A question that every mortgage buyer has in mind is what will be the next thing in the case he misses a mortgage payment. Well, it depends on the number of payments you have missed and on the type of state you are living in. For an instance, if there is only one payment that you have missed and you are able to pay it along with the next payment, then nothing serious is going to happen. But if you have missed a payment and chances are there that you will miss the next ones too, then you can expect foreclosure and losing your home.
Well, as mentioned above, it also depends on the type of state you are living in i.e. whether it is a mortgage state or a deed of trust state. It is because of the reason that the lenders collateralize the loan either as a mortgage or as a trustee’s deed. Confused about how these terms differentiate from each other? Though both of these will lead to foreclosure, the way they proceed is different. Let’s explain.
Deed of trust state and the foreclosure process
A deed is a document that transfers the ownership of a property to another party. And trustees deed is a deed executed by the person who acts as a trustee of your home. It can be an attorney, a title company or any other entity.
In a deed of trust state, when you stop making mortgage payments, your lender can start the foreclosure process anytime. When you miss one payment, you default on your mortgage. But, usually, the lenders don’t do anything until you miss three payments i.e. until you are 90 days late on your mortgage. It is after the period of 90 days, that your trustee files a NOD (Notice of Default) after your lender instructs him to do so.
A NOD is a notice just to alert you that if you don’t get regular with your mortgage, your house will be taken for the sale. Unfortunately, if you don’t make the remaining payment, your lender will set a sale date for your house and it varies from state to state that how long it takes for the sale. It can be 30 days or 6 months. The most important thing to notice here is that there is no right of redemption once the sale date is set in a deed of trust state.
Mortgage state and the foreclosure process
The process of foreclosure is same in the mortgage state but there are two exceptions. Firstly, the lender needs to go through the court to start the foreclosure process, which is not required in the deed of trust state. It means that foreclosure is a judicial process in the mortgage states.
Secondly, the mortgage states give homeowners the right to redemption period. As per this right, the homeowners can redeem their property even if it has been sold. They can seek the foreclosure help Houston to stop foreclosure and redeem their property by paying the owed amount on the mortgage. Also, the right of redemption period varies from state to state.