No one wants to deal with a foreclosure, especially after months of struggling to pay your mortgage on time due to lost wages. As the homeowner, you will be notified of your lender’s intent to foreclose on your home. The lender can go about entering the foreclosure process in one of two ways: judicial foreclosure or nonjudicial foreclosure.
In a judicial foreclosure, after the lender sends a letter of intent, and additional mortgage payments are still not received, the foreclosure process can begin. This process can take several months.
A nonjudicial foreclosure, on the other hand, does not require the lender to file a lawsuit. This can be more expensive to deal with because it requires you, the homeowner, to file your own lawsuit against the lender to protect your interest. Either way, it is best to hire an experienced real estate attorney to walk you through the foreclosure process.
A real estate attorney is well-versed in foreclosure law and can explain all of the potential solutions to delay or prevent you from losing your home. Contrary to popular belief, lenders are not eager to throw you out of your home. They would rather not have to deal with the real estate market by putting your home up for sale.
Therefore, a real estate attorney is a skilled negotiator and can send a letter to the lender on your behalf. In return, lenders are more prone to responding in a timely manner if a lawyer is involved. The quick response can also be contributed to the fact that real estate attorneys have established relationships within most loss mitigation departments of lenders, and they know exactly who to contact.
Some of the potential solutions that a real estate attorney can negotiate on your behalf include reinstatement, mortgage modification, refinance, short sale, deed in lieu, and bankruptcy.
To reinstate your mortgage, you will need to be able to pay off all of your missed payments, plus any interest fees acquired after you received the notice. Different states offer various grace periods in which you can legally reinstate your loan. If you cannot make up payments during that grace period, then mortgage modification may help you. Mortgage modification is when the original agreement in the loan is changed, normally due to a homeowner’s inability to pay, and debt rescheduling is negotiated.
However, if you have no plans to remain in your home, then a short sale is the option that most homeowners tend to choose. Along with a lawyer, you will want to work with a realtor that can get your home sold relatively fast. If a short sale fails to work, you have the option of deed in lieu or bankruptcy.
Deed in lieu occurs when you transfer all rights of your property to the lender, and bankruptcy wipes out some or all debt. However, this greatly affects your credit rating. In any case, a lawyer will be able to tell you which options are best suited for your unique situation.