With millions of homes across the country going into foreclosure, especially due to some hardships during covid, it’s important for both buyers and mortgage holders to understand the process.
So what is a pre-foreclosure in Philadelphia anyway?
Many homeowners across America and Philadelphia are facing difficulties making their monthly mortgage payments. Sometimes life comes at us hard, and next thing you know, you’re facing foreclosure. But once you become aware that you have missed your mortgage payments and you decide that you want to do something about it, all hope is not lost.
When a homeowner misses 3-6 months of mortgage payments, the lending institution will issue a warning, notifying the homeowner to pay or lose their home. This period is known as “pre-foreclosure.” Specifically in Pennsylvania the initial foreclosure process (pre-foreclosure) begins when the borrower become 60 days late on their mortgage payment. At this point the lender will have sent out two notices making you aware that you are in default.
Banks and mortgage lenders typically provide three months for the homeowner to become current. Of course this number can vary by bank and situation sometimes.
If a homeowner fails to make the necessary payments, the bank will foreclose on the home, assuming ownership, and evict the homeowner. There will be an auction or a trustee sale for the property and it will be sold to the highest bidder. This total process takes about six months typically but may take longer.
Thankfully, during this stage of the foreclosure process, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home.
Pre-foreclosure Options for Borrowers
If you’re behind on mortgage payments, you’re likely to receive a “notice of default” from your mortgage lender.
This document will state that you have not made mortgage payments for the last 90-180 days. It’s important not to panic.
You have options that can delay or even prevent losing your home:
- Try to catch up on your missed payments. If you can do that, pay your late fees, penalties etc then your lender will stop the foreclosure process
- If your mortgage is “above water,” (meaning you have equity in your house) you may be able to refinance your mortgage, which would allow you to receive lower monthly payments. Check with your local Philadelphia mortgage broker… or contact us and we can connect you with a reputable one.
- You may be able to quickly sell your home to a real estate investor that’s reputable in Philadelphia like us at EZ Real Estate Solutions LLC, using the cash acquired to pay the months of back-payments owed (or we *may* be able to work out something with the lender that relieves all or part of your back payments.We can buy your Philadelphia NJ area home quickly, often in just a week or two, will pay in cash, and takes the stress out of trying to find a buyer.
- You can contact the bank and ask them to permit a short sale. In a short sale, you’ll sell your home for less than it’s worth, and the bank will take the loss as a tax write-off. In some short sales you may still be required to pay the difference to the bank if the house doesn’t sell for what is owed on the loan. We can also assist you with the short sale process.
- Get a Deed In Lieu Of Foreclosure – this would basically mean you surrender you surrender your home to your lender in exchange for being relieved of your home’s debt. This will help you avoid the long-drawn out process of the typical foreclosure and will be more forgiving on your credit
- You may be able to declare bankruptcy, which can buy you time to pay your debt. Bankruptcy will remain on your credit report for years, and can cause significant damage so this is more of a last resort.
Lenders are very much aware of the widespread financial troubles across the country and they’re willing to work with borrowers a lot of the time. It’s important for you, as the homeowner, to understand that banks are not in the business of owning properties. That’s not how they make their money. They make their money by lending mortgages to people like you. So they would much rather try to figure out how to help you keep the house than to foreclose on it and take it back. In a lot of cases, they will lose money like that.
If you’re honest and communicate with your lender, you’ll often find that there are options that will allow you to remain in your home, or at least salvage your credit rating. Here’s a full list of options of how to stay in your Philadelphia home after a foreclosure.
A foreclosure can often negatively affect your credit score by 200-400 points and can prevent you from obtaining a loan of any sort for 5-7 years, so be very responsive if you’ve received a Notice of Default from your lender.
But if you’re not able to find a solution with your lender working directly with them… connect with us. We may be able to help. We took a lot of time and devised a FREE resource for you. 5 Ways To Avoid Foreclosure In Today’s Market.
After reading this simple to follow 6-page guide you’ll know:
- How you may be able to still save your credit during your foreclosure
- The 5 ways some banks are working with borrowers to lower payments or even sometimes eliminate payments (if you qualify)
- Why a “Notice of Default” can limit your options (and what to do this week if your bank has already filed a Notice of Default against you)
- The 5 options to stop a foreclosure that’s already happened
In the end, foreclosure is never fun and doesn’t always end well.
But, when you’re armed with the right information, know all of your options, and can make a well educated plan… your odds of coming out of this foreclosure situation with as little long-term damage as possible increase a lot.
Ways We Can Help If You’re In Pre-Foreclosure
- We can potentially help with a short sale – Submit your info on this website so we can evaluate your situation to see if we can help.
- We can buy your Philadelphia area house – We buy houses in Philadelphia and would love to make you an all-cash offer on your house too. Just fill out the form here to get started >>
- You can ask us questions and we can provide you FREE guidance and resources so you can make a well educated decision. This costs you nothing, there’s absolutely no pressure, no obligation… just free guidance without a catch.
If you’re in the pre-foreclosure stage… you’ve still got time to fix this situation.
Just connect with your bank to see if they’re willing to work with you… or contact us if you’d like to see what we can buy your house for or to tap into our free foreclosure foreclosure resources.