Are You in Pre-Foreclosure?

A Loan Modification May Offer Foreclosure Help

Have you missed some payments on your home, or other real estate property, recently? There is a period known as pre-foreclosure where the home is in danger of foreclosure, but there are still opportunities to reverse the situation and to avoid having a foreclosure on your credit history. If you need a loan modification, click here.

"Pre-foreclosure" or "pre foreclosure" is a legal condition whereby a Notice of Default has been filed in a Deed of Trust state, or a mortgage related Lis Pendens has been filed in a Mortgage state. Pre-foreclosure, therefore, is an action that gives public notice of the start of the foreclosure process on a property, while sometimes giving the defaulting borrower time to sell or refinance.

Mortgage Loan Background:

Banks lend money and take back legal instruments called mortgages as collateral for their loans. If you are behind on payments for 30 days (typically), the loan is considered to be in default. If the loan payments remain in default and are 90 days, or more, overdue, a Notice of Default is generally recorded in your local courthouse to protect the interests of the lender, at which time your name and property will be publicized in public records -- known as the 90-day Notice of Default or "N.O.D." The bank does not own your home at this stage.

Consequently, there is a period known as pre-foreclosure where the home is in danger of foreclosure, but there are still opportunities to "cure" the default, reinstate the loan, or otherwise avoide losing your home through foreclosure.

Once the Notice of Default (N.O.D.) is recorded, it may take the bank a few weeks to a few months to set a sale date to auction off your property. The foreclosure takes place when your property is sold at the auction.

A Lis Pendens is a notice filed with the court indicating that a mortgage foreclosure action is pending against a property. It details the property section, block and lot, as well as the names of the Plaintiff (bank or mortgage provider) and Defendant (mortgagor or borrower).

Foreclosure Avoidance:

There are a few options you have to avoid having a foreclosure on your credit history.

Contact your mortgage company and find out if you can obtain a formal loan modification and reinstate the loan. Sometimes they will allow you to reduce mortgage payments by reducing the interest rate, extending the term of the loan, and/or add any late payment fees and interest onto the balance of your loan, so they can bring you into compliance. Bad credit loans are possible during this current economic and housing crisis.