It’s not difficult to find free advice on Google about delaying foreclosures. Solicitors are also queuing up with paid assistance. Their market is booming since homeowners in financial difficulty, figured out they could live rent-free for years if they make the right moves.
Two Types of Foreclosures to Watch For
Mortgage lenders can serve notice on their borrowers for two reasons
# Firstly, a borrower may cease making payments because they can’t, or don’t want to do so
# Secondly, a lender can initiate a strategic foreclosure when the market value of the property falls below the outstanding loan
Tackling Strategic Foreclosures Head On
According to JP Morgan these strategic foreclosures are illegal, provided the borrowers are servicing their loans and are not in default. These ‘robo forecloses’ are often triggered by falling markets, and signed off by clerical administrators who don’t have the capacity to drill down to the facts.
Therefore they can be fairly easily fixed with a simple procedure, provided the borrower’s paperwork is in order and the credit bureaus update their records. Hence in this instance it pays to delay the foreclosure with a legal notice, ordering the lender to stop the process.
This Logic Does Not Apply to Defaulters
Mortgage lenders can, and will foreclose on a subject property if the borrower falls behind with their payments, no matter their reason. On many occasions this happens after their income dries up and they become a victim of a recession. While it is true they may be able to delay the process, they run the real risk of being worse off in the end:
# The lender may lose patience with their obstructive tactics and start foreclosing immediately with a quick sale
# The market value of the property may have fallen in the interim due to pressures from the recession
# The relative value of the house may have dropped owing to disinterest by the owner about to lose their home
In the above regard it’s vital to know that a foreclosed borrower is personally liable for any shortfall. This includes the auction price being lower than the outstanding mortgage amount.
Time Not On the Side of a Delinquent Borrower
Delaying tactics to slow foreclosures may cost a delinquent borrower heavily for reasons given above. Moreover investors hunt for bargains at foreclosure sales and often pay less than market value.
It follows it may make more sense to sell a bonded property before falling into arrears. In this regard, it pays to deal with investors who know how banks and lenders work, and close a deal quickly before lenders pounce.