Mortgage Default– What Is It And How To Avoid It?
Mortgage default is the situation where someone does not make payments on a mortgage and thus the loan is believed to be in default. This simply means that the agency that holds the note can select to take over the asset of the defaulter. Defaulting on the mortgage can lead to loss of your asset or real estate and thus it needs to be avoided for sure. Even if the asset is not lost to lender or bank, the mortgage default will eventually drag down the credit score you hold, thus making it tough to negotiate with bank or to even secure credit for more loans in future time.
What is a mortgage default?
When the mortgage is declared, some monthly due date is specified. A number of mortgages include some grace period or time of generally 1 to 2 weeks, simply meaning that the payment sent during that period will be considered on time. So, after that grace time has elapsed, late fees will start getting levied. If over 30 days after due date pass by, mortgage is then considered to be in actual default state.
Within a period of 60 to 90 days of determination that mortgage has been defaulted, the lender will send a notice of default or NOD to the defaulter. This is in fact the very first step in the foreclosure process, giving the asset owner an opportunity to make the missed payments in full amount or to risk his or her property getting sold at the auction. The bank will even be obliged to give public notice about foreclosure and thus the property owner will get the chance to buy back the property during foreclosure auction if the owner can muster up funds in cash.
Alternatives to foreclosure
The deed in lieu of foreclosure or simply the deed in lieu can help a great deal to avoid public auction or sale of the borrower’s property and can even help to start rebuilding their credit score. The main benefit to the borrower of a deed in lieu of foreclosure is that it releases him or her from most or all personal indebtedness linked with the mortgage default loan. Even the borrower avoids public notice of the foreclosure and may get more generous terms than one would in any formal foreclosure proceedings. Another great advantage to the borrower is the fact that it hurts the credit limit less than the foreclosure process.
So, if you are much concerned that your asset may go into the foreclosure process and you haven’t qualified for any alternative that can keep your property safe, consider the traditional option of a shortsale. Well, shortsale is a situation where you actually sell property for lesser amount than you actually owe. Thus, one may be eligible for the shortsale if they experience financial problem like reduced income, divorce or high medical expenses, you are not able to afford your monthly mortgage payments, you are not able to change your home loan, you don’t have approval for a deed in lieu for foreclosure or shortsale or if you owe more amount on the asset than its real worth.
In order to get foreclosure help, you need to pay closer attention to mortgage loan account that you hold. It is very important to review the account on a regular basis to ensure that your payments are duly credited on proper time and there are no unusual or unexpected charges. If you do not receive monthly statements, just check with the services to know if you can actually access your account over the net.
You can also hire the best of foreclosure agencies in California to get real foreclosure help from the professionals. The experienced attorneys at foreclosure agencies in California let you pass through the entire process of foreclosure without much difficulty.