Foreclosure is full of complexities. Mortgage companies must follow strict procedures when processing a foreclosure. For property owners, the process is a stressful and emotional one.
When a property or homeowner is unable to make their mortgage payments they default the contract in place with the lender. As a result, the lender can seize the property and sell it, causing the owner to lose their property.
After the market crash in 2008, foreclosure proceedings spiked in 2010. Since then, foreclosures have been trending downward year over year hitting a record low in 2020 as a result of the federal pandemic protections. Since those protections have ended, foreclosures are on the rise.
How To Navigate a Foreclosure Proceeding
Nearly all lenders would prefer to avoid foreclosure. Think about it, mortgage companies would much rather receive payments than have to navigate the foreclosure process.
Here are some helpful tips for each party that is affected by foreclosure.
Owners
Financial hardship is understandable. Americans are still feeling the effects of the COVID pandemic on the nation’s economy. Inflation is high and forbearances have ended, which is equating to increased mortgage defaults.
If you’ve received a foreclosure notice from your lender, begin by contacting the U.S. Department of Housing and Urban Development (HUD). According to HUD, two-thirds of people who use their housing counseling program are able to secure a mortgage remedy.
Keep in mind that almost all states require lenders to contact the property owner 30-day prior to issuing a notice of default. During the pre-foreclosure or foreclosure avoidance period, lenders will work with property owners to find a solution; such as deferral, interest or payment adjustments, or other payment plan solutions.
Once the owner received the Notice of Default sent via Certified Mail®, they are usually given 90 days to get current on their mortgage. If the mortgage is not reinstated within that time the owner will then receive a Notice of Sale, also sent via Certified Mail. Then, the home will go to auction three weeks later. There the home will be sold to the highest bidder at a public foreclosure auction.
Property owners who cannot escape financial hardship may consider selling the property, paying off the loan, and purchasing a new property with a lower, more manageable mortgage. If you are considering this option, click here to find a local REALTOR®.
Renters
Even though tenants do not own the property in which they are renting, they can still be affected by foreclosure.
Luckily, the Protecting Tenants at Foreclosure Act (PTFA) was passed in 2009 and while it expired in 2012, President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act in 2018 which permanently restored the PTFA.
The PTFA protects renters from immediate eviction if the residential property is obtained by a new owner due to foreclosure. For Section 8 tenants, additional protections are outlined.
According to the law, tenants may not be evicted until 90 days after a property is foreclosed or the tenant can reside on the property until the lease expires.
Additional state laws exist to protect renters and state eviction laws are still applicable.
Renters have the right to sufficient time to secure another housing option if their rental is foreclosed upon.
Lenders
While there are three types of foreclosure, judicial foreclosure, power of sale, and strict foreclosure, the most well know and commonly executed is judicial. It is permitted in all 50 states and required in many.
Prior to processing a foreclosure, many lenders and mortgage companies consider loan modifications to work with property owners in hopes of avoiding the foreclosure altogether. A few common efforts include offering a fixed interest rate, offering a forbearance or grace period, lowering the monthly payments by extending the lease term, or extending the entry interest rate.
If the offered modifications do not result in payment and the processing begins, lenders must follow strict guidelines to ensure the foreclosure is by the book. Sending all documents to the property owner via Certified Mail offers good record keeping and holds up in court.
Importance of Certified Mail on Foreclosure Processing
Certified Mail is a vital piece of the foreclosure procedure. Well-documented communication is not only helpful, but in many cases is also required by law.
Whether you are the lender or the borrower trying to reinstate their mortgage loan, Certified Mail Labels is your ally. The legal costs associated with foreclosure are expensive enough. Save time and money with Certified Mail Labels when sending all necessary documentation.
Skip the trip to the Post Office and mail foreclosure documents, on the same business day.
Getting started is quick and easy. Address and print United States Postal Service Certified Mail® Labels, Priority Mail labels, and Express Mail labels online with USPS Postage from your home or office using your computer or mobile device.
Receive 'proof of mailing', acceptance by the United States Postal Service, USPS tracking, Electronic Delivery Confirmation, and Return Receipt Signature for each compliance letter you send at no additional cost.
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No more waiting in long lines at the Post Office! Just log-in, address, print, and mail. There are no monthly fees, contracts, or special equipment needed. As well as, no need for stickers, forms, or green cards. Save time and money by paying as you mail, and skipping the trip to the Post Office.
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