I Am Receiving Letters From My Lender, What Should I Do?
Receiving letters from your lender, especially when you’re behind on a payment, can be a stressful process. But don’t panic. The foreclosure and late payment communications process can seem scary, but much of it is in place to protect the borrower. Read the letters and figure out how you should respond.
What to Do When You Receive Letters from Your Lender
Sure, it’s an obvious first step. But there are plenty of people who won’t even follow through on this one. Letters from your lender are an overwhelming, frustrating experience. If you’re in financial trouble and you know it you may not be actively checking your finances and the information that you’re receiving from your lender.
But you’ve got to get in the habit of checking mortgage information. If you receive letters from your lender, come up with a system so that you have to read them immediately. It’s important that you know what’s in the letters so that you have the most possible time to respond.
Open communication is super important throughout the lending process. If you’ve missed a payment and want to have the most leverage during the next stages of your lending solution, you need to respond quickly, timely, and in a professional manner. Lenders are much more likely to work with a borrower who knows that they’ve missed a payment and make it a priority to communicate with them. Communicate, honestly, and update them on your situation.
Types of Letters
Notice of Missed Payments
The first kind of letter that you might receive from your lender is a notice of missed payments. This will probably be sent immediately after you’ve missed a payment or are short on a payment in a given month. These notices will probably continue but be staggered out for the next few months. The foreclosure process won’t begin during these simple missed payments, but if you don’t respond to the missed payments notices, then you will probably enter the process quickly. If you receive a notice of missed payments—contact your lender and explain your situation to them. Hopefully the payments were just missed in a couple months and you can set up a forbearance plan to get your mortgage back on track. This is the time to talk about additional lending options, loan modification, and forbearance.
Notice of Default
At this point, the formal foreclosure process has begun. If you receive a notice of default, the lender has started the foreclosure process and you need to make an honest assessment of your situation to figure out your response. If you think that there is a chance that you can bring the mortgage current before foreclosure hits in around 120 days, then you should tell your lender that you fully intend to make good on the mortgage. If you don’t think that you’ll be able to make good on the mortgage, you should explore deed in lieu of foreclosure and short sale options to avoid foreclosure.
Notice of Trustee’s Sale
Once you receive this notice, there is very little that you can do to stop the foreclosure process. You’d have about 16 days to make good on the mortgage, otherwise your house will be sold at auction.
Know Your Options
I’m Behind on Payments By a Little Bit
If you are behind by a little and you are receiving notices that you’re behind, you still have tons of leverage and options. Talk to your lender about why you’ve missed a payment or payments. If it was an emergency or extenuating financial circumstances, explain that and make payments to bring the mortgage current again. If you can’t bring the mortgage current now, explain to your lender when you think that you’ll be able to do so.
I Had a Few Tough Months, But Now I’m Doing Great
Explain your situation, and work with them to figure out how to get back on track. If you had a few tough months but your income is back to normal, forbearance might be enough to bring the loan current. If you’ve experienced a permanent reduction to income, but not enough to put you under, a loan modification might work.
I’ve Had a Permanent Reduction to Income
Loan modification will probably be the only way to save your house in this case. If you’ve had a reduction to income, but are still close to being able to make payments, loan modification might be your way out of foreclosure.
I’m Behind and Don’t Think I Can Catch Up
To avoid foreclosure, talk to your lender about this and explore other options. A short sale or deed in lieu of foreclosure might be your main options in this case.