A foreclosure is the legal means by which your lender regains control over your property. The process is governed by the various state laws. Each state has disclosure guidelines, time lines, and restrictions as to how the foreclosure proceedings must be conducted. The lenders must follow the laws in each state when foreclosing on a property.

At a certain point of loan delinquency, a lender will exercise their right to foreclose on the property. When a lender determines that they are going to begin foreclosure proceedings on your property you will begin to receive notices from attorneys with demands for full payment. When these demands are not met in the time frames outlined, the lender has the legal right to accelerate the mortgage. This means that the loan you thought you had with 28 years remaining will soon be due all at once. The letters surrounding demand, acceleration and the actual establishment of a foreclosure date are intimidating to the homeowner.

Why is it important to stop foreclosure and make the effort to avoid foreclosure altogether with either a Loan Modification, Hybrid Refinance, or a Short Sale with your lender?

When you originally took out your mortgage, and went to settlement with all the happy realtors, lenders, and settlement attorneys that were dreaming dollar signs and just wanted you to quickly sign the 150 pages of documents so they could get rid of you and get paid, there was a very important document in the pile. It was called a Mortgage Note. You signed a Deed of Trust and a Mortgage Note. The Deed of Trust attached to the house or otherwise termed the collateral. Conversely the Mortgage Note attached to you and made you personally liable.

I had a client on Friday that decided after several months that he didn’t want to finish his short sale because it was taking too much time. This guy is actually in the business and did not understand the ramifications of the Mortgage Note. I explained it to him like this. If you are not personally liable for the mortgage thereby giving the lender the legal right to come after you, then why do lenders require Mortgage Notes and not just a Deed of Trust. I mean come on, why don’t we just consider all loans non recourse. Right about that time he woke up and said, “ah….” . Yeah, and your in the business!

This is precisely why it is important not to dump your problem in your lenders lap. You need to be responsible and provide your lender a solution. The Short Sale is an excellent means of avoiding foreclosure and helping yourself out of a bad situation. Don’t be fooled by what you hear. You owe the lenders the money and even if you can’t pay it don’t give them an incentive or legal means of getting any type of judgment against you. You will recover from this real estate mess. When you do, you will not want to deal with the headaches of the past.

Oh and lastly, get out of denial. You have a problem and you are not helping yourself emptying the retirement accounts and running up the credit cards with no solution.

On a positive note, has your check from the government arrived in your mailbox yet? You better go check the mailbox. You know the one from all the bailout program that you are expecting. What about your happy lender that just adores you? Has your one sided Loan Modification been approved yet? I am thinking that you either have a big check on the kitchen table or your lender values you as a customer so much that they just called you and said, “Spin the wheel and name your new lower payment”.

Tomorrow is another day, keep checking the mailbox or get a solution. Your lender literally does not give a “rat’s ass” about you. I am blogging from the front line of the housing crisis. Check out thenegotiatedsolution.com for answers.

Ghunter

Submitted on Monday, November 10th, 2008 at 7:37 pm