Notice of Foreclosure?

A client dropped in yesterday, and he was concerned about the mortgage on his home. He had fallen behind several month’s payments because of some personal financial problems, and was concerned with some mail that he had recently received. One letter from the mortgage company (Wells Fargo) invited him to call regarding his delinquent account.

The other one stated that the house (and/or the mortgage) could be transferred to HUD, and was asking if he would like to “continue to occupy” the house. This one was weird and scary, it assumed the procedure (foreclosure) to be different from what is required by law, at least here in the State of Texas, and was confusing on many facts. If it was meant to scare the homeowner, I suppose it had the desired effect.

I’ve worked with this client on many other matters, and was happy to help review some facts and possibilities regarding foreclosure in Texas, in order to get rid of his anxiety and get him on the right track. This is what I told him:

* First, there are particular requirements under the state law regarding foreclosures in Texas. Sales occur only on the First Tuesday of a month. Prior to the date of sale, the lender must give three weeks notice of the sale. Prior to that the lender must give a twenty (20) day notice demanding the payment of the current defaulted payments. Therefore, there is about six weeks, minimum, where the borrower is getting notices. So please:
* Pick up your certified mail! The requirement on the lender is to send it, not to prove that you received it. Ignoring it or avoiding the mail does the borrower no good. The borrower should find out what is actually going on.
* The lender must post notice of the sale, at or prior to the last 3 week period. Due to, how can I say this, a  “vigorous” market of investors, bankruptcy lawyers and short sale experts, not to mention the scam artists, equity skimmers, opportunists, etc., there will be a flood of mail and some visitors at the house under foreclosure. So:
* If you are being approached by this group, keep the communications in a shoe box, and immediately go contact a trusted lawyer that will help you work through the problems, with your concerns in mind.
* Most institutional lenders are backed by HUD, FNMA, VA, etc. on their loans, and this status gives them some requirements to work out defaults. Now, this is not a foolproof safety net, at all, but can work to your advantage if you are only somewhat behind in payments. Please remember:
* Get any cure agreement in writing. You need to follow it specifically. If it says that they will suspend foreclosure, you need to have that in writing.
* DO NOT ASSUME that they will not foreclose, even if you are going through forbearance procedures. If the property is posted for sale, they will foreclose, unless you have a definite agreement in writing that they won’t (see your attorney). Several times I have heard of people in the middle of forbearance applications whose property is still posted and sold.
* If you can reach a cure agreement with the lender, then do so.

I had my client contact the loan company pursuant to their first letter. He reached a reasonable agreement. He left with the above information and warnings, and should call me back if there is any further notice by the lender (or investors, attorneys, experts or – you know the others).

That’s advice for my client. Advice for you, the reader, should come from your own attorney. If you have any concerns about your home mortgage, contact him/her as soon as possible.