Life happens, we get it, and sometimes mortgage payments get missed. Then life can get really scary as you work at avoiding foreclosure.
When the late notices start to pile up, some might ignore the problem, because if you could make the payments you would. But you can’t so you might wonder, just how long can you stay there before the lender forecloses and even after that, how long until they make you leave.
Don’t ignore the problem. Be proactive. Stay in control of your situation.
As people who buy homes that are in foreclosure, homes at the foreclosure auction, and homes after the foreclosure, we here at kcmoHomeBuyer have worked with people in all three situations. The best advice we can give you is “Don’t ignore the notices from the bank, call them and talk to them as soon as possible. They have specialists on staff whose job is to help you figure out a solution. They have access to government programs that can help in some situations to help you get caught up on late payments and stay in your home. They have the ability to delay the process to give you time to sell the house. Whatever you do, don’t wait until 30 days before the sell-by date.”
Can I sell My Home if I am in Foreclosure?
Yes, selling your home when you are facing foreclosure is just one option. When you react quickly you may be able to list your home for sale, get it marketed, find a buyer and get it closed, all before the sale date. Keep in mind that all that time you are spending on this process is racking up late payments, late fees, and quite possibly attorney fees for your lender, all fees that get tacked onto what you owe the lender, making it harder to sell. Your lender also has the ability to waive these fees, and slash these fees, in order to allow you to make the sale. But you do have to talk with them. The faster you sell, the less time for these fees to pile up.
What Should I Do if I am Behind on my Mortgage?
Contact your lender right away: They are going to want to know why you are unable to pay and if this is a temporary problem or have you had a permanent change in circumstance. They will want to know all the same things you had to tell them to get the loan, details about income, expenses, and assets.
Counseling Agency: If you are unsure or want help, there are HUD-approved counseling agencies that can help, but they will charge you a fee.
Open Your Mail: While you want to ignore the problem, opening all mail that comes from your lender is vital. They will be sending you valuable information about the options they offer that can help you. They could also contain important legal notices that tell you what is happening and when.
Options to Help You Keep Your Home
Some loans that are backed by government programs often require the lender to offer, when asked, ways for the borrower to work out their missed payments. We have a list of options below that are required by FHA loans, most lenders offer similar workout programs to help you keep your home.
Special Forbearance: This provides for a temporary reduction or suspension of your payments to allow you to overcome the problem that made you unable to pay. Then they offer a payment plan to help you make up missed payments.
Mortgage Modification: This provides a permanent modification to your loan, adding the missed payments to the loan balance and possibly changing the interest rate and the number of years you have to pay off the modified loan.
Partial Claim: This is an FHA-only loan that provides a second loan to pay off the missed payments. It comes with zero interest and does not need to be paid until you pay off your first mortgage or sell your house. If you don’t have an FHA loan, ask your lender about an “Advance Claim”, this is something they may offer that is similar.
FHA – Home Affordable Modification Program (FHA-HAMP): This is an FHA program that comes with a grant to reduce your existing loan balance by up to 30%, then the reduced amount is modified to reduce your monthly payments.
To qualify for these programs and others that your lender may offer, you do need to qualify.
What If I Can’t Work with My Lender to Keep My Home?
If you reach out to your lender and none of the programs they offer will work for you to keep your home, your next step would be to look at options that require you to sell your home.
Traditional Sale: With the values of homes being way up, right now today in 2022, it may be possible that you could list your home with a Realtor, get it marketed and sold and pay their commission and be able to sell your home and pay off the mortgage and all the fees.
Investor Sale: It may be that you could reach out to cash buyers, like the Tuckers here at kcmoHomeBuyer, who can act quickly to purchase your home for cash, charging no fees or commissions, and paying off your mortgage and lender late fees.
Short Sale: If you owe more than your home is worth, especially if you have a lot of missed payments and late fees being tacked on top of your loan balance, it may be hard to sell your home as the pay-off amount is higher than what home buyers will pay. Your lender will often work with you in this situation to allow you to sell it at fair market value, even if it is less than what you owe. You do have to meet their conditions.
Deed in Lieu of Foreclosure: As a last resort, you can often times give the house back to the lender. Sign the deed over to the lender, leaving the home clean and undamaged, and they will not foreclose. Some lenders will even pay to help you move.
All of these workout options and sale options could have tax consequences, so you should check with your tax advisor before accepting any of the options.
When Does the Foreclosure Process Start?
You know you’ve missed a few payments, but you are not sure when the process starts. The answer is going to depend on your lender. The process to start the process varies from state to state and from lender to lender, and timelines vary from state to state.
In general, lenders will start taking steps to start the process if you have missed 3 months of payments. This will be in the form of some sort of Demand to Pay Letter, or a Notice to Accelerate Letter. This will tell you how much you owe and typically give you 30 days to bring your loan current. They will often send this by way of a certified letter or register letter to have proof that you received it. Your lender pays an attorney to send this letter, so now they have legal fees that they can tack onto your balance.
Next, the lender’s attorney starts the process to work toward the foreclosure itself. The Missouri Foreclosure process can be as little as 21 days. In Kansas, the foreclosure process takes about 4 to 5 months, and then after the foreclosure, there are another 90 days to 1 year in which the borrower has the right to redeem the property.
After the process is complete, the auction is completed, in Missouri, the house now belongs to the lender or the person who purchased it at the auction and you will now work with them to stay or move. Most will want you to move as soon as possible, some will pay you to move, and as a last resort, they will evict you. In Kansas, they have a redemption period after the foreclosure auction, this period will vary by circumstance and can be as little as 90 days and as long as a year, then the process to take possession of the house from you will start. (Nolo Press has a great resource on the foreclosure process)
I’m Behind on Payments but Not Yet in Foreclosure, Can I Sell My House?
This pre-foreclosure period is one of the best times to sell. You still have time to find to prep your home for sale so that it sells for the best possible price.
Time to avoid foreclosure so it does not affect your credit report too badly that will limit ability to buy in the future.
Time to work on your own schedule, and not the banks.
If you seek to sell your home too late in the process, the foreclosure process and associated fees could limit your ability to prep the house and find a buyer. It could force you to have to sell as-is or to a cash buyer that might net you less, all in an effort to beat the bank’s time frame.
“If you are in financial distress and unable to pay your mortgage, don’t wait. Get your house on the market as quickly as possible so you have time to sell and the bank has fewer fees to tack on.”
The Foreclosure Process Has Started Can I Still Sell it.
Even if the process has started and you have been receiving notices, it is always still possible to sell your home. If you are facing a long-term change in circumstance that you will not be able to recover from, it may be your best option, to sell your home, pay off the loan, and move on to something you can better afford.
And right now, in 2022, while the values of homes are at such high values, it may be that you have the equity in your home that you could tap into by selling. You might be able to sell your home for way more than you owe and pocket your equity to live off of or pay off other bills.
What are My Next Steps if I am Facing Foreclosure?
Find What Your Home is Worth – there are many online tools that can help you estimate what your home is worth like Zillow, Redfin, Trulia, Realtor.com. You could also reach out to a local Realtor or give us a call here at kcmoHomeBuyer and we can give you a rough idea. Keep in mind that any repairs or updates that you need to make can reduce the homes value.
Figure What you own in Mortgage, Late Fees, and Legal Fees: Call your lender and while you ask about your options, ask them to give you an exact amount you owe that includes principal, interest, late payments, late fees, and legal fees. You may have all of this in writing in notices that they have sent you.
Determine Costs to Sell: It cost money to sell the house. These costs can include cleaning, staging, repairs, marketing costs, real estate commission, closing fees, paying fees for the buyer, and moving costs.
Now that you know roughly what you can sell for, what you need to pay, and the fees involved, you can get a rough idea of how much you can put in your pocket:
Value – Fee – Costs = Money to You
Contact a Home Buyer: Because you are working on a tight timeline, you might want to reach out to a cash home buyer that has the ability to buy your house in as little as a couple of weeks, that requires no cleaning, repairs, or staging, and charge no fees. You may be able to make the same amount of money in the end if you can move faster, don’t have to pay out anything to get the home sold, and can stop the late and legal fees from mounting with the lender.
And because we also have real estate agents on staff here at kcmoHomeBuyer we can give you two options: A cash offer now on a short timeline, or a not-so-traditional Realtor listing selling your home as-is. Then you can compare the two and determine wich is better for you.
Stay in Contact with your Lender: We get it, it’s very tempting to sweep it all under the rug so to speak, and ignore everything. But it is very important to stay in communication with your lender. This can make or break your plans. Most lenders would rather work with you on a solution to help you sell your home rather than having to foreclose. As you work with a cash buyer or a real estate agent, they should also be in touch with your lender. This will require you to give your buyer or real estate agent authorization to speak with the bank, the asset manager, or the company handling your account.
And having this open line of communication with your lender so that they know you are working to find a solution can buy you time. If you are not in communication the process will proceed without your input and may have you get to where nothing can be done. But if you are in communication, the lender may slow or hold off on the process, allowing you time to get the home sold.
Can I Stop the Foreclosure Process?
Once the foreclosure process starts, the lender not only has your late payments, late fees, and mounting interest, but now they also have legal fees. The legal fees increase as the process proceeds. But you can stop the foreclosure process at any point in time, right up until the time of sale, if you can either pay it off or work out an arrangement with the lender or their attorney to make a payment or get the home sold. But keep in mind all those fees, especially those due to the attorney will have to be paid somehow.
Keep in mind that right now in 2022, most homeowners that are in financial difficulty have equity. Equity that they may be eating up with late and legal fees that they could put in their pocket with a fast cash sale or even a traditional listing sale.
How Long Does it Take to Sell House in Foreclosure?
The time it takes to sell a house, is going to be the same as any other house. It’s going to depend on the condition of your home, the price relevant to its condition, and how many people know the home is for sale. Because you are on a timeline, you will want to price your home competitively to the condition. The faster you need to sell, the better you need to price it. Be sure to be upfront with your Realtor when listing a home so they take the appropriate steps to price it for your time frame.
In general, it takes about 30 to 45 days to get the house ready to sell. Figure another 10 to 15 days or more to get the home listed and all the marketing put together. Allow at least 30 to 45 days to find a buyer. And then another 30 to 45 days to work through them getting financing and purchasing your home. All in all, between 90 and 120 days, with all things progressing in a positive manner. Should something happen anywhere in the process to slow things down, it could take longer.
Often it is the unknown factors that cause the delay, the seller requesting repairs that you can’t make, your house not appraising for enough money, or the buyer having some major problem that would cause them to be unable to buy. All of which can either delay the process while a solution is found or could stop the process and force you to start over.
If you are on a super short timeframe because you waited until the last minute, it may be too late for a traditional listing and your only option is a cash sale to a professional home buyer like the Tuckers here at kcmoHomeBuyer. With a professional home buyer, there is no getting the home ready for sale and no marketing time. Generally, there is no inspection, so no requested repairs to be made. And because we are paying cash, there is no opportunity for us to back out because of a bad appraisal or lack of loan approval.
What about a Short Sale?
When you owe more than the value of your home or it’s going to cost more than the value of your home to pay off the lender and the realtor commissions and all the other fees, many sellers give up. But most lenders will work with you when you are in this situation to allow you to sell the home for less than the total amount owed. You will need to ask your lender if this is a possibility and what their requirements are to do so.
Keep in mind that if the lender does allow you to sell for less than the total amount owed, they may not always forgive the amount still owed. They might still try to collect the difference through a deficiency judgment. Others might write off that amount and issue 1099 to you the borrower, causing a taxable event.
A short sale is preferable to foreclosure, it will be recorded on your credit report. But it takes longer to live down a foreclosure on your credit report than it does a short sale. Plus a short sale is anything but short, it is a process that can take a lot of time and effort to collect information and document that the lender needs to get the sale approved.
What if My Home is Foreclosed upon?
First, keep in mind that they are not going to throw you out on the street the next day, you do have some time. And it’s going to vary state by state.
If you are in Missouri, once the foreclosure auction happens, the lender or the person bidding the most at auction now owns your house. They might come and knock on your door in a few days’ time to let you know they purchased the home and to find out your intentions. In Kansas, once the foreclosure happens there is a time period called a redemption period. This is the time you have as the original owner to buy your home back essentially by bringing the loan current and paying all fees, this can be as little as 90 days and up to 1 year or more depending on the circumstances and the judge. After this is redemption period is over, and perhaps during the period, the lender or person who purchased at the foreclosure sale might knock on your door to see what you plan on doing.
Once the lender or new owner knocks on the door you have a couple of options:
Move out and give them possession.
Cash for Keys, where they pay you to move out.
Eviction or you stay until they work through the eviction process and a judge tells you that you have to move and the local law enforcement, make you leave.
What if I still Own Money After the Foreclosure.
It is possible that if the home sells at the foreclosure for less than what is owed, the lender might still come after you for the deficiency. The lender can then go to court yet again, incurring more legal fees, to get a judgment against you that they can use to place liens on other property that you might own, and garnish your wages and your bank account. If the home sells for more than what you owe, they could end up needing to pay you some of the proceeds.
Please, don’t wait – if you are facing foreclosure, take action now.
Call your lender and explore your options with them.
Find out what your home is worth, what you own, and how much it will cost to sell.
Talk with a local Realtor about your options on selling
Get a cash offer from a local professional home buyer.
Here at kcmoHomeBuyer, we can help you with 2, 3, and 4. We can take a look at your home and give you our opinion of what your home is worth now, at a price that would sell quickly, what it might be worth if you did some work, and timelines for each. We can also give you a fast, fair, all cash offer. Then you know your options and can make better decisions. Give us a call at (816) 408-3600 now.
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“We received a fair price for our mother’s house. We were very relieved because we had so much emotional attachment to the house that it would have been hard for us to sell in a typical manner. ” If you are on the fence about selling a house to kcmoHomeBuyer . . .”Do it, you won’t be sorry!”