The Consequences of not Paying Mortgages Can be Grim
November 12th, 2009
Today house owners are posing themselves the question about what will happen if they do not pay their mortgage dues. Many do not realize that the consequences may be grim.
As per the findings of First American CoreLogic nearly a third of all the mortgages in South Florida are underwater – the house being of less worth than the loan amount. This has made many wonder why they should go on paying mortgage dues.
The borrower has two options – either to change the mortgage terms or to go on paying. The latter option is tempting many but they are not aware of how quickly this may lead to problems.
If the borrower fails then either the lender or the service will notify the matter to the credit bureau by the first day of the following month. It may happen within two weeks of default and will cause a drop in the credit score of the borrower.
Within the following 30 days the borrower should be prepared for other creditors to wake up to the fact of late payment and jump into action. They have many options – increasing interest rates, shutting off credit card facility totally or lowering the limit of credit. Other troubles may come up with insurance, student and other forms of loans being refused.
If the credit limits are reduced and yet one is having a balance due then one is actually eating up more than due available credit. This leads to lowering of another round of scores.
The negative black mark stays on the report for as long as 7 years. But the impact slowly begins to lessen after the worst first two years.
Failing to make mortgage payments will cause repeated ringing of the phone. The lender will try to make contact and talk about loan modification. After the passage of 90 days one cannot start making payments at one’s own sweet will. Contact has to be made before proceeding. After the lapse of four months there is the likelihood of the borrower being served with a foreclosure notice. If the borrower does not respond within 20 days then the judge could issue a ruling against the borrower.
Following the order a date within 50 to about 120 days will be fixed for an auction sale. 120 days subsequent to the sale the sheriff will come knocking giving the borrower 10 days time to either move out or be pushed out.
- Watchdog Observes that Bailout has Done Little to Contain Foreclosures
- The Pros and Cons of Foreclosures in Miami Beach
- The Foreclosure Climate has Removed Social Stigma From Food Stamps
- Black Underclass Bearing Brunt of the Foreclosure Crisis
- White Plains Foreclosure Case Ruling is Sending out Stern Warnings to Lenders
- Foreclosures are Victimizing Apartment Dwellers
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January 26th, 2010 at 6:11 am
[...] gave out the largest number of sub-prime and exotic mortgages and hence gifted the nation with the maximum number of foreclosures. At one time it boasted of its [...]