Can you stop the foreclosure process? What are your options when foreclosure looms?
If you have missed a mortgage payment or two, you may be wondering how you will be able to catch up, and you may be worried about losing your house. While real estate lending and foreclosure laws vary from state to state, the steps below will give you a general idea of how the foreclosure process works – and what you can do to avoid it.
The foreclosure process
Late and missed payments
The first step in the foreclosure process happens when a homeowner fails to make a mortgage payment on time. The mortgage loan is considered delinquent if a payment is not made by the due date (or within your lender’s grace period, which usually allows a payment to be made 10-15 days after the due date). It is considered in default if that payment is more than 30 days late.
Lender notices to homeowner
Once a loan is in default, the lender may issue the homeowner a missed payment notice and charge a late fee. After 60 days of non-payment, the lender will likely send a demand letter to the homeowner. At this point, you may still be able to work out payment terms with the lender to catch up on your payments.
Notice of default
After 90 days of non-payment, the lender will file a notice of default with the county and issue a notice to the homeowner. Often, you will have another 90 days to catch up on payments and reinstate the loan.
Auction
If the loan has not been reinstated by the end of the additional 90-day period, the lender can attempt to sell the property at auction to the highest bidder. In Colorado, you have the right to pay the outstanding payments before auction, but you must file an intent to cure form at least 15 days prior to the auction date.
Post-auction
If nobody buys the property at auction, then it becomes bank-owned. The bank will then list it for sale on the open real estate market or through private auction.
Tips for avoiding foreclosure
Catch up on payments
During the foreclosure process, there are several points along the way when you have the opportunity to either catch up on payments in full or work out an acceptable payment plan with your lender. The sooner you reach out to your lender to discuss your options, the better. Missing payments for several months in a row will just mean you have more to pay back later and that might make it difficult or impossible for you to keep your home.
Refinance your loan or seek out HUD programs
The U.S. Department of Housing and Urban Development has developed a list of options for homeowners who are facing foreclosure. Options include loan refinancing for a lower mortgage payment, temporary breaks from mortgage payments due to unemployment status and more. Visit the HUD website to see your options.
Sell your property traditionally
For many people, it may not be possible to catch up on payments or refinance with the lender. You can try to sell your property through a traditional real estate agent, but that sales process could take months as you wait for your agent to list the property and as you wait for offers, appraisals and inspections before closing can happen. Learn more about the real estate listing process.
Sell your property to an investor
An alternative to the traditional real estate listing process is selling directly to an investor, such as Sell As Is Denver. An investor offers you cash, in many cases, and can close within a few weeks; bypassing the slow process of inspections, appraisals and buyer lending approvals. Learn more about Sell As Is Denver and our local expertise.