Homeowners in Default Ought To Know the Foreclosure Timeline

by Tom Webb on January 6, 2012

Foreclosure is a frightful situation for any house owner. Many various things happen within the foreclosure process and the servicers actions are different depending on the servicer. There are a couple of things however that remain constant when a home owner is going into foreclosure.

First, a bank will attempt to reach out to a house owner at the onset of delinquency. It is great practice for a bank, mortgage company or mortgage servicer to try and resolve any delinquency directly with the borrower prior to foreclosure. This is for plenty of reasons specifically that it’s less costly for the bank to work out loan issues with a borrower than to foreclose on the property. Federal guidelines also dictate certain responsibilities of lenders including a “Hello Letter”. Lenders have adapted to owners in foreclosure and hard-line collection efforts are not the standard. A homeowner going into foreclosure should talk with their lender to ascertain available options.

When a servicer has exhausted the opportunities to work with a owner to cure a delinquency, they can often begin the process of foreclosure. The servicer will have to follow state and local laws as they apply to foreclosure. Each state has their own guidelines as it relates to how foreclosure can be filed, the timeline in which the process will have to take place and other rules such as an imperative redemption period. It is a best practice for a owner who knows that foreclosure is eminent to educate themselves on the local and state laws as they apply to foreclosure. It is better for a borrower or former owner to grasp the laws and timelines then to be in the dark about the laws.

When the foreclosure is completed and the servicer owns the property, the former owner must leave the property unless accommodations are made with the servicer. Some servicers supply a relocation help program often referred to as “Cash for Keys”. These programs make allowance for a payment to the previous owner in return for possession being turned over to the servicer in good shape. Servicers will most likely retain a local real-estate agent or lawyer to help them in restoring possession of the repossessed property. Once the property is vacated, it becomes REO. REO is an abbreviation for Real Estate Owned, commonly known as bank owned properties that are bought by investors and new homeowners.

When a homeowner is in default or if their income levels will no longer permit them to maintain their loan, it’s a good idea to reach out right to the servicer and understand what options are available. Servicers must protect their investment in the in the dollars lent on thehome and will follow rules that are both internal and government mandated to do so. Understanding the process and talking with the servicer will make the process of foreclosure more amenable to a borrower that may inevitably lose their home to the foreclosure timeline.

Tom Webb is a local REO agent and works with homeowners in default. More information can be found regarding REO and bank owned homes at http://www.reoopportunity.com.

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