what is the mortgage default process and what are the stages?

Asked by Diana, Pennsylvania Wed Nov 28, 2007

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Donald J. Le…, Other Pro, Tacoma, WA
Wed Nov 28, 2007
Hello Diana,

Sorry no one has answered your question yet. Mostly its because Real Estate Agents are not Mortgage Lenders nor do we have their tools or experience, plus each state is different and each Mortgage Company or Bank has their own different set of rules as to what their Default process is.

I have dealt with Short Sales and Foreclosures a bit as an Associate Broker and I can give you an Example only, and hope that this helps. My best advice is to call your Home Loan Lender, even if you do not tell them who you are.... and ask them what their steps are. You should consult with a Real Estate Attorney for Legal help as well.

In some cases,
1. when you are behind a 1-3 weeks.., you will get a late notice.
2. some clients I have dealt with were 90 days past due before the Bank started Foreclosing on them, but most will begin the process with a Pending Foreclosure Notice by the end of one month.
3. Then if you do not respond to that notice, they mail you a certified letter Notifying you that your home will be sold at Auction within 60-90 days. Each company has different procedures with that.
4. You may have up till the day of Auction to redeem your home, in many cases not all, and you would have to generally pay all late fees along with past due... some insist that you pay off the loan as its in default.
5. Some home owners will contract with a Real Estate Agent to help them do a "Short Sale", to list it that way and give them a notarized letter which goes to their Lender authorizing the Lender to do all negotiations with the Licensed Agent as their Agent of Record. This type of sale is still a knock/bad mark on your credit, but some think its better than a Foreclosure showing up. Again, get Legal advice on that.

This is the short version. I hope it has helped.
Best of luck,
-Don
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