How To Stop Eviction After Foreclosure [Step-by-Step Instructions]

Economic hardship can hit anyone. Often, people who have been in a good financial situation find themselves without a job or with a significantly lower-paying job. As circumstances change, our ability to pay for housing changes as well. If you have a mortgage with a monthly payment that you can no longer afford, you may be facing foreclosure and eviction.

If you find yourself unable to continue paying your mortgage, the best way to avoid both foreclosure and eviction is to sell the property before the foreclosure is completed. That way you can return the borrowed money to the lender without facing legal proceedings.

Other options include paying back the missed payments, applying for financial assistance through government agencies, moving out voluntarily, or negotiating with the new owner to remain as a tenant.

Continue on to understand what foreclosure and eviction are, the legal ramifications of being evicted, and possibilities you can pursue to avoid being evicted.

When you purchase a home, you generally have to borrow most of the money to pay for it, sometimes hundreds of thousands of dollars. Most people take between 15 and 30 years to pay the total of the house. The house itself becomes the collateral for the loan.

If you cannot make the payments on the house, the bank that holds the mortgage has the right to take over ownership of your house after a certain amount of time, at least 90 days. When the bank takes possession of the house, it will put the house up for sale to recoup their losses and you will be evicted.

If you are just a few days late on your mortgage payment, you won’t be facing eviction, but you will accrue late fees. You should always contact the lender as soon as possible when you are having difficulty paying the mortgage.

If you miss payments, the lender will start by mailing or e-mailing you notices that your payment has been missed. After three missed payments you will be considered to have defaulted on the loan. At this point, the lender can start the foreclosure process by notifying you of their intent in writing.

Foreclosures will damage your credit score. It can make it difficult for you to rent or buy a home for the next seven years. The foreclosure reporting on your credit score can also make it difficult to get a loan of any kind in the years following the foreclosure.

Eviction is legal removal from a house for failure to make payments on a mortgage loan. Eviction laws vary from state to state, but in general, the owners whether it is the bank or a private owner must give the person living there a certain amount of time to move out.

The owners must provide the residents notice that they are being evicted and the number of days they have to vacate the property. If the resident does not move out, the owner can bring in a Sheriff or other law enforcement personnel to enforce the move.

Unlike foreclosure, eviction doesn’t show up on your credit score. However, it does show up in legal reports, and it may become difficult for you to rent in the future. Because the legal judgment against you can show up on consumer reports, you may also be denied a loan or credit card.

Both foreclosures and evictions remain matters of public record for seven years.

One possibility for changing the amount of your monthly mortgage payments in refinancing your home. Before you default on your loan and take a hit to your credit rating, shop around for a new lender to refinance the home at a lower interest rate. This will reduce your monthly payment, allow you to stay in the home, and keep your credit score intact.

If you cannot lower the interest rate, you might be able to extend the payment period from 15 to 30 years. This will also reduce the monthly payment. However, you will end up paying more in the long run due to interest charges.

You may also be able to apply for financial assistance through the Making Homes Affordable program. In addition, you can look for a foreclosure counselor in your state through the U.S. Department of Housing and Urban Development. If the loan you have is an FHA loan, you can call the FHA National Servicing Center at 1-877-622-8525 for assistance with your mortgage.

After the bank or lender has notified you of missed payments for at least 90 days, they can offer the house for sale at an auction. Their goal is to accept the highest bid for it and regain as much of their lost capital as possible. Homes often sell for 20-40% less than the market value of the house.

If no one offers the minimum amount that the bank wants, then the homeownership goes to the bank. It will likely be put up for sale at the next auction. You should take the extra time to hire a foreclosure attorney to help you make decisions about your situation.

If economic difficulties have forced you to miss mortgage payments, and you are facing foreclosure and eviction, you should try to sell the house in order to regain as much of the balance of the loan as possible. This way you can pay off the loan so that the default does not affect your credit score or your legal history. You can apply for financial assistance from the Making Homes Affordable Project and the U.S. Government’s Housing and Urban Development Programs.

If you are unable to sell the property, you should negotiate a move-out date with the new owners so that you do not have a legal eviction on your record, because it could impact your ability to rent or get a loan in the future.