This may be a time where you a hurting for money. You are living paycheck to paycheck, barely paying the bills at the end of the month. Thoughts might be going though your head, like ‘what happens if I miss a mortgage payment, will I lose my house to foreclosure?’ This is a great question and valid one, considering that most people are usually one paycheck away from not making all their payments at the end of the month. Read on to find out what exactly happens when you default on your mortgage.
First, it is important to note the mortgage default and foreclosure laws vary from one state to another. So it is very important after reading this article to do some more in depth research on the laws in your particular state, possibly talk with a foreclosure attorney. Secondly mortgage lenders can also vary the way they approach mortgage defaults, so you will want to talk with your bank as well.
Most banks dread having to foreclose on you; they find it more cost and time effective to help you stay in your home than start the foreclosure process. So if you have or are about to default, the first thing you should do is talk to your lender immediately. They will try to come up with solutions for you before starting foreclosure proceedings. Foreclosure is very time consuming for a bank, because, as the new owner of the property, they must find someone to manage and sell it — this is all something lenders would like to avoid. So this fact is one that is working in your favor.
What happens when you default
Here are some standard things that happen when you default on the mortgage. After 16 days of being in default, you will start getting late fees. The amount of your late fee is determined by your personal mortgage, usually around 3 percent. This is 3 percent of the balance due, not just the payment you missed, so the bigger your mortgage, the higher this number will be.
Once you have become 31 days late, some lenders may handle the default by allowing you to do a partial payment, while others will want the full amount. This all depends on your lender — even if you send them a check for some of what you owe, they may return it to you demanding the full total.
Once you hit 45 days in default, you now will be getting regular calls from mortgage collectors. Keep in mind if this happening and they are calling you at work, you can tell them not to bother you there and by law this must abide. Another law set by the Fair Debt Collections Practices Act (FDCPA) is that no one can call you before 8am or after 9pm. So if you are being harassed on the phone, it is important to know your rights. But certainly expect the calls to keep coming, until you figure out how to avoid foreclosure.
Usually the first official mortgage default will be sent to you in 60-90 days after your last payment. Generally it will come certified mail, so the lender will know when and if you received it. This is the last chance to come up with some money and stop foreclosure proceedings from happening.
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