What Happens If I Can’t Pay My Mortgage ?
When you decide to buy a house, this isn’t usually a thought that crosses your mind. But the truth is, sometimes you don’t anticipate financial problems until it’s too late.
Unfortunately the future cannot be determined and should you get behind on payments that you cannot afford your home anymore the question then arises: What happens if I can’t pay my mortgage ?
The first step when facing the question, “what happens if I can’t pay my mortgage,” is to understand that your lender can take your home should you fail to make your mortgage payments. Fortunately, a foreclosure process is generally a lengthy process, so there is a chance that if you act quickly you can save your home from foreclosure.
The only way you can save your home from foreclosure is to understand how it works.
A foreclosure process begins with a Notice of Default.
A Notice of Default is a Notice that your lender will record against you with the Registrar Recorder’s office when you default in your mortgage payments.
This Notice keeps record of the total amount that you owe inclusive of all the missed payments and the foreclosure fees as well. The lender must include a declaration to the Notice that involves any and all attempted or successful communication with you regarding the possible foreclosure.
Once a Notice of Default has been recorded by the lender you have 90 days from date of recording to make a payment of all the outstanding money. If you succeed in making the full payment within the designated period, you would have successfully stopped your lender from taking your house.
In the event that you fail to pay the outstanding amount within the 90 day period, the next step is for the lender to record a Notice of Trustee Sale against your property. In this Notice, the date, time and place of sale for your home will be included.
The Notice of Trustee Sale should be posted on the door of your property at least 20 days before the date of sale. If you want to save your property before the sale, you can do so, as long as the full loan repayment is made to the lender within the last five business days before the sale.
This means that your countdown does not include weekends. If you happen to reach some sort of agreement with your lender with regards to the full loan repayment, it is best to get such an agreement in writing. Once you have paid the outstanding amount to the lender, the lender must then record a Notice of Rescission.
A Notice of Rescission is proof that the lender was paid in full and the sale had then been cancelled. At this point if you have failed to make payment of the outstanding amount to your lender and you are still asking yourself;
What really happens if you can’t pay your mortgage ?
If you fail to make payment your house will be sold on the 20th day and the new owner is only obligated to give you a notice period of 3 to 5 days. If you don’t move out by the 5th day the new owner can approach the court to file a lawsuit against you called an Unlawful Detainer.
Should you lose in court, the court will issue a 5 day eviction notice that will be posted on your door by the Sheriff. That same sheriff will then return to force you to move out if you haven’t moved out by the 5th court appointed eviction date.
If you fail to make payment of the outstanding amount within 105 days, your house will be sold and you will effectively be forced to move out. So as you can see, the process is not pleasant and if you frankly, don’t have the money to get caught up on your payments than you can lose your home.
Well what if you’ve already decided that it’s no longer feasible to afford your home BUT you don’t want to be foreclosed on and have the embarrassment and massive ding on your credit.
Is there a Plan B? Yes, there is.
I am a professional real estate investor who buys houses for cash and if you find yourself in a situation where you want to avoid foreclosure and needs to sell your home quickly, give me a call at: 310-928-9688. Or simply fill out this form.
We all get affected by hard financial struggles from time to time. But you owe it to yourself to explore all your options. This call is no pressure and no obligation.