Ok, so the worst case has happened, you can’t pay your mortgage and you’ve missed two payments. You’ve been given a Notice of Missed Payment letter (1 missed payment) before and you’ve now been given a Demand Letter.
See our previous article about understanding the process of foreclosure so you know where your stand.
You don’t have any way to come up with your payments directly for the foreseeable future. So what to do? Well, one option you have is to STAY IN YOUR HOME DURING THE FORECLOSURE PROCESS. You legally can’t be removed from your home until the official eviction notice is given and if you play your cards right and there are a lot of foreclosures in the area, this might be a months to a couple years away.
Basically, by staying in your home after foreclosure, you gain months of time before you actually have to leave AND it may also force the lender to modify your loan for better terms or offer you some other option. You are pretty much just living for free.
Of course, absolutely make SURE you speak to a housing councilor or foreclosure attorney before you commit on staying in your home after foreclosure – you never know what sort of laws change with time. Note as of 2014, you can stay in foreclosed homes until served an eviction notice.
Why would you want to delay foreclosure?
- You get to live rent/mortgage free for months or even up to a couple years. This allows you to save money for your post-foreclosure life.
- You may be able to force the lender to modify loan terms, reduce principal, push through a short sale or offer additional benefits to you just to avoid having the deal with an extended foreclosure battle – a battle that could take months or even a couple years and cost the lender. If you don’t challenge a foreclosure, the bank could assume position in 3 or so months with little legal cost.
There are three things you can do if you want to maximize your time before eviction (assuming the whole while you are staying in your home):
- Stay in the house while the foreclosure is being processed.
- Hire a lawyer to challenge the foreclosure filing; your lawyer can do this by filing just a couple basic documents – documents which can delay the process and if there are a lot of ongoing foreclosures may have your case moved aside due to the wait.
- As a last step when all author options are exhausted, consider filing Bankruptcy to delay foreclosure
How to Delay Foreclosure
1) Commission a Foreclosure Lawyer to File a Motion to Stop Foreclosure
Goal: Delay foreclosure for up to 6 months and force lender to consider loan modification terms
At this point, you should still be living in your foreclosed home. It’s imperative you STAY put during this whole process. You can’t legally be evicted until you get an eviction notice, and this only occurs months down the road after the house has been processed and the court orders an eviction. If you are contesting the foreclosure by filing a motion, this whole process is delayed longer.
The key to contesting your foreclosure is to file the appropriate challenge to it. This is also called ‘filing a motion.’
In this case it’s basically forcing the bank’s attorneys to come up with specific information proving something about your property. Producing this information can delay the procedures for months. Filing the right motion can delay the foreclosure process between 3 to 6 months.
Remember, the longer it takes the lender’s attorney’s to come up with the appropriate proof documents, the more the lender ends up paying in time and legal fees. The end game here (besides staying for free in your foreclosed home for a longer period of time) is to force your lender to consider a loan modification in your favour because of the extended time the process ends up taking.
You will need to consult a foreclosure lawyer so properly file these motions. It’s not likely to be expensive as your lawyer only needs to file a few basic motions to delay the process.
2) File Bankruptcy
Goal: Further delay/stop foreclosure process
If you’ve filed motions, delayed the foreclosure as long as possible, the next and final option open for you is to file Bankruptcy. This will stop the foreclosure for several more months (depending on what kind of Bankruptcy you file). Chapter 13 bankruptcy will allow you to keep your home and prevent foreclosure, but you’ll have to make payments from a court-structured plan.
Keep in mind Bankruptcy is a major step and has wide-ranking consequences for your credit history, ability to get certain jobs, and future ability to get a house/credit.