An FHA loan is insured by the government. When you default on your FHA mortgage, your home could end up being sold at a government foreclosure auction if you do not resolve your default with your lender. The FHA insurance you pay during your loan term insures that if you default on the mortgage, the government will pay your lender what you owe on your mortgage balance. To save your home from an FHA foreclosure, you must first try and negotiate a resolution with your lender. A HUD certified counselor or an attorney can help you work out a modification, forbearance or refinance with your lender if you want to keep your home or a short sale or deed in lieu of foreclosure if you cannot afford to keep it.
Steps to Foreclosure
- Initially your lender will send you a default notice once you are at least 90 days behind in your mortgage.
- You have time to respond to the notice and work out a resolution
- After 90 days, the lender may institute a judicial or non-judicial foreclosure process against you depending on the foreclosure laws in your state and the default provisions I your mortgage documents
- During the foreclosure process you can still negotiate with your lender, stay in your home and avoid paying your mortgage payment allowing you to save money to move if your home is sold at an FHA foreclosure sale.
- A notice of sale is published in a newspaper of general circulation in the county where your property is located stating the date of the sale and other terms of sale
- The home is sold at foreclosure sale
- You may have ability to redeem your home after the sale under statutory redemption laws of your state
This foreclosure process is taking as long as a year so while it is going on you should speak to your lender to find a way to stop the process and save your home. Once your home is sold at a foreclosure sale, you may have a chance to redeem the home if your state allows a redemption period after the sale. Check the laws of your state.
Avoiding Foreclosure
- Work out a budget and eliminate unnecessary debt
- Sell your assets to pay off your mortgage or pay your mortgage current
- Work out a modification , refinance, forbearance, short sale, deed in lieu or reinstatement
- File bankruptcy as a last resort
When to Talk to a Foreclosure Defense Attorney
If you are facing an FHA foreclosure, you need to hire an attorney to help you keep your home or negotiate a solution with your lender to avoid foreclosure. FHA foreclosure laws are complicated, and you should seek the help an attorney.
