How To Stop Foreclosure

Times can get tough and banks don’t always play fair. If your lender has sent you a notice of sale and you are looking for options, here are some ideas that might work for you. We have worked with many people who are in a temporarily difficult situation. We’ve all been there at some point in our lives but we don’t have to go it alone. We encourage you to reach out to us to review your specific situation and create a customized approach. We will never charge for our services.

What is the Foreclosure Process?

1. After a payment is missed, the lender will typically send out a notice of default. This is a first legal notification towards processing a foreclosure. This notice is not filed publicly in our area as Texas is a non disclosure state. 

2. If payments are not caught up, a bank may process a lis pendens which is a legal notice of filing for a foreclosure.

3. The bank will hire an attorney, typically referred to as a trustee or substitute of trustee, to file a notice of sale. 

   1.  A notice of sale means that the bank is providing notice to the mortgage owner that they will be selling the property at an auction on a given date and timeframe in order to recover the amount owed on the loan. 

   2. A notice of sale is filed with the county clerk records and viewable by the public online or at the courthouse. 

4. On the day of the sale, the trustee or substitute of trustee will begin the auction at the county courthouse steps. If the property is sold, it now belongs to the new owner. If it is not sold, it will become the property of the bank. 

What is the Impact of Having a Foreclosure on my Record?

1. A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae-backed mortgage for a period of 5 years.

2. On any future application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 form that asks “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?” This will affect future rates.

3. Score may be lowered anywhere from 250 to more than 300 points. Typically will affect a credit score for over 3 years.

4. Foreclosure will remain as a public record permanently, and on a person’s credit history for 10 years or more.

5. Foreclosure is the most challenging issue against a security clearance outside a serious misdemeanor or felony conviction. If a client has a foreclosure and is a police officer, in the military, in the CIA, security, or any other position that requires a security clearance, in almost all cases clearance will be revoked and position will be terminated.

6. Employers have the right and are actively checking the credit of all employees who are in sensitive positions. In many cases, a foreclosure is reason for immediate reassignment or termination.

How can I Stop a Foreclosure?

1. At a high level, your primary options are either pay off the full loan or make the loan current.

   1. Note that you have to get a payoff quote or a reinstatement quote

   2. Your quotes will include the principal and interest that is in arrears, as well as any taxes they paid on your behalf and attorney fees.

   3. By the time you have received a notice of sale, the bank has hired an attorney. This means that the bank will need to calculate their costs plus the attorney’s costs. 

   4. Most banks will take 7-10 days to process a request for a quote and will usually only give you one quote or the other.

   5. Other options can include:

      1.Postponement

      2. Deferment

      3. Forbearance

      4. Loan Modification

      5. Deed in Lieu of Foreclosure

      6. Short Sale

      7. Sell the House
      
      

   When dealing with a foreclosure, time is of the essence. Each of the above options take time to work through.