The Covid-19 pandemic has gone on for over a year now, and it still continues to shape how foreclosures are being handled here in Omaha, and all over Nebraska. We hope that this article will help those facing foreclosure, or the threat of foreclosure, by informing them of the general process of how foreclosures have worked historically.
Where the Law Leans
Prior to the 2010 foreclosure crisis, Federal and State foreclosure laws tended to favor lenders. More recently, Federal and State laws have begun to heavily regulate loan servicing and foreclosure processes and give protections to borrowers. Servicers now have to provide borrowers with an option for loss mitigation opportunities. They must also accurately account for each step in the foreclosure process. Additionally, most borrowers looking to buy a residential property in Nebraska have to sign a promissory note and a deed of trust. These documents are intended to give homeowners contractual rights as well as the existing Federal and State legal protections.
In Nebraska, during foreclosure you have the right to receive a breach letter, apply for loss mitigation, receive foreclosure notices, become current on your loan, special protections if you’re military, pay off the loan, or get excess funds after foreclosure sale. You don’t need to worry if you’re behind in your mortgage payments. Hopefully, once you understand the foreclosure process, you will be able to take advantage of your situation to work out a way to save your home. You will at least be able to get through the process with little to no anxiety.
The process begins in “pre-foreclosure”. This is the period immediately after you begin to fall behind on your payments but the foreclosure process hasn’t actually begun. While you’re in pre foreclosure the servicer can still charge various fees such as late charges or inspection fees. Your servicer must inform you about ways you have available to you to avoid foreclosure and also send you a pre-foreclosure notice also known as a “breach letter”. Should you fall behind in payments, most lenders will include some sort of grace period between ten to fifteen days. During this time, you will likely incur late fees. Every month that you’re late on your payments the servicer will apply the fee to your loan. You should be able to look at your promissory note that you have signed in order to determine the amount of time your grace period would last and you may even be able to see how much the fee would be added to your payment. You can also, generally, look at your mortgage pay statement for similar information. Your Nebraska deed of trust allows the lender to take necessary steps to protect its interest in the property. Something else to know is that property inspections are generally performed to ensure that the home is still currently occupied and maintained. Inspections are automatically ordered by the lender once the loan proceeds into default and can cost around $10 to $15.
Under the current Federal mortgage servicing laws the lender must attempt to contact you by phone to discuss loss mitigation steps. These are generally options such as loan modifications, forbearance, or even repayment plans. The lender must contact you no later than 36 days after you miss a payment and then subsequently within 36 days after each additional delinquency. Also, no later than 45 days after missing a payment, your lender must inform you in writing about your options and appoint someone to help you try to work out a plan to avoid foreclosure. There are exceptions for a few of these requirements however. A few examples of this are in the event that you’ve filed for bankruptcy or asked your lender not to contact you. Federal mortgage servicing laws also prevent what’s known as “Dual Tracking”. This is when a lender pursues foreclosure while a loss mitigation application is still pending with the lender.
Nebraska deeds of trust, generally, have a provision that requires your lender to mail you a notice. This is the “Breach Letter” from earlier. This is intended to inform you that your loan is in default and that they intend to accelerate the loan. The breach letter gives you, as the borrower, a chance in which you can try to cure the default and avoid foreclosure entirely. Under Federal law your lender can’t officially begin the foreclosure process until you’re more than 120 days behind on payments. This 120-day period provides you, as the homeowner, time to submit a loss mitigation application with your lender.
How We Can Help
If you find yourself facing foreclosure, consider contacting Red Ladder Property Solutions today. We understand the process, and have been able to help homeowners with their properties. Our service is completely free, so filling out the form on our site or calling us won’t cost you a thing. We’ll review where you’re at in the process, and let you know how we can help.