordeal. Knowing the process fully and the steps that will occur can help you mentally, so you’re informed every step of the way. Losing your home is a significant blow, and you must secure new housing.
There are resources in your area that can help. For instance, the USDA and HUD provide housing to those who fall within a certain percentage of the poverty level. If you’ve lost a job or have health issues preventing you from working, applying for subsidized housing might help you secure a new home.
Additionally, most regions have a homeless committee that can help. They might be able to assist with temporary shelter and help you secure a new residence. Some will even assist with the deposit and the first month’s payment. It’s imperative to contact local resources to ensure you’re not living in your vehicle or in some other horrible situation.
Above all, you should consider counseling both for your mental health and your finances, as this is a lot to digest. Coming to terms with what’s happened and preventing such an event in the future is wise. Some things are out of your control, and life will throw you many curveballs. Thankfully, you can learn how saving just a few dollars each week can help protect you during these unforeseen events.
Final Thoughts
The most important thing to remember when going through something as challenging as a foreclosure is that you’re not alone. Currently, the foreclosure numbers are higher than normal. It’s estimated that one out of every 3,050 homes will be foreclosed on annually.
With the costs of living increasing, insurance premiums at record highs, and inflation, it’s easy to see why so many people find themselves in these situations. Even if your home is foreclosed on, you can file for bankruptcy, clear these debts, and start the rebuilding process.
The key is not to focus on the part where you stumbled financially but to look to the future and build it bigger and better.