Most advice given by those who write about avoiding foreclosure says that you should find out the lender’s position and policies as soon as you know that you are going to have a problem making your required payment. This is not necessarily true.
While lenders’ policies may change as the economy changes, the law regarding your mortgage will most likely remain the same. When you apply for your loan, ask what the foreclosure procedure is for the loan, specifically how long it takes from the time you miss your payment until you have to move. Also find out if you can be held personally liable for any deficiency if the house does not sell for enough to pay off the mortgage.
You may feel uncomfortable asking these questions when applying for a loan, but you should not. If the person you are dealing with asks why you want to know, say that while you plan to make the payments, you like to be thorough and cover the negatives as well as the positives.
When you ask about the lender’s policy regarding foreclosure, you are not asking a general question. There are specific ways to avoid foreclosure. There are several reasons why a borrower may have problems making the mortgage payment. Some are temporary, such as a job loss or a temporary health problem requiring time off from work that could last for a few months. A salesperson working on commission could have this problem. The word temporary in the mortgage industry usually means no more than six months. The other situation is the permanent inability to make the payments. This could be a job loss followed by a new job that pays much less, a severe health problem restricting the borrower’s ability to work, or a divorce.