Information on foreclosure because of delayed payments

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READER QUESTION

As of this past year we have been late on our payments due to illness. Do they have grounds to foreclose?

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Bills.com Resident Expert
Dec 12, 2011
BILL'S ANSWER

How many payments one can miss before the lender puts the property in foreclosure depends on what type of loan you have. Your mortgage contract should state how many payments you can miss before a Notice of Default is filed and sent to you. Different types of loans have different time frames. If you are currently up to date with the payments, then the lender cannot foreclose based on your previous history. But, if at this time, you are behind on your payments (even by 1 month), I strongly suggest that you look into the terms of your mortgage. In most case, foreclosure proceedings are not initiated until you miss two consecutive payments, but nonetheless, you should look into your mortgage contract to verify the same.

Refinancing your mobile home might be a difficult proposition given your late payment history. Generally speaking, lenders do not like to offer refinance loans on mobile homes because, unlike homes that are built on permanent foundations, which tend to gain value over time, mobile homes tend to lose value, or depreciate, as time passes. Refinance lenders take a security interest in a home on which they lend money, in case the borrower defaults on the payments, allowing the lender to foreclose on the home. During a foreclosure, a lender will sell the home to recoup as much of their money as possible. However, since mobile homes tend to lose value over time, it is much more difficult for lenders to get their money back through a foreclosure. For example, if a lender loans you $50,000 on your home based on its current value, and you default on your payments 10 years later, the lender may only be able to sell the property for $10,000, meaning the lender would lose a significant amount of money in the process.

If you want an introduction to pre-screened mortgage lenders, Bills.com makes it easy to compare mortgage offers and different loan types. Please visit the loan page and maybe you can find a loan that meets your needs at: https://www.bills.com/mortage/refinance/

While most standard lenders do not offer refinance loans on mobile homes, some specialty lenders will allow borrowers to refinance their mobile homes. You should keep in mind that loans on mobile homes are not the same as standard mortgage loans. Rather, they are generally referred to as personal property loans, and carry higher interest rates and shorter loan terms than regular mortgages. If you are interested in obtaining a refinance loan for your mobile home, you should look for a specialty lender who offers mobile home refinancing, such as http://www.mhloans.com

I hope this information helps you Find. Learn. Save.

Best,

Bill

www.bills.com

Comments (4)


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Bills.com
April 07, 2008
The answer to your question would greatly depend on the foreclosure laws in your state and what requirements the lender must meet in order to proceed with foreclosure. Generally, the lender is required to give you a period of time to cure the default, meaning they are required to provide you with an opportunity to bring the loan current before they can foreclose on your property. I would advise you to consult with an attorney in your area who can provide you some guidance regarding your state specific foreclosure laws, and who, if needed, can represent you in court if Chase does try to proceed with foreclosure. Regarding what documents the creditor is required to produce to win a court case for foreclosure, that will again depend on your state’s laws, court precedents in your state, and the judge’s opinion of the case. In this market in which mortgages are sold left and right, foreclosures often proceed without original copies of the mortgage note; if the bank can prove that it is the rightful owner of the note by producing a bill of sale or other documentary evidence, it may not be necessary for it to produce an original copy of the mortgage note. Again, you should consult with an attorney to discuss this matter and to help you determine the best course of action given the situation you are facing.
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Greg .
April 05, 2008
I initiated a mortgage note a while back and it was subsequently sold to Chase Manhattan. There was an issue with a bounced check for June 2002. I called to fix the problem and was told that there was no problem and it was fixed. The next month (July) I was sent a letter saying that there was no problem and it was also this month that my first automatic payment kicked in. The payments were taken out until February 2005 and wasn't taken out that month due to a potential investor sale. The sale fell through. I contact Chase again multiple times and each time was told a different month that the problem had arisen. It made it impossible to figure out the problem. In all of 2004 I would send in a payment and it would get sent back. I would double it up for the next month and it would be cashed. This happened until September 2004 when they contacted me and said they were going to foreclose. Question: 1. Can they legally foreclose after only two missed payments when they clearly had a hand in the default. 2. Do they have to prove that they are the holders in due course of the note (meaning are they required to show me the ORIGINAL contract and not merely a copy of the contract, even if the contract is a certified copy? Anyone can make a copy and get it certified. EXAMPLE: one cannot take a certified copy of a $100.00 bill and expect to be able to spend it because it is not the real thing but only a copy. Thanks
Avatar
Nithin .
February 20, 2008
Diane, most mortgage lenders will initiate foreclosure if you miss payments for 3 consecutive months. If you get back in a position to pay them, they would usually insist that you pay the past payments and bring the loan current before you can continue making regular monthly payments again. In your case, even though you have made payments for the last 10 months, you have still not paid the payments that you had missed, which means that on paper, your loan is still past due. Your brother could possible initiate foreclosure at this point.
Avatar
Diane G.
February 16, 2008
My husband and I entered into an agreement with my brother for the purchase of a home on a three year interest only with a balloon note at the end of 3 years. The purpose was to give us time to refinance the home in our name within the time period. In the first year, my husband had had heart surgery, and months later had to have a pacemaker installed, followed by a staph infection in his heart. He was very sick for several months. We missed payments during the worst part of his ilness basically with my brother's blessing. We then got back on track and have made payments ever since. We are now 10 months being back on track with a few payments being 14 days or less late, and the rest being on time. My brother has an escrow company receiving payments on his behalf. After getting back on track 10 months ago none of our current payments have been applied to the back payments from when my husband was very ill. They have always been applied to the current month due. Last February my brother experienced another one of his real estate deals gone sour, lost money and was extemely upset to say the least. Since then i have received nasty, threatening e-mails that he will come in and foreclose on our home. I have put up with very regualr and very upsetting e-mails from him for six months now. I'm not sure where we stand legally. There is still 13 months left on our agreement. We recently had a lender offer us a loan for all by $1900 of the loan just to pay him off and end this but he refused it which was unbelievable to us. We ended up losing the loan as we couldnt move forward. Then he was very adamant that we use a Mortgage Broker "Friend" of his which didnt work out. Then we tried starting a new loan request with the same company used before and things have changed and they are asking us to produce much more to make this one go through, obviously more money out of pocket we cannot come up with. Legally can my brother foreclose on us when weve made our payments now for 10 months or does he have the right based on the months we missed when my husband was sick and he told us not to worry about it until my husband was better?
Thanks for your feedback!

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