Default happens on a house loan once the borrower defaults, or violates terms, at a mortgage contract. One of the most typical kinds of default is creating overdue mortgage payments. Default does not automatically mean that the house is in foreclosure, and a late payment does not automatically set the loan . Ordinarily, when a homeowner overlooks one mortgage payment, it is simply considered overdue and the lender assesses a late fee. When a borrower accomplishes a subsequent payment, then the mortgage is considered in default. If a debtor continues to miss mortgage payments, the house will eventually go into foreclosure. It is simpler to work out a settlement before a house goes into foreclosure, rather than later.
Contact your loan servicer. Be prepared with monthly income and debts, assets and an explanation of your situation. Ask about options available, such as refinancing or even a loan modification. Inquire about government mortgage programs your lender participates in that may assist you in your circumstance. HUD has several Making Home Affordable plans that tackle a variety of mortgage requirements.
Call a local HUD-approved housing counselor or the Homeowners HOPE hotline. Housing advisers are trained to assist you understand foreclosure law and accessible options. They can help negotiate your situation with your lender. Telephone 800-569-4287 to find a local HUD-approved adviser, or call the Homeowners HOPE Hotline in 888-995-4673 for assistance.
Contact a reputable bankruptcy attorney. Find out the particular laws in your state concerning foreclosure and default. Understand the timeline and what measures your lender needs to take before your house goes to foreclosure. California foreclosures often happen out of court and might begin once a debtor misses a mortgage payment. Oftentimes, lenders must make a fantastic faith attempt to contact the debtor 30 days prior to initiating foreclosure proceedings. When there is no fix in the arrears by the end of 30 days, the lender may file a notice of default, which formally starts the foreclosure process. The debtor has three months to cure the default. Lenders can then possess the trustee program a sale , which completes the eviction process. For loans initiated after December 31, 2002, and from January 1, 2008, California law requires an additional 90-day waiting period if the lender doesn’t have an approved alteration program in place. Ask your attorney about options available to you. At some point, you might want to think about Chapter 13 bankruptcy if you would like to keep your property. Give 30 days advance notice for your attorney should you do.
Call your lender weekly. You want to understand the status of your loan discussions. Regularly contacting your lender keeps you updated on any progress. Even when no progress is made, your phone calls show your lender that you would like to resolve your loan default.
Consider your alternatives. If you are unable to keep your house, you might wish to take into account a deed-in-lieu or short sale. HUD’s Earning Home Affordable plans include incentives for lenders to take with no further action required of the debtor. You might even receive $3,000 for moving expenses.