Defaulting On Mortgage Payments

You have taken out a mortgage loan, and have been paying your dues regularly as a responsible home owner. You have been paying your home owner insurance and keeping all the tax dues well up to date. But things do go wrong with people. You are suddenly faced with retrenchment and you lose your job. You may meet with an accident and get injured. You may be faced with a dilemma, whether to pay your mortgage installment or have your car repaired, which takes you to your job, by which you get to pay your mortgage installments. It is a catch 22 situation. Hoping that you would never face such situations, it is helpful to have knowledge, which could be helpful to you.

Under normal circumstances, mortgage loans carry a grace period of 15 days. In some cases this grace period is 10 days. Many of us put off our payments or delay the payments thinking of the grace period in the terms of the mortgage contract. Very little is thought about this, and even the lender, at times, does not take notice of this delay. As the grace period of 15 days end, on the 16th day a late fee is assessed, and there could be a friendly call from your lender regarding the matter. It just could be that this delay in payment would not even show up in your credit report. The total scenario changes on day 30. Things start to turn serious at this time onwards.

Mortgage defaulting laws varies from state to state in the US, and so does foreclosure law. The lenders approach the defaulters in various ways, which differ from how big the mortgage lenders are. On the 30th day, you incur an additional mortgage fee, which is usually 3% of the principal amount outstanding, which is a typical figure of $600,000 mortgage loan. As you pass the day 30, the lender would perhaps allow you to pay a partial sum out of the past due amount. Some lenders may also insist upon you to clear up all the dues and bring the account up-to-date.

By day 45, you will start to get phone calls from the mortgage collectors, and the frequency will gradually increase, limiting them to the law in that particular state. There may be aggressive demands of helping you with the foreclosure. By the end of 60 to 90 days, the lender will send you a demand notice for the amount pending. This notice is usually sent by certified mail, in which the lender provides you with a definite time, asking you to clear the outstanding within that time. The amount mentioned could carry additional charges of collection fees. If this goes unattended by you, the lender's legal department will now take over the matter, and you will start incurring serious legal charges.

The law provides every opportunity to the owner to stop the process leading up to the foreclosure, even to the minute before the auctioneer's hammer comes down. In some instances the opportunity may be available even beyond that. In some of the states, a law, right to redemption, comes into operation. You got to know the law so as not to be misguided by some of the unethical lenders. The foreclosure process may takes place in the front yard of the property in question, or it may be "by public outcry" on the steps of the county courthouse. This is embarrassing and frightening to the home owner.

By: Amalorpava Mary