Avoiding Foreclosure Through Communication

First, it must be assessed whether or not the homeowner is in danger of losing his or her home. Answers to a few simple questions are a good indicator of what is lurking ahead: Has a first house payment been missed? Haven't missed a house payment yet, but afraid it is inevitable in the near future? Has the financial situation changed due to a financial hardship—lost job, medical expenses, divorce, child care services? Are credit cards being used to buy groceries and is credit card debt out of control? Is it becoming more difficult to pay bills on time?

If “yes” was the answer to most or all of these questions, then it is time to take action that will supersede the problem before it happens, hopefully avoiding foreclosure.

Do not be naive and think that “This won’t happen to me” or “I think I have more time.” Those are defense mechanisms that only prolong the inevitable. Face reality because here is how it will likely happen if too many house payments are missed, but remember all of the state’s timelines are different.

Here is the basic timeline for the sequence of events taken by your lender following missed mortgage payments. When a first month’s payment is missed, the lender will try contacting the borrower either at home or at work. If that does not work, then a letter will be forthcoming. Once the bank makes contact and if the homeowner is receptive, a housing counselor may be suggested by the lender and an appointment set up. The housing counselor will assess debt and assets and suggest the best option available for avoiding foreclosure.

If a second month goes by and still no word from the homeowner after numerous tries, the lender will more than likely begin to think something is wrong. These people are trained to sense oncoming borrower trouble and at this point step up efforts to reach someone, even if it means sending an representative to the home, but DO NOT avoid the lender. He or She can be a friend, especially now. Always remember the bank who holds the deed to the home really does not want the home; it wants to sell the home to whom it was contracted for all the interest that the home will accrue over the long term, assuming that payments are paid on schedule, which is how banks profit.

After a third month goes by and letters go unheeded and still no personal contact has been made, the lender has no other choice then to use all their pull and strength that they have to let the homeowner know that he or she is on thin ice. A letter stating a 30 day notice to bring the mortgage current will more than likely be sent. And if this fails and a fourth month goes by, foreclosure proceedings will no doubt begin by the lender in earnest. It is therefore imperative, if not having yet done so, to make contact with the lender. But even at this point it is still not too late to sit down and talk with the mortgage finance representative about current financial circumstances. If the lender can it will offer the best solution for the situation before foreclosure is an inevitability.

Another inevitability, if no communication has been initiated between the homeowner and the lender after the third month without payment, when the 30 days end, if the full or at least some of the mortgage has not yet been paid and no arrangements have been made, the homeowner will be referred to its lender's attorneys, and the homeowner, as part of the court 's proceedings, will wind up having to pay the lawyer’s fees.

After that time, the lender’s attorney will arrange a Sheriff's or Public Trustee's Sale. The day of the sale will be considered the actual day of foreclosure.

The best advice to avoid foreclosure if it has not been yet realized is stay in contact with the lender and ask for assistance at the first sign of financial hardship. By talking to the lender and explaining the circumstances and how a plan of action has been implemented or about to be implemented to resolve the debt, the lender will hopefully be more willing to work with the proposed plan.

This will alert the lender and a solution can hopefully be compromised to avoid foreclosure before the debt reaches a level that realistically can never be paid.