Facing the possibility of foreclosure can be a daunting experience for any homeowner. Pre-foreclosure is a critical stage in the foreclosure process, and understanding its implications is crucial for homeowners who wish to explore their options and potentially avoid losing their homes. In this article, we aim to explain pre-foreclosure, and a short overview of the steps you can take to avoid a foreclosure and navigate through the challenging situations.
What is Pre-Foreclosure?
Pre-foreclosure refers to the period between the initial default on mortgage payments and the actual foreclosure sale. During this time, homeowners have an opportunity to resolve their financial difficulties and prevent the foreclosure process from progressing further. It is a critical window for homeowners to act and explore various alternatives.
When you miss mortgage payments:
30-60 days late
Lender makes initial contact regarding missed payments
Lender makes initial contact regarding missed payments
60-120 days late
Lender sends notice of intent to foreclosure
Lender sends notice of intent to foreclosure
120-175 days late
Summons by the sheriff or a process server
Summons by the sheriff or a process server
60 days after being served
Motion of default and judgement
Motion of default and judgement
90 days after being served
Right to reinstate loan expires
Right to reinstate loan expires
7 months after being served
Right to redemption expires
Right to redemption expires
Source: NHS Chicago, Illinois Foreclosure Process Timeline
Approximately 70% of all mortgages last for 30 years. As a homeowner, it is important to understand the mortgage structure and the terms, and additionally, the help/assistance you can receive should an unforeseen circumstance affect your ability to make mortgage payments.
On average, the foreclosure process takes anywhere from 640 to 1000+ days. Lenders typically dislike going into foreclosure as much as the homeowners due to the fact that it’s a lengthy process involving legal intervention and fulfilling certain state-mandated steps prior to the proceedings. As of December 2022, in Illinois, one in every 2,399 housing units has foreclosure filing with the nationwide average being one in every 4,558 housing units.
Top 5 states with foreclosure starts in 2022
California
27,269
27,269
Texas
23,151
23,151
Florida
22,968
22,968
Illinois
16,941
16,941
Ohio
13,469
13,469
Top 5 states with highest foreclosure rates in 2022
Illinois
0.49%
0.49%
New Jersey
0.45%
0.45%
Delaware
0.40%
0.40%
Ohio
0.38%
0.38%
South Carolina
0.37%
0.37%
Source: ATTOM U.S. Foreclosure Market Report
Causes of Pre-Foreclosure:
Pre-foreclosure can occur due to various reasons, including job loss, unexpected medical expenses, divorce, or other financial hardships. Missed mortgage payments trigger the pre-foreclosure process, and it is essential for homeowners to address the situation promptly to avoid further complications.
Financial
hardships
hardships
Recent
unemployment
unemployment
Medical/health
emergencies
emergencies
Unexpected financial
emergencies
emergencies
Personal
debt
debt
Steps to navigate pre-foreclosure:
1. Contact Your Lender
This is first and foremost. Communication is key! When you’ve missed your mortgage payments, it’s essential to keep your lender apprised of your financial situation and have clear/transparent communication in written form. Your lender would most likely be willing to work with you to address your problems and find a solution for you. If selling your house seems like a more suitable option to mitigate the situation, find a cash buyer for your property so you can save your built-up equity from being lost to the lender.
2. Know Your Options
Remember that as a homeowner going through pre-foreclosure, your lender may present several ways you can save your house from an impending foreclosure. Some of these may include loan modification, repayment plan, or refinancing.
3. Seek Professional Guidance
Consulting with a housing counselor or an attorney specializing in foreclosure can provide valuable insights and guidance. They can help you understand your rights, negotiate with your lender, and explore alternative solutions.
4. Explore Government Programs
Investigate government programs designed to assist homeowners in pre-foreclosure. Programs such as the Home Affordable Modification Program (HAMP) or the Hardest Hit Fund (HHF) may offer potential solutions to help you stay in your home.
5. Consider Selling Your Home
If keeping your home is not feasible, selling it before foreclosure can help you avoid the negative consequences of foreclosure on your credit score. If time is working against you, consider selling your house to a direct cash buyer company such as Offer4Homes.com, where the process is typically quick and you are paid the full amount in cash, which helps you pay off the mortgage.
About Offer4Homes
Offer4Homes is a trusted property buyer in the Chicagoland area. We buy houses in any condition and serve homeowners who need a quick sale to come out of difficult situations. We put our clients' priorities and requirements first and help them save the built-up equity from being lost to the lender. We expedite the closing process if you're behind in mortgage payments or on the verge of foreclosure.
Losing your home to the lender is tough. Losing equity is worse. Don't lose your equity to the lender. For homeowners in financial trouble, the pre-foreclosure phase is crucial. Homeowners can investigate their alternatives to perhaps prevent foreclosure and safeguard their properties by being aware of the causes, acting pro-actively, and consulting a specialist. It is imperative to note that prompt action and transparent correspondence with your lender are critical to achieving the most favorable result during this trying period.