The first question from our clients who are in ‘pre-foreclosure’ or are facing a foreclosure is: what is a foreclosure and how long does it take?
Unlike some other states, New Mexico is a “judicial foreclosure” state in which the foreclosure must take place through court processes. The processes are identical in most cases, so there is a general timeline that can be used to track the progress of a foreclosure case.* As with most legal actions, prompt actions and responses to the lawsuit will generally improve one’s outcome. If you fail to respond to a foreclosure lawsuit it only helps the lender, who may then move to default the borrower and fast-track the case.
The foreclosure process is initiated when the borrower fails to make a mortgage payment on time.
Day 16 to day 30
A late charge is assessed on payment. The lender, or the servicer, will begin sending collection notices to the borrower for the missed payment.
Day 45 to day 60
The servicer sends a “demand” or “breach” letter to the borrower pointing out that terms of the mortgage have been violated.
The borrower is usually given 30 days to resolve the situation by paying the delinquent amount.
The lender or the servicer typically refers the matter to the “loss mitigation department” or the “loan modification department.”
These departments will attempt to collect information from the borrower to determine why the borrower was delinquent. Sometimes, these departments will request that the borrower send packets full of information to the lender outlining the “hardship” of the borrower and explaining the need for a loan modification.
Day 90 to day 120
The lender or servicer refers the loan to its foreclosure department and hires a local attorney or other firm to initiate foreclosure proceedings by filing a “Complaint for Foreclosure.” Sometimes, a borrower’s request for a loan modification will be “pending” when the file is sent to the foreclosure department or attorney.
At any Time During the Foreclosure Process
At nearly any time during the foreclosure process, you may request a “reinstatement proposal” from your lender. This reinstatement amount, if paid in full, will immediately end the foreclosure and reinstate your loan to its previous terms. Similarly, if you qualify for and comply with the terms of a federal loan modification under HAMP, HARP, or other loan assistance programs, your loan will be reinstated and the foreclosure lawsuit can sometimes be dismissed.
The discussion of the foreclosure process and timeline will continue in our next posting. If we may be of assistance, please contact our office for your free initial consultation. We provide foreclosure help and defense and can be reached at (505) 246-2878.
*This timeline is for demonstrative purposes only and should not be considered, or relied on, as legal advice. Please consult Albuquerque Business Law, or another qualified attorney, to learn more about your rights and defenses when facing foreclosure.