Real Estate Marketing & Beyond
People can miss a mortgage payment for a variety of different reasons, and circumstances do change. Job losses or relocation can all put pressure on household finances and homeowners may end up owing more than their properties value.
Figures from the Mortgage Bankers Association show approximately 6% of mortgage loans were at least one payment behind at the end of March this year. The article in aol.com points out that missing a mortgage payment isn't a trivial decision, especially as foreclosure can seriously damage credit ratings. In addition it makes obtaining another mortgage much harder or almost impossible in the shorter term. If you do have to miss one or two mortgage payments it doesn't necessarily mean you are at risk of foreclosure, but it could set processes in motion that carry long-lasting consequences for your finances.
Earlier this year new foreclosure avoidance procedures took effect and are designed to get rid of the mismanagement and deceptive practices that plagued the housing crisis. The procedures now mean mortgage lenders have to send written notices to homeowners before they are 45 days in delinquency. The notice has to include all the available options to avoid foreclosure such as loan modifications or short sales.
If the loan is modified then the provider will add on the delinquent payments plus the penalties to the balance of the loan, creating a brand-new payment plan. A short sale enables a homeowner to sell the property for less than they owe on their mortgage. The foreclosure procedure does differ depending on where you live is there are two different types which are judicial and non-judicial. A judicial foreclosure involves formal court proceedings and is generally more drawn-out. If the proceedings are non-judicial then a foreclosure sale can be initiated without the approval of a judge. Neither of these systems is particularly fast, and data from RealtyTrac for the first quarter of this year shows banks took an average of 572 days to complete the process.
If you live in a state where judicial foreclosure is more likely, then the wait can be considerably longer. It took an average of 840 days for this type of foreclosure to go through in Hawaii, while the figures for Florida and New York were 935 days and 986 days respectively. If you're in New Jersey and the process could take a lengthy 1,103 days. In addition lenders cannot formally file for the foreclosure until you are at least 120 days delinquent on your mortgage, and they cannot start the process if you have already applied for assistance. The article goes on to detail ways of avoiding foreclosure and the possible effect on credit ratings.
