April 23, 2014
A reader asks, “How long does it take to foreclose an FHA loan ?”
The FHA official site has much to say on this subject in general, but borrowers should know that FHA foreclosure times will vary by state. FHA.gov says, “Foreclosure processes are different in every state. If you are worried about making your mortgage payments, then you should learn about your state’s foreclosure laws and processes. Differences among states range from the notices that must be posted or mailed, redemption periods, and the scheduling and notices issued regarding the auctioning of the property.”
There is an FHA foreclosure timeline, however, that can give some good general information in this area. The timeline is very general and the amount of time this process takes will definitely vary. According to the official site:
“First month missed payment – your lender will contact you by letter or phone. A housing counselor can help.” After the first missed payment, the financial institution will step up its efforts to contact you to discuss the situation. It’s crucial to avoid falling three months behind in order to avoid losing your home–quick action at this stage is the best thing you can do. Talk to the lender to work out the situation if possible.
Second month missed payment – your lender is likely to begin calling you to discuss why you have not made your payments. It is important that you take their phone calls. Talk to your lender and explain your situation and what you are trying to do to resolve it. At this time, you still may be able to make one payment to prevent yourself from falling three months behind.”
By the time the borrower gets to the third missed payment, things are quite serious. At this stage, FHA.gov warns, “you will receive a letter from your lender stating the amount you are delinquent, and that you have 30 days to bring your mortgage current.”
This contact is known in the industry as a “Demand Letter” or “Notice to Accelerate.” At this point, FHA.gov warns borrowers that immediate action is needed. “If you do not pay the specified amount or make some type of arrangements by the given date, the lender may begin foreclosure proceedings. They are unlikely to accept less than the total due without arrangements being made if you receive this letter. You still have time to work something out with your lender.”
When the fourth missed payment occurs, time is running out–according to the FHA, the borrower is close to, “the end of time allowed in your Demand or Notice to Accelerate Letter. When the 30 days ends, if you have not paid the full amount or worked our arrangements you will be referred to your lender’s attorneys. You will incur all attorney fees as part of your delinquency.”
After this, foreclosure is imminent. Borrowers should not delay at any stage in this process to contact the lender to make arrangements to save the home. For more information call the lender and/or the FHA directly
Do you have questions about FHA home loans? Ask us in the comments section. You can get information about applying or getting pre-approved for an FHA loan at FHA.com, a private company and not a government website.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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