Foreclosures 101 (What They Are & What To Do!)

Financing

Some words or phrases just invoke fear, plain and simple. “Audit”, for example. “Starring Carrot Top” could be another. I know “Sugar free diet” is absolutely terrifying, to me anyway. But one word which seems to scare more people than JAWS is “Foreclosure”.


For those who find the word supernaturally scary, let me explain the science behind what a foreclosure is for a minute. If you don’t pay your mortgage payment, ignore your late payment notices, and avoid speaking to your lender about what is going on with your financial situation, expect (a foreclosure) your lender to exercise his lien in order to sell your house and pay for your mortgage loan. There are four stages of a foreclosure before a borrower loses their home however, so I thought I’d cover them for anyone unaware. After all, it is real estate related, and this is a real estate blog. So, for those blissfully ignorant to foreclosures, enjoy!


STAGE ONE:

In the first stage of a foreclosure, your bank records a notice of default for your account. This just means they are making note that you have a payment(s) outstanding. Long ago, before banks started getting more serious about people not paying (after a certain amount of financial/housing crises, one just becomes paranoid), it took several missed payments before a notice of default was recorded. Nowadays, with many banks, it generally only takes one missed payment to get a recorded notice of default, so always keep up on your mortgage payments!


STAGE TWO:

Before a date of foreclosure is set by the bank, you will receive an opportunity to reinstate your loan. All that means is you’ll get a chance to pay your missed mortgage payments, plus any late fees, before the foreclosure process goes any further. Pay up, and the foreclosure is a thing of the past. If you don’t get current with your debt, you will be one step closer to losing your house.


STAGE THREE:

Next, the bank chooses your date of foreclosure. Typically, this is 90 days after the notice of default. Legally, you can not be evicted or kicked out of your home until the date of the foreclosure. Just because a date is set, doesn’t mean the foreclosure has to happen. The bank would much rather receive the money it is owed than have to go to the trouble of selling your home.


STAGE FOUR:

The last stage before your house gets sent to auction is publishing the notice of trustee sale. You will receive a copy via the mail, and the bank will also physically post a copy on your front door. Again, the bank just wants their money. If they can get their money from you instead of from the sale of your home, they will happily accept it.


STAGE FIVE:

For whatever reason, you just couldn’t get the money together. Your house is sent to auction, and it is no longer yours. The day it is auctioned off, you have 24 hours to vacate the property. If sold, the new owner can call the Sheriff/Police to make sure you are off his property within twenty-four hours, and if the house doesn’t sell on its first day of auction, the bank retains the right to evict you and any other residents. Sometimes, banks will allow the homeowner to stay until the home is actually sold, but if you are going through a foreclosure yourself, don’t count on this.


Just remember, the bank is going to do any and everything in its power to get their money from you over a sale. It’s paperwork, and as all of us know from either working or watching cop shows, paperwork is never fun. Try not to get behind on your mortgage payments, and if anything, get ahead of them if possible. Still, if you do get behind and get a notice of default from your bank, don’t panic. Panic is just going to distract you from the money making hustle you’ll need to enter into. If you ever find yourself in a pinch financially and fear you won’t be able to pay your bills, try one of these five ways to make some extra cash quick. Life in the United States can be expensive nowadays, especially in some areas. Don’t get discouraged if you find yourself getting behind. Instead, use it as motivation to find even more ways to apply yourself.


Sell your stuff: It might be cliched, but a garage sale can be helpful to make a few bucks while getting rid of some of the junk you’ve got laying around your house. A clean home is a happy home, as is one that has current mortgage payments. If you’ve got some more high end items, consider selling them on ebay, amazon, or even Facebook Marketplace.


Search on Craigslist: You’d be surprised how many people need a helping hand, and are willing to pay cold, hard cash for it. From moving and rearranging furniture to temp work and more, Craigslist can be helpful in finding those who need temporary (paid) help.


Uber/Lyft: Anyone can be a taxi driver nowadays, thanks to Lyft and Uber. If you need a few extra bucks, have some time where you aren’t tied to a desk, and secretly pray for exciting things to happen in the back of your car like you’re living in an episode of Taxi Cab Confessions, then Lyft and Uber are definitely services you should look into.


Other Driving Services: If you like to drive around, don’t limit yourself to Uber and Lyft. There are apps which will hire you to bring groceries and restaurant food to people’s houses. I’ve even seen a dog walking service, all offered through apps on your phone. Explore your app store and see what other delivery/driving services you can find, I’m sure there are tons I have no clue about.


Get a second job: Just the sound of it is awful, I’m sure. But there is no shame in moonlighting! Even if it is doing a job you’d rather not do, just remember, this won’t be forever, and no job is worse than losing your home.


The most important thing to remember while going through a foreclosure is to stay calm and make money! Set aside every penny you can, eat as cheap as possible, and eradicate luxury items from your life. If living this way seems impossible to you, just stay focused, do what you need to do to survive, and use it as motivation to push yourself to great, new heights. In a way, your house isn’t lost at the date of auction, it is lost the day you give up on pulling through against all odds.