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Foreclosure Process – What to expect
The foreclosure process is often scary because you don’t know what to expect.
Being informed is one way to ease your anxiety. Before we look at the foreclosure process let’s look at the technical definition of foreclosure.
A situation in which a homeowner is unable to make full principal and interest payments on his/her mortgage, which allows the lender to seize the property, evict the homeowner and sell the home, as stipulated in the mortgage contract. One month after the homeowner misses a mortgage payment, he/she is in default and will be notified by the lender. Three to six months after the homeowner misses a mortgage payment, assuming the mortgage is still delinquent and the homeowner has not made up the missed payments within a specified grace period, the lender will begin to foreclose. The farther behind the borrower falls, the more difficult it becomes to catch up, since lenders add fees for payments that are 10 to 15 days late.
Definition by: Investopedia.com
Okay. Plain English… If you don’t pay your mortgage payment and it becomes 30 days past due, your bank or lending company, who ever you borrowed the money from, has the right to evict you. That is part of practically every lending or rental agreement. Makes sense, “If you don’t pay, you can’t stay!” If you are in financial hard times and you are in contact with your lending agency working out payment arrangements they will be less likely move to a foreclosure scenario.
You can still get a mortgage down the road after a foreclosure, and New Mexico Financial and Family Law can help you with the process.
If you are in danger of foreclosure talk to an attorney that specializes in foreclosure.
If you are simply unable to make payments on any schedule, the foreclosure process will begin. Important: The Foreclosure Process is different in each state. New Mexico is a Lien Theory State. Lien theory is when the person who burrowed the money to buy a home holds the title to the home. A title theory state is when the lending company holds the title to a home until the mortgage is paid off. In a lien theory state the foreclosure process is more challenging for the lending institution because the do not hold “title.”
When the New Mexico foreclosure process begins this is what you can expect:
- 30 days of non payment, your lender will send a notice stating your payment default
- 3-6 months of continued non payment, your mortgage company will begin to foreclose the property
- Lender files court documents (lis pendens), requesting the court issue a final judgement of foreclosure
- When final judgment is issued, the property can be sold at a public auction (this is when the bank will attempt to secure as much money for the property as it can obtain from a public buyer)
- No sale can be less than 2/3rds of the appraised value (conducted often by the sheriff)
Time frames depend on how long your lender takes to process their end and how long the court system takes. These are common time frames:
- 120-180 day to place in effect a foreclosure, unless you are contesting the foreclosure
- 4 weeks at a minimum to advertise the public auction
The foreclosure process is long and stressful.
A few things to remember, the bank probably doesn’t want you house, it is easier for them and more cost effective if you stay there. They really want you to just work it out with them. A local, financial lawyer will be familiar with the laws and options best suited for your state and specific set of needs. Don Harris and New Mexico Financial Law is an experience New Mexico Financial Attorney.
Contact New Mexico Financial Law today to discuss Foreclosure Options.
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