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Different Types of Options When Facing Foreclosure


Foreclosure is not an easy process for anyone. No matter what your situation is or how you found yourself it in, the emotional ups and downs of the process can be overwhelming. There is hope though.

Just because your mortgage company has begun the foreclosure process does not mean that it is all over. To understand why you will first need to understand that foreclosure is a long process most of the time. There are exceptions though as some states, such as Texas, which is the fastest foreclosure state in the country.

Texas usually takes about two months but some homeowners have found that they only had forty-five days from start to finish. New York is probably the state that takes the longest to foreclose in as it is normally a ten month process but can take as long as three years.

There are guidelines out there that you can look into to see how long it takes for a foreclosure to be completed in your state. It is just a guideline though as it could be off by a couple months or more.

What Is Foreclosure?

Foreclosure is the legal process in which mortgage companies seek to claim the property as theirs so that they can sell it at auction. The monies that are collected from the auction are put towards the amount of money that is owed to the bank.

The action of foreclosure is started because the homeowner defaulted on the terms of the mortgage that they agreed to take on. Usually, it is not until the homeowner misses three payments in a row that the bank takes any sort of legal action.

What Are The Options?

Some people get notice of foreclosure and they automatically assume that there are no options for them. This is not true however as there is still enough time to work something out.

As long as the situation that caused you to fall behind in the first place is done with, and you have income to support the monthly payments, there should be options that you could qualify for. Giving up is the last thing that you should be thinking of doing.

Talk with your mortgage company and make sure that you are speaking to their loss mitigation department. The actual department name may vary from company to company but if you ask for the loss mitigation department, they will know what you are talking about and refer you to the correct department.

See what options there are for you to keep the home. After your financial and expense information is taken, you may be offered a loan modification or a repayment plan. Go with what is offered to you as the best solution as they are the professionals and they know what is in your best interest.

What's The Most Popular Option People Take?

That really depends. Those who decide not to communicate with their mortgage company may decide to simply walk away or file bankruptcy because they are unaware of other options.

Homeowners who take the time to talk with the mortgage company usually end up on a repayment plan. The loan modification is generally only allowed to be offered to each customer a certain number of times for the entire course of the loan. This is to prevent abuse of the benefit.

Those who can easily afford a repayment plan tend to do that first in order to save the loan modification for a time where they may not be able to afford a plan. In certain circumstances, homeowners with an extremely bad payment history may be asked to start with a repayment plan but then may be approved for a loan modification after a couple of payments on the repayment plan.

This is to prove that the homeowner can actually afford the home and to establish a good enough payment history to be approved for the loan modification.

Where Can You Stay Until Things Are Sorted Out?

If the home is still legally yours then you do not have to move. You can continue to stay at your home until you are forced to leave. Of course, if you will want to start to prepare for the worst-case scenario just in case, but otherwise you should stay out.

Even if the home ends up at auction and someone buys it there, you still may not have to leave just yet. Some states have what is called a redemption period which means homeowners can still get their home back if they pay off the loan within a certain period of time after the auction. You may have the legal right to stay in the home during that time.

Can Your Kids Go To The Same School?

If you are no longer living in your home because the foreclosure process become final, you may or may not be able to keep your children in the same school district. For those that are renting a home or an apartment or temporarily staying with friends or family in the school district then yes, you can keep your children in the same school.

Sadly though, if you find that you had to move out of the school district then you are going to be told by the school district that you have to transfer your children to your new school district, even if your move there is only for a short period of time. This is generally because of funding that schools receive and politics that are involved.

In closing, you really want to start looking into your options as soon as you realize that you are heading down the road of foreclosure. Work with your mortgage company and provide them with all of the information that they will be asking from you. As long as you cooperate and do not waste time, you should have no problem pulling your home out of the foreclosure process.