The Virginia Foreclosure Process, Timeline & Defenses
Part two of two: Learn about the options you have to prevent the foreclosure of your home.
Tips for Preventing Foreclosure
If you are concerned that you may not be able to make your mortgage payment on a current basis, and it may take you a week or two beyond your usual payment date to complete the current payment, you should immediately contact your loan servicer to inform them of your plans to bring the loan back to a current status. Make sure the servicer has documented the expected date you will send in the payment.
If you cannot make your mortgage payment at all:
1. Don't ignore the problem.
The further behind you become, the harder it will be to bring your loan current and the more likely that you will lose your house. Remember that your lender will probably not accept partial catch up payments if you are behind. You will have to pay the full arrearage in order to bring yourself back to a current basis and stop any pending foreclosure. Partial payments may be received by the lender and held in an escrow account, which means it won’t apply to your loan balance if not a full reinstatement payment. The lender can then take that money to pay taxes and insurance renewals, instead of applying the payment to your loan. That partial payment will NOT stop the foreclosure.
2. Contact a Certified Housing Counselor.
Housing Counselors can help you understand the law and your options. They can explain the current loan modification process, different state and federal programs, and help you to organize your financial documents that you have to produce to ask for a loan modification. They can represent you in negotiations with your lender, if you need this assistance. To find a Housing Counselor in your area, click on Housing Counselor Search.
3. Open and Reply to all mail from your lender.
The first written notice you get from your lender after a late payment situation will offer you information about foreclosure prevention/loss mitigation options. These can describe procedures to follow to ask for a loan modification. A loan Mod can take the full arrears and tack that amount onto the back end of the payments on your existing loan, and also reduce the interest rate on the loan. Most do NOT reduce the principal balance of the mortgage debt. You will probably also get important notices of pending legal actions, such as foreclosure or a lawsuit. Your failure to open and read the mail will not be an excuse allowing you to stop a foreclosure. Keep every piece of mail sent to you, and give it to your housing counselor.
4. Know your mortgage rights.
Get out your original mortgage documents and read them. They include a note and a Deed of Trust. These documents will state what will happen if you are unable to make your mortgage payments. You should contact a Certified Housing Counselor, because you may have several alternatives that can delay or stop a foreclosure. Do not be afraid to ask what each term in the mortgage loan document means. Your housing counselor will be able to explain the foreclosure procedures stated in the loan documents, as well as explain Virginia's foreclosure laws and timeframes. Be sure to take these loan documents with you when you see your housing counselor.
5. Understand foreclosure options.
Your Certified Housing Counselor has information about foreclosure prevention, which is also called loss mitigation. Be sure you understand these options. There are many steps and written forms you have to fill out and send in to start the loan modification process. If all documents are not filled out correctly, and sent in on time, your loan modification will likely be denied. You may or may not be given a second chance to start the process over.
6. Prioritize your spending.
After healthcare, keeping your house mortgage payments current should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses--cable TV, memberships, entertainment--that can be cut out of your monthly budget. You may even be better off making late payments on credit cards and other "unsecured" debt until you have paid your mortgage back to a current status, so you don’t lose your house in foreclosure. Initially, you need to develop a "crisis spending plan" that eliminates everything but food and health care, and car loan until you get the mortgage caught up. Once you are able to get some cash together to start paying back your delinquent payments, you can develop a more stable spending plan to include other unsecured debt payments and optional items.
7. Use your assets.
If you have a second car, jewelry, whole life insurance policy or other assets that can be sold, you may need to consider selling those assets to raise money for the mortgage catch up. Or, see if anyone in your household can work extra hours or get a second job to bring in additional income to use in paying the mortgage. Even if these efforts don't increase your available cash or income, they will help you show the lender you are trying everything to keep your home. Your housing counselor can also give you more tips on how to tighten your spending.
8. Don't lose your house to foreclosure recovery scams!
If anyone other than a bankruptcy law firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, don't do it. Only bankruptcy lawyers can file a bankruptcy for you in a proper and assured manner to stop a foreclosure, especially if you are near to the foreclosure date. Also, be aware that you only get one bankruptcy filing within a single year, so you cannot stop a foreclosure by filing bankruptcy, letting the case dismiss, and then within a year try a second bankruptcy. That will not stop the foreclosure.
(Learn more about Using Bankruptcy to Stop Foreclosure).
9. Don't wait to defend yourself.
The longer you wait to get help, the harder it will be for a certified housing counselor or bankruptcy lawyer to assist you. Losing your home may be the price you pay for thinking something will come along to fix everything. Action is what will make that happen.
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About the Author
Michael Strong Michael Strong is a practicing lawyer licensed in Virginia, Maryland and the District of Columbia. He has practiced law since 1980 and represents clients in foreclosure, bankruptcy, debt settlement business cases.