Find Answers to Frequently Asked Questions about Foreclosure and Foreclosure Light’s Services
Learn more about foreclosure types and consequences below so you can find out the facts and act quickly to prevent or stop foreclosure. If you have any additional questions or concerns, contact Foreclosure Light via telephone 800.234.7003, so we can help get you answers.
Foreclosure is a legal process in which a lender tries to recover the balance of a mortgage loan, from a borrower who has stopped making payments, by forcing the sale of the asset (your home) used as the collateral for the home loan.
Formally, a mortgage lender (mortgagee), or other lien-holder, obtains a termination of a mortgage borrower (homeowner)’s equitable right of redemption, either by court order or by operation of law after following a specific statutory procedure. These statutory procedures differ by state.
There are 3 types of foreclosure: (1) Judicial Foreclosure involves the sale of the mortgaged property under the supervision of the court; (2) Nonjudicial Foreclosure is authorized by many states, if a power of sale clause is included in the original mortgage documents then the lender can sell the home without judicial oversight; and (3) Strict Foreclosure is when the lender wins the court case and the court orders the defaulted borrower to pay the full mortgage amount within a specified period of time. Should the borrower fail to do so, the mortgage holder gains the title to the property with no obligation to sell it.
Once you have missed one or two mortgage payments, the lender will begin to send you notices reminding you that you are overdue on your payments.
If you don’t make up the missed payments, the lender will get more aggressive with their notices, and possibly threaten foreclosure via a letter to you. If you still do not pay what you owe and continue to make your monthly payments and do not respond to your lenders inquires, their attorney will send you a demand letter, formally notifying you that if you do not bring your mortgage current immediately, they will initiate foreclosure proceedings.
If you still don’t respond, the lender will issue you with a Notice of Default (NOD), which means they have taken the first step in filing for foreclosure of your home.
Your mortgage contract requires you to make your monthly payments on the date that they are due. If you miss even one mortgage payment, you are already in breach of your contract and susceptible to your lender beginning foreclosure proceedings. However, most lenders won’t start foreclosure proceedings until after you have missed three payments in a row.
Depending on your state of residence, and type of foreclosure (judicial vs non-judicial), a foreclosure can be initiated and completed in a matter of weeks or be drawn out for a few years.
Once a home is lost to foreclosure, the homeowner’s credit score will drop by as much as 250-300 points. Which means that it will be harder and sometimes impossible to get credit cards and loans for at least the next five years, and any credit you do get, you can expect to pay higher interest rates. Plus, some employers look at your credit score, which means that it may make it more difficult to land a job.
A foreclosure brings about a property title transfer and subsequent tax assessment. The IRS states that any borrowed money that is not paid back is considered as income and is taxable.
Once the foreclosed property is sold, the tax consequences come in. If the property is sold for less than it was originally worth, and the bank is unable to recover all the money it had lent, the balance is reported to the property owner and the IRS on a Form 1099-C, Cancellation of Debt. This amount is considered as income and must be reported on the homeowner’s income tax form potentially leading to additional tax liabilities.
Buying Another Home
Most lenders will require a waiting period of no less than 7 years before they will consider your loan application after having a previous foreclosure.
Foreclosure Light is a company that helps people who are facing foreclosure. We do not offer legal services. Instead, we connect you with independent foreclosure specialists who can help people with different foreclosure situations. The specialists in the Foreclosure Light network are providing services such as, rate negotiation, loan modifications, reverse mortgages, short sales, bankruptcy help and more.
Our service is to connect you with an experienced foreclosure advocate within our network, so you can get a free consultation. By providing us with a few details about your current mortgage situation, we can match you with a qualified mortgage specialist within our network who can assist you. You can call our toll-free number to start the qualification process.
The initial consultation with a foreclosure professional is completely free of charge. After careful evaluation of your situation, the mortgage debt specialist provides a quote for the services to be provided and associated costs. Every case is different, and we are dealing with many unique situations, which is why it is impossible to determine a flat price to cover every scenario. No upfront fees will be collected, unless you are paying for legal services at a pre-determined hourly rate. Call us now for your free consultation with a mortgage specialist 800.234.7003. Save your home today!