how long after a foreclosure is in effect do you have to pay back payments or balance of loan?
Posted on November 7, 2009
Filed Under Renting & Real Estate | 2 Comments
happyhunting asked:
Can I pay off a loan or make payments between the time the foreclosure goes into effect and when it is sold?
This mortgage is a note to an individual.
Can I pay off a loan or make payments between the time the foreclosure goes into effect and when it is sold?
This mortgage is a note to an individual.
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Of course you can! But the amount of time for your “cure” period varies by state… google it. Some states will even let you pay off a loan AFTER foreclosure (known as a redemption period). Just make sure that instead of blindly sending them payments that you’re working closely with your bank and that you get some sort of forbearance agreement from the bank in the case that you only pay part of your loan off.
Lenders these days will be happy to get the arrears paid in full at any point before the sheriff’s sale or trustee sale. Once the home has sold, to get the home back during a redemption period (if your state has one) you will need to come up with a lot more money. In most cases, you will need the entire amount to repay the loan.
Prior to the sale, you could realistically get the home back with $0 out of pocket! Using a loan modification, you can get a new lower payment and you can negotiate the arrears and/or payoff amount.
If you just want to buy time to come up with money to pay off the loan, just explain your situation to your lender and tell them you need more time. It’s very important to negotiate the payoff amount if you do plan on paying the mortgage in full. The lender should be willing to accept a reduced amount, since the cost to foreclose will be avoided. Also consider the current value of the home when making your offer. If the home has dropped in value, you should only pay what the home is worth, minus the cost of foreclosure.
When negotiating a reduced payoff, it’s important to get your entire agreement in writing and eliminate your lenders right to file a deficiency judgment (again, if allowed in your state)
There are many options when negotiating with your lender, so it might be best to do more research or hire a professional to make sure you get the best possible deal.