Learn how much time you have to sell your home before it's foreclosed.
Question
We're a month late on our mortgage payment and my husband, who's self-employed, just had surgery and can't work for several months. We feel like our house is just more than we can afford—we probably should never have bought it. We'd like to sell now rather than hanging on and going through a foreclosure. How much time do we have to sell?
Answer
Under federal laws that protect homeowners in foreclosure, in most cases, your mortgage payment must be over 120 days delinquent before the loan servicer can initiate a foreclosure.
Once foreclosure starts, there's no automatic deadline—the amount of time before the foreclosure is complete depends on whether the process is judicial or nonjudicial, and also varies among the different U.S. states. Though, the longer the process takes, the more time you have to sell the property. (To learn where foreclosures take the longest, see States With Long Foreclosure Timelines).
Because you say that your home is more than you can afford, you might consider applying for a loan modification, which could make your monthly payments more affordable. If you want to apply for a modification, call your servicer and ask for a "loss mitigation" application. Also, your state might have a Hardest Hit Fund program that gives money to qualified homeowners so they can avoid foreclosure during a financial hardship.
If you decide you still want to sell, and you can't sell your house for the full amount owed, your lender might agree to accept less, in what's called a "short sale." To get approval for a short sale, like with a modification request, you'll need to submit a loss mitigation application to your servicer.
Getting Help
If you need more information about how foreclosure works in your state and how long the process will take—or want to learn about possible defenses to a foreclosure in your situation, which could delay the process and give you more time to sell—consider talking to an attorney.
If you want to learn more about alternatives to foreclosure, like a modification or short sale, consider talking to a HUD-approved housing counselor.
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