The bottom line with foreclosure, it means losing your home. It’s a legal process to recover the balance of a loan from the borrower who has stopped making payments.
When people purchase a home, we refer to them as homeowners, but they really aren’t. They are officially borrowers. They don’t truly own anything yet. This involves either a mortgage or deed of trust for the loan agreement.
There are a number of reasons why a borrower stops paying their home loan. It is usually due to unemployment, divorce, death, or medical issues. Perhaps it involves an out of state work transfer, or even unaffordable maintenance issues. Sometimes it involves a reduction in property values, owing more than what the home is worth and it’s overwhelming. No matter the reason, possible foreclosure is a stressful situation for sure! Bankruptcy may be option for you.
Specific aspects of foreclosure can vary from state to state, but it generally involves five general steps.
It all begins with missed payments, and not meeting the terms of the loan. Following this is a public notice. After a number of months of missed payments, the lender records a public notice with the County Recorder’s Office. It is to make the borrower aware that the danger now exists with losing all rights to the property and they may possibly be evicted. It is a clear sign that they are now in danger of foreclosure.
Some states require this notice to be placed on the door of the property. The pre-foreclosure stage is a grace period, which does depend on local regulations. This is a time when the borrower can perhaps work out a deal with the lender, or pay off the outstanding amount. An auction is next. If it is not sold at auction, then the lender takes ownership and it becomes bank owned or referred to as real estate owned. Here it is generally listed for sale on the open market, or sold at a liquidation auction.
A serious result of foreclosure is that it ruins your credit. The timing can vary by state, but it’s on your record for years. Eventually, you may qualify for another home, but it’s going to involve inflated interest rates until your credit is reestablished.
It is a difficult time for sure, but time, patience, and diligence with spending and baby steps to reestablish credit can bring about a financial healing. A new beginning is possible. It just takes one day at a time.
The attorneys at our bankruptcy firm are skilled and experienced in helping people through the foreclosure process. Depending on your situation, our counsel can help you every step of the way, beginning with your legal rights and options on how to move forward. We have five locations throughout Massachusettes, including Framingham, Westborough, Leominster, Watertown, and Worcester. Call today to set up your appointment 781-277-0411.