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What your foreclosure procedure will look like depends on
many things. It depends on your state laws, your mortgage
company’s policies, how quickly you act and what your
financial situation is. So let’s talk about what each of
these looks like.
Your state’s laws. Every state has different laws when it
comes to foreclosure. Some of them have what is called
judicial foreclosure and others have non-judicial
foreclosure. Judicial foreclosure basically means that your
bank has to go through the courts in order to foreclose on
your home. In non-judicial, the courts are not involved.
Some states have a right of redemption period. Others do
not. The timeline also varies widely by state. You need to
find out what your state’s laws are so that you understand
what foreclosure procedures look like in your state.
Your mortgage company’s policies. Every bank has their own
policies when it comes to foreclosure. If a large
corporation owns your loan, there are likely going to be
more hoops that you need to jump through in order to save
your home. No matter who your mortgage company is, you are
going to have to provide them with lots of documentation
about your financial situation. This will likely include tax
returns; details about your current financial situation;
recent pay stubs or proof of unemployment or business profit
and loss statement; and the reason why you have been unable
to make your mortgage payments. If your bank offers you a
modification to your loan, be sure that you understand their
loan modification procedures and everything that they will
require from you.
How quickly you act. If you act at the beginning of your
foreclosure procedure
or, even better, before it begins, your chances of saving
your home are better. The longer you wait, the more fees add
up; late fees, attorney fees, court fees, etc. If you act
quickly and contact your mortgage company early, you also
show them that you are interested in saving your home. If
you act before the foreclosure process begins, you may be
able to avoid any fees at all and avoid having your home go
into foreclosure at all.
Your financial situation. You need to be honest with
yourself and your bank about your financial situation. Are
your financial problems temporary? Do you expect them to
turn around soon? If you are currently unemployed but
believe that you can get work with a salary similar to what
you were earning before you became unemployed, your
situation is temporary. In this case, you can likely work
out a solution with your bank to perhaps temporary stop your
payments or to reduce them for a certain time period. If you
have had a permanent life change like a medical disability
or divorce, your financial problems are permanent. This
means that in order to keep your home, your loan payments
will need to be drastically reduced. Check with your
mortgage company to see if they can work with you.
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