Foreclosure is the ability of lender to take back the property when the homeowner defaults in the payment. When a lender gives money to buy a property the homeowner has to repay in monthly instalments. When the homeowner is unable to pay, the lender can sell the property to repay the debt. To avoid this homeowner can get in touch with a loan modification company.
A loan modification expert in the company will help to modify the loan repayment instalments. If there is breach in the contract and the homeowner defaults in payment, the Bank can sell the home through one or two foreclosure processes.
How Federal Laws can protect Homeowners?
Homeowners can get protection from Federal laws when they face foreclosures. Under the Federal Law the Bank that accepts the monthly payments and handles the loan cannot begin a foreclosure before the mortgage payment has been delayed by 120 days.
The 120 days’ time gives the homeowner time to rectify the loan by paying overdue amount, costs and fees or to submit a loss mitigation application to the loan modification mitigation department that will help in a new agreement which will prevent foreclosure.
How can the Company giving Loan protect the Borrower?
When the borrower falls back on his payments the Bank can call him and discuss ways to avoiding foreclosure within 36 days of defaulting in his payments. Within 45 days the lender must be reader with foreclosure options and the staff must be available to discuss the borrower’s payment history and account.
If a mitigation application is submitted by the borrower within 37 days before the foreclosure sale. The foreclosure cannot be initiated. The bank must inform the borrower that he cannot appeal for a mortgage modification and the appeal period should expire. If the borrower has turned down the loss mitigation offer then the foreclosure can start.
If you are thinking of a home loan, now you know your rights when it comes to foreclosure.