A Notice of Default from your mortgage servicer means you face the prospect of losing your property. Most people are overwhelmed by the idea of foreclosure. Many homeowners don’t reply to the Notice of Default and accept the foreclosure process as their fate.
Know that you have legal rights in a foreclosure proceeding. Your understanding can play an essential role in keeping your property or, at minimum, mitigate some of the damage done to your financial health. Lenders must abide by state law and, as long as your state stipulates that you must receive a written Notice of Default, you have some time to fight or remedy the situation.
In most states, the lender’s most important obligation is to provide the Notice of Default to the property owner. Lenders in these states must provide the homeowner with “sufficient notice” to facilitate understanding of the default and provide notice of his or rights to cure the default before the lender initiates foreclosure proceedings.
The lender must also provide proof of the money owed on the mortgage. It must file a statement to itemize what the current owner owes on the mortgage loan, including principal, interest charges, late fees, attorney costs, and other items the lender may charge under the mortgage contract’s terms or according to state laws. In some states, lenders aren’t required to send a written claim to the property holder.
If you’re active military, you may have an automatic remedy against the foreclosing party. The lender must certify in writing that the property owner isn’t a member of the military services before starting the foreclosure action. The Service members (Soldiers & Sailors) Civil Relief Act (SCRA) protects deployed active duty members. Consult an experienced attorney about foreclosure proceedings to protect your rights.
Let’s review potential remedies you might have when faced with the written Notice of Default.
The written Notice of Default is the mortgage servicer’s declaration that you’re behind on mortgage loan payments. It’s a statement that you’re in breach of the loan contract. With the notice, you receive a specific time period to remedy the condition to avoid foreclosure.
Foreclosure allows the lender to repossess or sell your property for purposes of repayment of the debt you owe on the mortgage loan. The mortgage holder has the right to foreclose on your property at any time after you miss mortgage payments unless the mortgage contract or state laws in which the property is located say otherwise. Each state laws vary. However, foreclosure in all states usually involves the following:
It’s important to communicate with the lender after receiving the Notice of Default. The timeline of the foreclosure process can vary widely. State law and the mortgagee’s motivation can shorten or lengthen the time needed to foreclose. Typically, the foreclosure process begins 90 to 180 days after the homeowner misses the first mortgage payment. In the next section, let’s review some of the remedies to prevent foreclosure.
Lenders make mistakes. You lender may incorrectly claim you’re in arrears by a certain amount of money. If you believe the lender is wrong, write a letter to explain why you’re not in default. Attach copies of cancelled checks or other documents to prove your position.
If your lender doesn’t agree, there’s a legal remedy. Take the lender to court to provide you didn’t default on the mortgage loan. If you reach the decision to sue the lender, the documentation you provided to it beforehand is crucial. Consult legal counsel at this stage to manage court appearances, communication, and documentation.
Two legal ways exist to defend against or challenge the foreclosing party’s decision to foreclose:
You may have a legal reason to prevent or stop foreclosure. In that case, you must file an objection with the state court. In most states, you may file an objection before or after the sale takes place or prior to the ratification of the sale if you believe the sale wasn’t properly conducted.
If you’re facing foreclosure, check the mortgagee’s status with the state attorney general’s office. Never make verbal agreements. Don’t hide your head in the sand. Foreclosure is a problem that won’t go away unless you take proactive remedies to cure the mortgage default.