How does foreclosure work?
Your mortgage payment is typically (not always) due on the first of each month. If your payment is not made by the due date, it is considered delinquent.
A late fee may be assessed to your mortgage account after the 15th day. The first notice is mailed to you on the 16th day of the month. You will begin getting phone calls at this time.
- Your loan enters default when it is 30 days late. At this time, a second notice is sent to you. When a loan goes into default, it could have a negative impact on your credit score.
- If your loan is 60 days past due, the lender/servicer may begin acceleration procedures and will notify you in writing that they have started the foreclosure process.
Acceleration procedures may include the lender/servicer refusing to accept any partial payments and require that the past due balance on the mortgage be paid in full, and can even mean that the lender will void any payment agreement and call the loan due in full.
If you abandon your property at the time acceleration has begun your property will be red tagged and your home will be repossessed. They have the ability to change the locks to your home and can disconnect your utilities.
Keep in mind that once you have received the acceleration notice the foreclosure proceedings may begin. Foreclosure process usually happens if a loan is 90 or more days past due.
Contact the lender or servicer on your mortgage loan, ask to speak with the loss mitigation department (if one exists) and tell them you want to begin a workout process. Make note of the time, date and person you talked with and make sure that you confirm all agreements in writing. Below is a list of documents, which you will need to have available when speaking with your lender or servicer. It would be a good idea for you to have an understanding of the documents when you speak to a loss mitigation specialist. They can provide you with a workout package that should include the documents listed below:
- Completed Application Form.
- Pay Stubs of Income Verification.
- W-2 Forms from the Previous Year.
- Completed Budget.
- Hardship Letter explaining your situation.
It may take a few weeks or longer to hear from the loss mitigation specialist regarding the decision on your workout plan for your mortgage loan. It is very important to check with them regularly on the status of your request so that it does not get lost in the meantime. Keep in mind that the collections department will still be contacting you to collect on your debt, so be aware that the phone calls will not stop even though you are in the process of a workout solution.
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