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The challenge of unpaid mortgages

On Behalf of | Sep 1, 2023 | Foreclosure

If you take out a mortgage to finance a property, you may find it hard to keep up with mortgage payments. Life’s unexpected turns can sometimes lead to financial difficulties, making it hard to meet your obligations. This can put you at risk of foreclosure.

The foreclosure process

Foreclosure is a legal process that allows the lender, typically a bank or a mortgage company, to take possession of your property due to missed mortgage payments.

When you miss mortgage payments, the lender will usually send you notices to remind you of the outstanding dues. Here is a breakdown of the process:

  • If you continue to miss payments, you will receive a formal “Notice of Default.”
  • After the notice, there is a pre-foreclosure period during which you can still work things out with the lender. You might be able to negotiate new terms or find a way to catch up on payments.
  • If the pre-foreclosure period passes without a resolution, the lender can move forward with a foreclosure auction or repossess the property. This involves a legal process and varies by location.

In Texas, In Texas, home foreclosures come in two primary forms: judicial sale foreclosure and power of sale foreclosure. Each type follows a distinct process, and understanding the differences can empower homeowners facing these challenging situations.

Preventing foreclosure: Your options

Seeking expert advice can help you make informed decisions about the fate of your property. However, foreclosure is not the only option when you are struggling with mortgage payments. Here are a few avenues you can explore:

  • Communication: The key is to communicate with your lender. They might be willing to work out a temporary solution or modify your loan terms to make payments more manageable.
  • Loan refinancing: If your financial situation has improved since taking out the mortgage, you could consider refinancing. This involves getting a new loan with better terms to pay off the old one.
  • Loan modification: Some lenders offer loan modification programs that can adjust your interest rate or extend the loan term to reduce monthly payments.
  • Sell the property: If you are unable to afford the property, selling it voluntarily can help you avoid foreclosure and salvage some of your credit.

Facing the prospect of foreclosure is undoubtedly challenging. But by taking proactive steps, you can potentially find a solution that helps you keep your property or transition out of it without the harsh impact of foreclosure.