Want to discuss a nightmare? Foreclosure, eviction, or repossession may be at the top of the list. What is involved in foreclosure, eviction, or repossession? How long does the process take? Does a consumer have recourse?

Foreclosure

Foreclosure can take from 6-18 months to wrap up depending on state laws and the homeowner circumstances.

If you have missed one or two payments, the creditor will write you a letter requesting payment of the outstanding amount plus a penalty of 5 % or so of the monthly payment. If the consumer ignores these communications, a formal notice called "Notice of Default" is sent. This is the first official step in the foreclosure process. The consumer at this point has 90 days to correct the default or "cure" the debt by making all back payments plus penalties.

If the back payments are not made up or contact not made, a second formal notice is sent by mail. This is the "Notice of Acceleration". Basically what this mean is that the total amount owed is now due and payable to avoid foreclosure. Some states require an actual court order to remove the consumer from the house delivered as a summons. At court the consumer can raise a defense to try to overturn the foreclosure. If the homeowner does not respond, a foreclosure judgment is rendered and a "Notice of Sale" is sent to the house with the date and time the foreclosure is in effect.

Avoiding Foreclosure

Obviously avoiding foreclosure means staying up with mortgage payments and taxes. But what if a person can't? The first course of action is to make contact with the mortgagor and ask for a temporary or even permanent reduction of the interest rate or even a short-term moratorium on the payment. But if this cannot be done, there are other options depending on whether the condition is temporary or permanent.

If the condition is only temporary, it is possible to obtain a "Mortgage Workout" as described below. However, if the conditions are long term, it may be wiser to sell the home before a foreclosure sale when the owner has no control.

But if the mortgage payment is only temporarily difficult, the homeowner can negotiate a workout with the mortgagor for an easier schedule. This can be either permanent or for the short term. A common workout is to "cure" the default by adding a percentage of the mortgage in arrears to the regular payments until the debt is current. "Recasting" is another option. If the homeowner can make the current payments but cannot handle the past due amount, the arrears can be deferred or "recast" so that this amount can be paid at the end of the contract. Today workouts of up to thirty-six months are common.

Often a second loan is procured to pay the first. But this option so often leads to disaster because the terms of the second loan are usually far more stringent. Getting a second loan then usually only delays the inevitable which is foreclosure.

Eviction

When rent is not paid, the landlord has the right to force the renter out through the eviction process. Eviction varies greatly from state to state and by city ordinance. The process can take just two weeks in some locals and in other areas up to two months. But the first step in the process is the "Notice to Quit" or "Notice to Vacate". It simply tells the renter to pay up or vacate within a limited period of time. Hidden within this notice is the right of the tenant to remain if the amount is paid.

If the obligation is not met, the landlord can file an eviction order with the court. A hearing is then issued and a summons issued for the tenant to appear in court. If the tenant does not appear, the landlord gets a default judgment. If the tenant is not out by the required date, the tenant's belongings can be put on the street. Additionally the landlord can then sue for all unpaid back-rent. If there is a lease, the tenant is legally bound to pay all future months until the end of the lease.

If the renter is having trouble paying the rent, contact the manager immediately. Perhaps something can be worked out. But doing nothing can be disastrous as shown above. Even if evicted, the tenant should attend the hearing to insure the amount of back rent is correct and to offer any mitigating circumstances. Tenants cannot be locked out nor have their property seized without a court order. Also landlords cannot evict in retaliation for reporting sub standard housing conditions.

Auto Repossession

A default can occur with any missed contracted installment payment. The lender can then seize the property. In the case of a car, the lender can put a lien and sell it to regain the loss. Some states require a Notice of Default to be sent. Other states do not and a car buyer may not even know they are in default. Especially in these cases, it is critical to keep track of payments on secured loans.

A reposed vehicle can be seized but only without confrontation. However, a car can he hot-wired, opened with a duplicate key, removed from an open garage and in some states even removed from an unlocked garage.

It may be possible for a very short time to regain the automobile but the lender is not required to provide this option. Normally a repossessed auto is sold at an auction block and the difference between the amount owed on the balance and the selling price becomes the obligation of the former owner. The remaining balance is known as the "Deficiency Balance".

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