Failure to Make Mortgage Payments
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If a homeowner fails to make the required mortgage payments, the lender may foreclose on the property. Depending on the terms and agreements made within the original mortgage contract, the lender may initiate either a statutory or a judicial foreclosure.
A statutory foreclosure to force the sale of the property can be performed without bringing a court action. The lender must follow strict state regulations as to the proper notices and opportunities for the homeowner to provide payments before the sale of the property. This procedure is a relatively fast process.
If a judicial foreclosure action is required to force the sale, the lender must file a complaint with the court system and go through the litigation process. In several state jurisdictions, the homeowner is allowed the right to stay in possession of the home until the foreclosure process is finalized or a sale of the home occurs.
Since some lenders prefer to avoid the cost of foreclosure, they are sometimes willing to work out an agreement with the homeowner. The lender may accept "interest only" payments or partial payments for a time to assist the homeowner. There are detailed regulations which must be followed regarding the foreclosure procedures. It is recommended that if you are facing a foreclosure proceeding, a consult with an attorney who can interpret these regulations would be in your best interest.