This article is in response to an email but it is a common enough question that I figured I should write about it. Several things can happen once a mortgage company agrees to postpone your foreclosure. The main question once your foreclosure has been postponed is, “What is my plan?” Your plan will greatly depend on how much time you have before your lender attempts to foreclose on your home again. In this post I will explain the three time frames you could have depending on your particular plan.
Plan 1: Loss Mitigation Workout Plan
If you are working with your lender to obtain some type of repayment plan, then you could only have up to 30 days before your lender forecloses on your home. Many mortgage companies will suspend a foreclosure when they feel that they are close to reaching a repayment plan agreement with a home owner. So if your foreclosure is suspended for this reason more than likely within a couple of weeks you and the mortgage company will reach an agreement.
Plan 2: Short Sale
A short sale can cause your foreclosure to be suspended for up to 6 months. The reason why a lender will postpone your foreclosure for so long is because a short sale is a negotiation. So the mortgage company puts your foreclosure “on hold.” This means that at any time they can put your home back into active foreclosure. However, typically they leave it on hold until they reach a short sale agreement. It is important to note if the mortgage company is unable to reach a short sale agreement they will immediately foreclose on the property.
Plan 3: Selling Your Property
If you can prove that you have a buyer for your home or are attempting to sell your home typically your lender will postpone your foreclosure. Generally lenders will provide home owners 3 months to attempt to sell their home before they put the home back into active foreclosure. Lenders prefer to have home owners attempt to sell their own home(s) because it will cost the lender more to foreclose and resell a home than to allow a home owner to do it themselves.
So if you are able to have your foreclosure postponed, remember to make sure you know your plan. This will ensure you don’t fall into the trap of waiting around for your lender to make the next move. Instead, you will follow your plan and ensure you keep your home.
Cliff Pape
Home-Buddies
Sheila said,
May 12, 2008 @ 6:10 pmPlease help me in the best way you can to clear up my credit report due to our short sale of our property. What I was saying previously is that we did a short sale on our house which included a 1st and 2nd. The bank agreed to a short sale if we could get what they wanted and we did so but it is showing as a charge off on our credit report plus an M9 ( I don’t know what this means). I thought every thing was fine until we were approved for a loan for a house and 2 days before we were suppose to close they decided they couldn’t based on this info. Please help!!!!