November 3, 2011
Foreclosure is the worst-case scenario for home owners, but many don’t understand how the process works or at what point the FHA borrower may be in danger of losing his or her home.
If you don’t understand how the foreclosure process works, but fear you may be nearing default or worse on your FHA mortgage, it’s definitely time to get educated about foreclosure and get in touch with your lender. FHA guidelines encourage borrowers to work closely with both the lender and the FHA to avoid loan default.
What is the FHA timeline when it comes to missed payments and foreclosure proceedings? Many don’t understand how this works. Borrowers who miss a single payment face a serious issue, but there is still time to work out the problem and avoid future issues. The basic timeline includes a set of contacts from your lender when you’re behind on your payments. Your first missed payment may go with nothing more than a mailed reminder.
When the FHA borrower is 90 days past due, a default notice will be sent with a timeline for the borrower’s response. After that option is gone, the lender may start foreclosure proceedings against the borrower.
This boils down to a formula that is simple, but misleading. Reviewing the foreclosure process, some borrowers may assume it is “safe” to miss one or more payments until a “limit” of four has been reached (usually the time when foreclosure proceedings have begun). But in reality, the borrower should not miss any payments at all, and missing a single payment should be dealt with immediately. By the time your loan is two months behind you may become ineligible for some foreclosure avoidance programs as their terms require a borrower to be current.
Again, if you are in danger of missing a payment, contact your lender before the payment is missed to see what can be done to help. The proactive approach–taking action before you get into a situation where missed payments must be dealt with–is the best plan.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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