The F word. I’ve avoided it here for 28 years.Unfortunately, foreclosure is what often hap-pens when a borrower can no longer make hisor her mortgage payments. The word alonemakes me queasy. Even queasier-making isthe fact that in the first half of 2022 foreclosures were up 219% annually across the U.S.However, as grim as that seems, but for thegovernment’s pandemic-inspired moratorium,most of these homes would’ve been fore-closed on two years ago; moreover, recentlypurchased homes have had very little defaultor delinquency.
Even so, below is a cheat sheet of sorts, anano-guide to foreclosure: its steps and howto avoid it.
Foreclosure begins with the first missedpayment and progresses slowly until all missedpayments and late fees have been satisfied— or not. A typical foreclosure takes approximately three to 32 months. The homeowneris allowed to remain in the home while theprocess wears on. But, once the house is sold,the resident will be ordered to vacate. Makessense. Sad sense.
There are several types of foreclosure, butonly one has significance for New Mexicohomeowners. Judicial Foreclose provides theborrower with a legal notice of nonpayment,which allows for 30 days in which to makeup missed payments. The first step is for thelender, the mortgage owner, to file a com-plaint with the court. This is when the 30-dayredemption period begins. If the complaintis ignored, the foreclosure process speeds upand becomes final. Fast.
If payments and late fees are not made inthree to six months, foreclosure usually proceeds like this:
1. Notice of Default. (The lender files this.The notice does not mean the lender canautomatically foreclose, nor does it mean thatthere are no more options for the borrower.)
2. Notice of Sale. (The sale refers to a fore-closure auction. Notice of the sale must bepublished in the newspaper daily for 30 daysprior to the auction and must include theaddress, the property’s legal description andlocation and the auction’s date and time. Thetime period between the Notice of Defaultand the foreclosure auction is approximatelynine months in New Mexico, but can varyamong lenders.)
3. Foreclosure auction.
4. Eviction.
In advising clients on ways to avoid foreclosure, I always stress communication: talk withyour lender. (Remember, I amthe middle man, the broker between thelender and the borrower. I can advise, but Icannot solve the issue of missed payments.)The actual lender will often want to help theborrower work it out by doing one of the following:
• creating a longer amortization period
• refinancing the loan
• making a loan modification, whichworks to establish an agreement allowingfor several smaller payments, or evendeferral for a month or two
As I said earlier, foreclosure is a sore subject in anyone’s book, but in an attempt toleave you on a positive note, I would point outthat the recent although probably temporarydip in inflation from 9.1% to 8.5% is a step inthe right direction toward easing the “cost” ofmortgage payments.
