The current economic climate has caused thousands of homeowners to lose their homes because of repossession or foreclosure. If a homeowner is facing the same situation, knowing the home repossession process will help them to prepare for it and ultimately try and avoid it.
If a homeowner starts to miss mortgage payments, the lender will usually contact the homeowner to enquire regarding missed payments. Some property owners mistakenly avoid these calls, thinking that the problem will soon go away. However, being unresponsive proves to be a big mistake as the lender takes it as a sign of unconcern and disregard and will use it against the borrower. It is best to keep in constant communication with the lender as to when the payment will be made.
Once the arrears have reached three months, the lenders will forward the incident to the collections department. The collectors or solicitors will get in touch with the homeowner via post and demand settlement for missed payments. At this point, the homeowner can appeal for payment extension to prevent legal proceedings. However, the homeowner must make sure to make the payments on the agreed dates or else legal proceedings will follow. Alternatively, the homeowner can propose a special payment arrangement to catch up on missed payments, such as spreading the arrears over a longer amount of time. Often lenders will be willing to agree to a new arrangement as it means that the home repossession process can be avoided.
If a payment arrangement has not been reached and arrears remain unsettled, the lender may begin legal proceedings to repossess the property. The homeowner will be notified of the court proceedings via post, in which the borrower may be required to send a reply. The reply may include the homeowner’s plan and intention regarding the outstanding arrears and any supporting documents that proves their current financial situation. At this point, the borrower may still try to arrange a special payment plan with the lender.
If the court rules in favour of the lender, the court will grant a possession order instigating the homeowner to vacate the premises by a specific date. The property owner can still avoid home repossession at this stage by selling the property in a regular sale or a short sale. Alternatively, the homeowner can settle the outstanding arrears, thus a suspension order can be sent by the court. The borrower can continue living in the property as long as regular payments are made. However, if at any time the payments are missed, the lender can repossess the property without any further court proceedings.
The owner of the property will be sent an eviction notice in which the premises should be vacated. A bailiff will come to the property for lock up, thus the borrower should gather their belongings before the lock up. If the homeowners fail to vacate the property on the specified date, they may be removed by force. Even during this point, the homeowner can still try making payment arrangements with the lender to avoid repossession.
Clearly, the homeowner still has options available at each home repossession stage. Thus, the borrower can and must exhaust all efforts in order to avoid property repossession.
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