Foreclosure: Will the Bank Take My Home if I Miss a Payment?

 Posted on September 19, 2018 in Foreclosure

Consumers who struggle to make monthly mortgage payments quickly become overwhelmed with collection calls and letters plaguing the mailbox. Fight or flight instincts immediately kick in, and most people choose to ignore the lender’s collection efforts. Many automatically assume that the bank immediately wants their home and retreat into self-preservation efforts. The truth is, the bank does not want your house. Lenders want you to pay the mortgage, and in most cases, if they can help you make that payment and save your home, they will. If the mortgage lender fails to reach an agreement with the borrower, imminent foreclosure efforts can stay through a bankruptcy filing.

Why Will the Bank Help?

The home you live in belongs to your mortgage lender. When you purchased, they assumed the cost of the home for you with the agreement that you would pay monthly payments until the loan is repaid in full. Until that day, the house belongs to the mortgage company. While they will not typically help someone with no potential benefits for themselves, they also are not in the business of buying and selling real estate either. If lenders must take a house in the foreclosure process, not only do they lose out on the money they would make in your interest payments, they also must pay the legal costs for the foreclosure process and the costs to sell the home, typically for less than the original amount. Lenders ultimately prefer to salvage the mortgage agreement, either by extending the loan or lowering the interest rate. If their borrower fails to communicate, this option is null, and the lender must begin foreclosure proceedings.

Bankruptcy or Foreclosure?

For your lender to recuperate some of their costs, they must have the title “free and clear,” which means they must have possession of the property. You can choose to allow the bank to go through a lengthy foreclosure process or opt to surrender the home through bankruptcy. A foreclosure enables the bank to remove you from your home, sell it for as much as they can make, and still hold you liable for any outstanding balances on the house. Foreclosure does not ensure an end to the collection calls. If you decide to file for Chapter 7 or Chapter 13 bankruptcy, both of which enable you to settle your debts often for pennies on the dollar, an automatic stay immediately halts all collection efforts, including from lenders. This momentary pause in a foreclosure process is sometimes all a family needs to earn enough money to save their home. Otherwise, if you do relinquish your home in bankruptcy, any liability is fully released. The bank cannot contact you if they lose money in the sale of the house.

Contact an Experienced Attorney

Attorneys are as unique as the fields in which they specialize. Like you would not hire a foot doctor for brain surgery, hiring a criminal attorney will not guarantee the best results when you face financial struggles. If you are having a hard time making your payments and are concerned about the future of your home, a New Braunfels bankruptcy attorney can help you get the answers you need. The Law Offices of Chance M. McGhee dedicates 20 years of experience to help you achieve financial freedom. Find out how we can assist you today by calling 210-342-3400 to schedule your free initial consultation.

Sources:

https://www.streetdirectory.com/travel_guide/63141/real_estate/why_the_bank_does_not_want_your_house.html

https://www.thetruthaboutmortgage.com/foreclosure-help/