What is Foreclosure?
When a homeowner fails to make the payments due on their home loan, the mortgage company can ‘foreclose’. This means that the lender can force a sale of the home to pay for the outstanding balance of the loan.
Timeline of a Foreclosure
| Day 1 | You are in default two days after your payment is due. |
| Day 32 | You have now missed two monthly payments. |
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Day 32-90 |
Sometime during this period you will receive a letter stating that the Notice of Default (NOD) has been recorded. The speed with which lenders send NOD depends on the policy of each individual lender. |
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NOD Recorded |
From this day, the next 90 days is a silent period. You have this time to pay all back payments, fees, and other charges due to your mortgage lender and your default will be cured. |
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Trustee Sale Date |
If you have not caught up on your payments, fees, and other charges at the end of the 90-day silent period, you will receive a second letter specifying the date that the Trustee’s Sale will take place. This will be the sale of your home. This usually takes place 3 weeks after the date you receive the second letter. |
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Right to Cure |
You have until 5 business days beforethe Trustee’s Sale to reinstate your loan and cure the default by paying all payments, fees, and other costs associated with the foreclosure. |
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Eviction |
After the Trustee’s Sale you may have up to 30 days to remain prior to being evicted. |
How to Stop Foreclosure?
If your home is at risk of foreclosure, you have several options, depending on your circumstances.
1. FILE CHAPTER 13 BANKRUPTCY
A Chapter 13 bankruptcy, by operation of federal law, will guarantee that you can save your home from foreclosure. You must qualify for this type of bankruptcy, and you must comply with all requirements. Assuming you qualify and are filing in good faith, you can file for bankruptcy anytime before the foreclosure sale, even minutes before the sale takes place. Even if a foreclosure sale does take place after the bankruptcy is filed, you can still have the court deem the sale VOID. This is called an ‘automatic stay’. You may even be entitled to attorneys’ fees and damages if your lender had notice of your bankruptcy filing and still took action to sell your home.
It’s important to note here that a Chapter 7 Bankruptcy will not help you avoid foreclosure. Your mortgage company will file what’s called a ‘relief from stay’ and will be able to continue and complete the foreclosure process, despite your bankruptcy filing.
2. MODIFY YOUR LOAN
You may apply for a loan modification with your mortgage company to adjust the terms of your loan and make it easier to pay. If a complete loan modification application is received more than 37 days before a foreclosure sale, the sale cannot take place. Ultimately, if your modification application is approved, the foreclosure will be permanently stopped, so long as you keep up with the modified payments.
3. SELL YOUR PROPERTY
If you have equity in your home, you may consider selling and cashing out before losing it to the foreclo- sure sale.
4. FILE A LAWSUIT
If your mortgage lender acted in bad faith, or participated in unfair lending and business practices, you may be able to sue the mortgage company for money damages, and request that the court stay (or sus- pend) all foreclosure activities with a temporary restraining order.
5. PAY OUTSTANDING BALANCE
If you can find a way to come up with the money to pay your entire balance due at least 5 days before
the foreclosure sale, the mortgage company is obligated to take the payment and stop the foreclosure. However, if you try to make the full payment within 5 days of the sale, your mortgage company is not required to accept your payment. Pay close attention to the deadline and obtain an accurate payoff figure.
6. GOVERNMENT ASSISTANCE
As a results of Covid-19, a multitude of consumer protection laws have been passed, including a moratorium on foreclosures, and new loan modifications programs. Please see our Covid-19 Consumer Protection Guide at: www.voklaw.com/covid19-consumer-guide.
About Vokshori Law
With our clients at the heart of all we do, we live by these values:
- Treating all of our clients with the compassion, dignity and respect that everyone deserves,
- Proactively finding innovative solutions that meet the unique situations of each client,
- Delivering our very best in all we do, and holding ourselves accountable for the results.
That’s the Vokshori Difference!
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