Dealing with a foreclosure can be quite a stressful and scary experience, especially if it resulted from a sudden event. To go from one day possessing amazing credit to the next experiencing a tumultuous drop in your credit score and a loss of your home can be hard to grasp. In times such as these homeowners are searching for answers to their questions. They need to sort out the details as quickly and as easy as possible to get things moving in the right direction.

Some homeowners miss consecutive monthly mortgage payments and as a result they are in serious risk of foreclosure. What they do not know is that if they keep constant communication with their lenders, they can prolong the foreclosure process.

How many missed payments are you allowed before your lender starts the foreclosure process?

These guidelines will vary by state and by lender. Most lenders will start the foreclosure process after a payment is 30 days overdue. Others will wait 3-6 months. It’s important to know that lenders understand when hardships occur and they can be patient as long as you discuss your hardships with them. Many homeowners put off this conversation and do not respond to communication from their lenders and they end up knee-deep in foreclosure when they could have had more time to regain their previous financial status.

If you are concerned about a possible job loss or medical problem, you can contact your lender and inquire about any programs designed to help borrowers avoid foreclosure. If your lender is aware of your situation you will stand a better chance of preventing a foreclosure situation and maintaining your home ownership.

Homeowners who are worried about a possible job loss, medical problem, or the payments going up due to an adjustable rate mortgage, should call the lender as soon as possible and ask if there are any programs offered to help prevent foreclosure.

How is the homeowner notified of foreclosure proceedings?

You will be notified by mail when a Notice of Default is initiated by your lender.

How long do you have once the Notice of Default is initiated?

Lenders must wait 90 days to give you time to make up the payments. After 90 days, the lender can auction off the property and sell it to the highest bidder. If the house does not sell, the lender takes the property.

Note: During this time, if you haven’t already done so, contact your lender and try to negotiate more time. If you are in the process of acquiring more money or you are genuinely on your way to a better financial outlook, they may negotiate a deal with you.

Lenders must then wait 90 days. During that 90-day period, the borrower has the right to make up the back payments and reinstate the loan. After 90 days, the lender is required to publish a notice in the newspaper for 20 days and sell the property to the highest acceptable bidder on the courthouse steps. If no acceptable bid is received, the trustee then conveys the property to the lender.

Will I receive any money if my house is sold at auction?

Once the house is sold and the remaining balance on the mortgage and all taxes and attorney fees are paid, what is left is known as “overbid funds”. You are entitled to that money by law; however, in most situations it is negligible.

Foreclosure is a serious matter

Foreclosure should be taken seriously, whether in the preparatory phase or in real time. If you are struggling at all financially and you think you will miss a mortgage payment, it is better to communicate with your lender right away than to let it go. Eventually your lender will contact you and the more unresponsive you are the faster they will proceed with the foreclosure. Contact an attorney if you are unsure of your rights and keep the lines of communication open at all times.