If you don't pay your mortgage payments, your bank or loan servicing company can file a lawsuit to sell the property. This is called a foreclosure case.

The bank or loan company asks a judge for a court order. The order eventually allows them to sell the property. The money from the sale is used to pay off the remaining balance on the mortgage.

Responding to a foreclosure case

It is important to participate in your court case so you know what is happening and what you can do. You should always attend court dates to make sure you can ask questions and access any resources that are available. This also shows the judge that you care about what happens in the case and are doing everything you can to save your property.

If you think the bank or loan company has made a mistake or done something wrong in how it handled your loan, it is very important to raise these issues in your Answer so the court can consider your side of the story. You should also work with the lender on options to save your property. This is commonly known as "loss mitigation."

To participate in your foreclosure case, you will need to file an Appearance and Answer.

Learn more about responding to a mortgage foreclosure case.

Getting back on track

Usually once a foreclosure case is filed, the bank has accelerated the loan. This means that the entire loan balance is due all at once. Once this has happened, most lenders will not accept regular monthly payments. If they do, they are often held in a "suspense" account. This means they are not applied to your loan balance.

If you have enough money, you can "reinstate" the loan. This means making a single payment to catch up on all of the months past due, plus fees and costs.

If you cannot afford to reinstate the loan, you will need to work with your loan company to modify the loan. This will allow you to resume making monthly payments again. This process can often be lengthy and require a lot of paperwork.

Other options

You might not be able to afford to keep you property. Or the loan company might not be willing to agree to a new payment schedule. If this happens, explore doing a short sale or a deed-in-lieu of foreclosure. 

These options unfortunately mean giving up the property. But they can avoid further liability under the loan and allow you to move forward.

Learn more about options for dealing with foreclosure.

Talking to an approved counselor

If you need help, contact a HUD Approved Housing Counseling Agency. Their services are free. You should never need to pay for foreclosure help.