Know Your Foreclosure Rights
When you take out a mortgage, you agree to pay the bank each month until the mortgage is paid off. If you lose your job, have a health care crisis or otherwise find yourself unable to pay, you might face foreclosure. Foreclosure is a legal process in which the bank resells your house and evicts you from it. If you are facing foreclosure, knowing all your rights can help you to calm down and make the decision regarding foreclosure that is in your best interest. It also helps ensure that nobody will take advantage of you during the foreclosure process.
First, you should be aware of how long you have to be in default before the lender can foreclose on your property. While state laws vary on this point, most states require you to be in default for 90 days. That means your lender can’t foreclose on the property if you’ve only missed one payment. Under the Fair Credit Reporting Act, it is illegal for your lender to threaten foreclosure in order to get you to repay if he or she is not legally entitled to foreclose on the property at this point in time.
Your lender must send you a written notice informing you of his or her intention to foreclose. At this point, you can still redeem yourself and stop the foreclosure. If you pay back your entire back balance, including any late fees and non-payment penalties, you can bring your mortgage current and the foreclosure process stops.
If you can’t bring your mortgage current all at once, don’t panic; you have the right to negotiate with your lender. Sometimes you can make an arrangement to pay a certain amount per month beyond your usual payment until you catch up with your mortgage payments. If you make this kind of deal with your lender, make sure to get it in writing.
Finally, if you can’t stop the foreclosure at all, you have the right to stay in the house until the foreclosure is finished and you are evicted from the home. You are responsible for property taxes and maintenance of the home during this period, regardless of whether you choose to stay in the home or not.
In some states, all is not lost if you’ve been foreclosed on. After the foreclosure has gone through, you may have the right to redeem the home, depending on state law. If your state allows it, you can buy the home back by paying the entire balance of your mortgage plus a statutory rate to the lender. You usually have 6-12 months to do this.
Although it can be terrifying to contemplate losing your home to foreclosure, don’t panic. You have a lot of rights related to foreclosure; you won’t be kicked out of your home immediately upon missing a mortgage payment. Think carefully about what you want to do if you are facing foreclosure and make the best decision for yourself, based on your personal situation and your knowledge of your rights.