These days, unfortunately many people are facing a tough economic situation. And often, their biggest monthly liability is their mortgage payment. So what happens when someone falls behind on their mortgage?Here's a choronological timeline of this process, which is foreclosure:
*1-4 payments behind: When a property owner starts missing their mortgage payments, they will initially gets calls from the collections department trying to collect the amount in arrears and possibly set up a repayment plan to bring the mortgage current. Letters warning of foreclosure will also be sent at this time.
*4+ payments behind: If the mortgage is still falling behind, the foreclosure process begins at this time. This is the legal process that the bank uses to take back the property for not making the mortgage payments. At this point, the bank's Loss Mitigation Department will try to work with the property owner to resolve the delinquency. Some of these options may include a loan modification, a partial claim, or a forbearance.
*The Sale Date: If nothing was able to be worked out with the bank's Loss Mitigation Department, the property is sold at auction to the highest bidder. If no one buys the property, it defaults back to the bank as a Bank-Owned property.
If you know of someone that is going through this difficult and emotional process, have them contact their bank directly and ask them the speak to the Loss Mitigation Department. Even though the name of the department may sound intimidating, the process is designed to be simple to help the property owner. More than likely, they will need to take their financial information over the phone to see if they qualify for assistance.
Beware of 3rd party companies that charge hundreds or even thousands of dollars for these services. I'll cover that in my blog next month.
Thanks for reading!
Manny Carrillo
REALTOR®
SJ Fowler / GMAC Real Estate
4015 S. McClintock Dr., Ste. 110
Tempe, AZ 85282
480.338.3062 - Direct
www.mannycarrillo.com
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