What is foreclosure exactly?
Foreclosure is the process where your mortgage lender takes away your home and sells it to satisfy your unpaid mortgage. Missing your mortgage payment doesn't mean you are in foreclosure, it means you are in default. The foreclosure process starts when your lender has filed the necessary paperwork, which can be as soon as 60 days after your first missed payment.
Why can my lender foreclose on my home when I've made all the other payments on time?
Your mortgage contract with your lender uses your home as collateral. Unfortunately, the contract states that your mortgage lender can take your home from you, even if you only missed one or two payments.
What are the laws regarding foreclosure?
Foreclosure laws vary state to state. You can check with your attorney general to find out more about the laws in your state. This is very important to do, as it will determine how much time you have to save your home.
Do I have any options?
You actually have a few options, but you'll need to decide which will be best for you and your family. Options that allow you to keep your home include reinstatement, forbearance, loan modification, partial claim, and refinancing. Other options are selling your home before the foreclosure sell date, deed-in-lieu, bankruptcy, and foreclosure. The first options are typically far more desirable than the last few.
What should I do now?
Make sure that you are in contact with your mortgage lender. Keep a log of your telephone calls and copies of your correspondence. Tell them what you can afford right now and if you have a windfall coming in the future that you're sure about. Your communication with them can at least help you in court if a judicial foreclosure goes through.
Staying in contact with your lender may also help you avoid foreclosure and will keep you informed about where your lender is in the process. Most good lenders don't want your home, they want your payments and will work with you as much as they possibly can before they foreclose. Be wary of people and organizations that advertise a quick fix to help you save your home, as there are people who will take advantage of you during this difficult time. Read over all agreements and ask questions to protect yourself. You don't want to end up without your home and deeper in debt.