My wife blamed me for all of the years we struggled to keep our house. I kept telling her that the banks were completely uncooperative, and they were making it impossible to resolve the situation before it became worse. By the end of the ordeal, she conceded that the bank did nothing to help us keep our property. We needed help with foreclosure, and we got nothing. They only wanted to get it back in their control, so they could auction it off for half of what they said we owed them.
In my last video, I talked about how foreclosure starts. This video gets into what happens to you after you have missed several payments. We will go through everything in the foreclosure process, so you know what to expect during this incredibly painful experience.
NOTE: The information provided by John Ross is intended for educational use only. Please consult with a registered professional before acting on any information herein.
0:00 What is Foreclosure Process?
0:37 Missing Mortgage Payments
1:57 Loss Mitigation Options
3:39 Going to Court
5:48 Final Days in the Property
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If you miss a payment on your loan that’s due on the first day of each month, most lenders will normally offer a grace period and give you a little bit of breathing room to make payments until the 15th of the month. You may incur a late payment fee after that, and receive a missed payment notice after 30 days. This is when it will be reported to the credit bureau as a missed payment.
If you still haven’t paid after two payment cycles, lenders can now send a demand letter to follow-up on your debt. You can still work with the lender to make arrangements on catching up with your loan. To get you caught back up, they may charge you an extra $300-500/mo until you have it current. They will also keep hitting your credit report as being delinquent until you are completely caught up. This alone will destroy your credit. The other issue is that if you fell behind in the first place, you likely don’t have that much extra money laying around. Remember, you’re dealing with a bank, and they just don’t care.
If Loss Mitigation/Mediation has not resolved the foreclosure, the process continues. While you can still stay in the home until the property is sold, you will be sent an eviction notice that demands you vacate the premises by a certain date. If you leave, great. But strangely, you don’t actually have to. You don’t have to do anything until the Marshall is knocking on the door with a locksmith standing next to him.
Depending on your state, A notice of trustee sale will be recorded if you still fail to make payments. A notice will be published in the local newspaper for three weeks and your property will be placed in public auction, and awarded to the highest bidder. Whoever wins is entitled to immediate possession. If nobody buys the property, the lender will be the owner. They can now attempt to sell the so-called “bank-owned” property through a broker.
You won’t necessarily be around for all of that. The bank wants you out as quickly as possible, so they can go about doing their thing without you in the way. My advice is that you sell all of your valuable excess stuff online, before moving out.
We actually found a good rental early on in our foreclosure, so we simply left. Little did we know this was more than a full year before we actually needed to. In retrospect, we could have stayed there rent free all that time. But the stress was too much to bear, we didn’t know what was going to happen, and here was a rental that allowed us to keep our dog and cats, so we took it. Keeping the family together was a priority for us.