People fall behind on their mortgages every day. In our latest post, we can help you learn how to stop the bank from foreclosing on your Salt Lake City house!
How To Stop The Bank From Foreclosing
Why Do The Banks Foreclose?
Banks foreclose after multiple missed payments. In Utah this is after at least 3 missed payments. This can happen to the very best people for all sorts of reasons. Divorce, job loss, the death of a loved one, family addition, and sudden illness are all common causes of missed payments. The last thing people need in any of these situations is to lose their house on top of everything else they are going through. If you are not able to repay the bank what you own, the bank will foreclose on the property and resell at auction in an effort to recoup their money.
How to Stop Foreclosure
The four most common ways to stop the bank form foreclosing on your home is to file a chapter 13 bankruptcy, apply for a loan modification, complete a short sale or sell your house on the MLS or to an investor.
A chapter 13 bankruptcy is typically the fastest, the least expensive and most successful way to stop foreclosure if keeping your house long term is what you want. This method may even help you reduce some of your consumer debt. One draw back to bankruptcy occurs if you decide to sell your house.
Loan Modification is a process where the mortgage holder negotiates a new payment plan with your mortgage company. Many times the mortgage company will add the payments that are behind to the back end of your loan, but many times your payment will go up.
Sell Your House on the MLS or to a professional home buyer. Selling your house on the MLS will often times result in the highest offer for your house, but it will take a couple of months o complete the sale. Selling your house to an investor will provide for a much simpler transaction with rent-back or buy-back options.
Negotiate a short sale with your bank. Short sales are not as common as they once were because of rising home prices, but they do happen.
I will go over each of these options in more detail at the end of the article. This will help you decide which foreclosure prevention plan will be the best for you.
What is a Foreclosure?
Foreclosure in Utah can be a difficult and frustrating process. Not only can you lose your house, but your credit will be in the worse possible shape if your house goes to the end of the foreclosure process. It can be difficult for anyone to handle and even be a little embarrassing. It does happen to people all the time though. You are not the first person going through it, and you certainly won’t be the last. The good news is, that if you are still in possession of your house, there are some things you can do to stop the banks. But first lets look at the foreclosure timeline in Utah, so you know where you stand.
In Utah the pre-foreclosure process can start once a homeowner is 90 days late on their payments. Once a homeowner is 90 days late, the Mortgage holder will issue a Notice of Default. The notice of default is giving the homeowner another 90 day’s notice that the house will be sold at auction if the default is not cured. After 90 days from the Notice of Default date, a Foreclosure Sale Date will be issued. A Foreclosure Sale Date is giving you 3 week’s notice and the exact date your house will be sold at foreclosure auction. If the bank does things as fast as they can per the law, the process I just described will take about 7 months starting from your first missed house payment. The #1 advice we give if you recently got a notice of default, is to start your research to formulate a plan to meet your needs of keeping your house or selling your house. The worst outcome is to have your house auctioned off and lose all of your equity and have your credit trashed. We see this happen on a weekly basis.
Banks are not in the business of making money on properties they sell at an auction like a real estate investor. The bank only seeks to regain its investment of the mortgage amount and back payments. If a foreclosed property provides more money than what was owed, the excess funds should go to the former owner in Utah.
It is an important thing to remember to maintain the property as much as possible. Most foreclosures are purchased in complete disrepair because former owners take frustration and anger out on the property being seized. Keeping the property in pristine condition can yield higher sales and thus money back to the former owner. There are often fees to get the money you deserve, and you will probably need to pay legal fees to an attorney to request the money due to you.
How Does Foreclosure Effect You?
It is Embarrassing and scary –
You will get a ton of mail, people may knock on your door and your phone will ring off the hook from investors, real estate agents and your mortgage company. The sooner you act, the faster these actions will stop.
Your Credit Gets Ruined –
Foreclosure hits your credit significantly. In addition to the late or non-payments of the mortgage, the sale at auction or seizing of the property can drop credit scores two hundred or more FICO points.
The foreclosure itself remains on credit scores for seven years, the same as a bankruptcy. Rebuilding your credit can happen immediately with a good payment history on a credit card or on auto loans. Most mortgage lenders will not consider a loan to someone with a foreclosure on their credit history for at least three years from the date of the foreclosure or the day the house is sold at auction.
Depending on the circumstances behind the foreclosure, some lenders will consider another mortgage sooner, but not before two years of the foreclosure sale date. Hardships that caused the late house payments, included a loss of job or severe family illness or death, may be taken into consideration. These need to be well documented and the circumstances leading to the foreclosure must be rectified prior to getting approval for a new loan. A foreclosure most of the time affects your credit the same as a bankruptcy.
You Can Lose Your House –
Utah is a non-judicial foreclosure state which means your mortgage company does not need a court order or a judge to approve a foreclosure. Your mortgage company will hire an attorney to do the foreclosure process for them.
In some states there is one way some homeowners are able to reclaim their home even after the foreclosure sale has occurred. This is called a foreclosure redemption and is available for homes seized through a judicial foreclosure.
If the home is eligible for redemption, the former owner has one year to complete the redemption in most states that allow this. The redemption requires paying the new owner for the total balance of the previous mortgage and reimburse the new owner for any repairs and upkeep. Unfortunately Utah does not allow a redemption period in most cases.
You Can Lose the Equity in Your House –
Especially if the bank finishes the foreclosure process and takes your house back or someone at the auction buys the house. You have many options if you act quickly.
Why Do Banks Foreclose?
Banks foreclose after multiple missed payments. In Utah this is after at least 3 missed payments. This can happen to the very best people and for all sorts of reasons. Divorce, job loss, the death of a loved one, family addition, and sudden illness are all common causes of missed payments. The last thing people need in any of these situations is to lose their house on top of everything else they are going through. If you are not able to repay the bank what you own, the bank will foreclose on the property and resell at auction in an effort to recoup their money.
How to Stop the Bank From Foreclosing?
Find A Buyer… Quickly if you want to sell
When you sell your house, the foreclosure process will stop in its tracks. You can try to find a buyer who can close quickly on your own, or you can call a professional house buying company who will always pay you a fair and honest price for your house. If you sell on your own or sell your house on the MLS to a buyer using financing, the sale could end up taking weeks or months to be finalized, and by then, the bank may have already foreclosed. With a direct house sale, you will typically be able to sell your house in only a few short days. And, at Gary Buys Houses, you probably qualify for our program to sell your house now, get your money now and move at a later date. It is called our Sell Now now Move Later Program.
Work Out A Deal or Loan Modification with your bank
When you first realize you are having difficulties making your mortgage payments on time, call your bank. They would rather work with you then deal with missed payments and foreclosure. Look into a loan modification which is changing the terms of your loan. You might be able to refinance and lower your payments. If you have missed a few payments, try to set up a payment plan to get back on track. Some lenders will agree to forbearance, forgiving the missed payment and adding it on to the end of your loan term. Before you do anything drastic, talk to the bank first. They are used to dealing with these situations and will likely have a solution to help you.
File For Chapter 13 Bankruptcy
If you file for bankruptcy, the lenders cannot attempt to collect payment until the court allows it. Make sure you choose the right type for your needs, Chapter 7 or Chapter 13, and that you have talked this through with an attorney. Filing for bankruptcy can have adverse effects on you and your credit for years to come. We think it is a good option to keep your house if you know you can afford the payments for the bankruptcy. It can end up costing you part of your equity in the long run if you fail at your payment plan a few times, so make sure you go over your finances in detail.
Negotiate a Short Sale
A short sale is when you own more on the house than the house is worth. A short sale happens when a homeowner and the bank agree to sell the house for less than what is owed. The bank will agree to this if the home has dropped in value and the homeowners aren’t able to make the payments. The bank would rather recoup the majority of what is owed instead of going through the long and lengthy foreclosure process. A short sale will usually look better on your credit than a foreclosure will.
Working With Gary Buys Houses
- I always be respectful of your situation. Bad things happen to good people sometimes.
- I am happy to discuss your situation and answer all of your questions with no obligation.
- I will review all of your options available to you even if it means we will not do business together.
- I can offer cash advances, free rent, long term rent options and even buy back options.
- A realistic plan is essential if equity preservation is your #1 goal.