If you are facing foreclosure, you will need as much help as you can find. Lenders and servicing companies will make things hard for you, and unless you are a lawyer, you probably will not understand much of what is happening throughout the process. These questions and answers are meant to help you understand more of what is happening, but we always recommend seeking professional help to assist you successfully stop foreclosure.

Question: How many payments can you miss before foreclosure?

Answer: This varies from one state and lender to the next, but in most cases, the lender will file a notice of default after the third missed payment.

Question: What happens when I get a notice in the mail?

Answer: There are several different "notices" you can receive by mail or in person. When you are in foreclosure, or if you have missed payments, you need to open all the mail you receive and accept any notices. You may also want to read the local papers, keeping an eye out on the public notice section. Your lender or servicing company will send several late notices and "warnings" that the foreclosure process is going to start, but the summons and complaint is usually the official beginning. This is when the lender starts the foreclosure lawsuit by having the sheriff serve a summons and complaint. The summons return date will be on the form, but this is not a hearing date, this is only the deadline for filing papers. The complaint section will usually be the lender's (plaintiff) intention of satisfying a debt through foreclosure. Once you receive a summons and complaint, you should file an appearance to tell the court that you intend to cooperate and that you wish to appear in court. Filing an appearance form should be done immediately and is absolutely necessary if you intend to contest the foreclosure. We recommend finding help immediately upon the first notice or warning letter from your lender.

Question: How can I use my equity in foreclosure?

Answer: The first step is to find out if you actually have any equity. You will need to order an official payoff and get a lien and title search and a property appraisal or valuation. There are many good sources for this kind of research. Once you have verified that you do actually have equity, you will have to do one of three things to get access to it. The first option is to do a cash out refinance. The second option is a second mortgage or line of credit. The third and final option is to sell the home outright to pay off the loan and liens, and you can keep any remaining funds.

Question: What is a deficiency judgment?

Answer: In states that allow deficiency judgments, the court will order you to pay the difference between what the home was sold for and what you still owe. Example: if your home sells for $100,000, but your total payoff was $200,000, the court would order you to pay your lender $100,000. In most of our cases, we have seen the lenders agree not to pursue a deficiency judgment, or they have not pursued one voluntarily because of few assets possessed by the homeowners.

Question: Can I get a loan after foreclosure?

Answer: Yes, getting a loan after foreclosure is possible, but these loans are usually based on your income and the equity in the home, rather than your credit. Since your credit will drop significantly during foreclosure, you will need to take steps to improve your credit as quickly as possible.

Hopefully these questions and answers will help you understand the foreclosure process and help you take the steps necessary to stop foreclosure. There are many more concerns that will come up during the average financial hardship leading to a foreclosure, and every situation will be unique. Understanding the basics of how the process works will help you put together a realistic plan to get out of the situation and begin recovery afterwards.