The process varies by state. If you apply for a forbearance by the deadline, which is currently the end of September of this year, the lender won’t be able to foreclose on you while you are in a forbearance plan. However, if people don’t act, that could start the clock running on the foreclosure.

In Maryland, the foreclosure process takes about four to six months, depending on whether the homeowner still lives in the property and whether they’ve requested a mediation. Foreclosure is not a process where you miss your payment and then are out of your house the next day. There are some things that have to happen, and there are ways to stop that process by filing bankruptcy or, in some cases, applying for assistance. Homeowners who’ve applied for assistance in a timely manner have some protection in place, and their foreclosure process can be put on hold.

Do Banks Want to Put Delinquent Homeowners in Foreclosure at the Moment?

I’ve stopped trying to figure out what banks want to do because they never seem to apply the same logic. In many instances, it’s just a business decision for them. They’ve lent out a certain amount of money, so do they want to put that money at risk again or do they want to cash out? If that’s the assessment that they have to make, it differs greatly from the one my clients have to make to keep a roof over their heads. Maybe that’s the only place that they have to live and they don’t have other options. Maybe their home has sentimental value to them and they don’t want to lose it. Or maybe they just got a job across the country and they don’t care. Those interests don’t always align, so at the end of the day, it’s impossible to tell what the bank wants to do until you apply for assistance, which I think everyone should do.

There is really no harm in applying for assistance. It doesn’t take that long to fill out the forms and send the other items that they want, and the worst thing that they could do is say no. But in a lot of cases, people get loan modifications where their loan is restructured. Sometimes the arrearage is put on the end of the loan, sometimes it’s recapitalized into the loan, and a lot of times, the payments and the interest rates are lowered. I’ve done a lot of loan modifications, and some that I thought were probably going to sail through didn’t, while others that I thought would never work out happened. All I’ve learned is that you really never know until you try. But I think it is always a good idea to talk to an attorney because they can help you put those packages together in a way that can cut down on a lot of denials and help streamline the process for you. Even just messing up on a form could mean being denied or having your request sent back to you. Find an attorney or a housing counselor who knows what they’re doing to help you.

There is also the bankruptcy option, which is not for everyone. It can, however, be a very useful tool, and it does stop the foreclosure process. It forces the lender to work with you, though in a bankruptcy, you’ll only have five years to pay back what you owe the mortgage company. That doesn’t always work for everyone, and it really depends on how far behind you are and what your resources are.

Is It Better to Restructure a Loan When Facing Foreclosure, or Is It a Good Idea to Let My Home Go?

I’ve had this conversation with almost every homeowner who has walked in the door, and it’s really a tough one because it’s specific to the person and the situation. Sometimes, it makes financial sense for a person to walk away, but they may not want to. Sometimes, even though they may have no equity in their home, it might be cheaper for them to stay put than to rent. Right now, we have a crazy real estate market here, and even finding a place to rent is very difficult.

We just have to look at all of the different factors that are going on with the person. Who is their mortgage company? What options are on the table? Is bankruptcy an option? What would their payments look like? What’s their income at the moment? Those things will tell us the answer.

It’s always a client’s choice what they want to do, though not everyone has the resources to keep their home, unfortunately. We sometimes have to have a tough conversation about the best way to let it go. Here in Maryland, that’s not easy either because if you walk away from your house here, you could end up owing the mortgage company if there is a shortfall or deficiency after the foreclosure sale. So even with just walking away from your home, there is a conversation to have about options. A lot of the time, we’ll recommend bankruptcy, short sale, or deed in lieu of foreclosure because those can mitigate the deficiency. The last thing you want to do is lose your house and still owe money.

For more information on Foreclosure Process After Moratorium Expiry, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (443) 492-9003 today.