So in non-judicial states, a homeowner must file a civil action against the lender to compel it to provide proof of claim. Regardless of whether you signed a mortgage or a deed of trust, you also signed a promissory note — a promise to pay back a specified amount over a set period of time. The note goes directly to the lender and is held on its books as an asset for the amount of the promised repayment. The mortgage or deed of trust is a public record and, by law, must be recorded in a county or town office.
Each time a promissory note is assigned, i. Each time a deed of trust or mortgage is assigned to another entity, that transaction must be recorded in the town or county records office. In other words, there must be a clear, unambiguous record of ownership from the time you signed your papers at closing, to the present moment.
In reality, lapses occur frequently. As mortgages and deeds began to routinely be bought and sold, the sheer magnitude of those transfers made it difficult, costly and time-consuming for institutions to record every transaction in a county records office. When a foreclosure is imminent, MERS appoints a party to foreclose, based on its records of who owns the mortgage or deed of trust.
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But some courts have rejected the notion that MERS has the legal authority to assign title to a particular party in the first place. And since MERS has essentially bypassed the county record-keeping system, the perfection of chain of title cannot be independently verified.
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In the U. Supreme Court case Carpenter v.
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Longan , it was ruled that where a promissory note goes, a deed of trust must follow. In other words, the deed and the note cannot be separated.
Learn more about how to talk to your lender about trouble making payments. You can get help through the Making Home Affordable MHA program , which provides free counselors for advice and assistance with keeping you in your home or getting out safely. You can also find a counselor in your area. Your state's housing agency might have a foreclosure avoidance program as well.
Beware of mortgage relief scams. One sign of a scam is when they ask for a fee in advance. Get reliable foreclosure help and counseling through the government's Making Home Affordable program or find a government certified housing counselor near you. Read more about foreclosure scams and find numbers to call for assistance.
After a foreclosure, the road to recovery can be challenging, but there are steps you can take to get yourself and your family moving forward to new housing, revitalizing your credit, and buying another home in the future. Your immediate need is finding a new place to live. Reach out to the U. Local HUD-approved counselors can help you work through your housing options. A loan modification is a change to the original terms of your mortgage, typically due to financial hardship. The goal is to reduce your monthly payment and this can be achieved in a variety of ways.
Your lender will calculate a new monthly payment based on amendments made to your initial mortgage contract. Some types of modification are better than others, and your lender might not offer all of them, although it might have additional options. Options include:. Get into the numbers to see exactly how your payment changes when you use any of these strategies.
Try punching numbers into a loan amortization calculator. Depending on the type of loan you have, it might be easier to qualify for a loan modification. Speak with your loan servicer or a HUD-approved counselor for details. Modification is an alternative to foreclosure or a short sale. It's easier for homeowners and it tends to be less expensive for lenders than other legal options.
You get to stay in your home, and your credit suffers less from modification than it would after a foreclosure. Otherwise, your lender has several unattractive options when and if you stop making mortgage payments and it must foreclose or approve a short sale.
How to Keep Your Home and Avoid Foreclosure
It can:. These options damage your credit , and they're expensive and time-consuming for lenders. Lenders will require an application and details about your finances to evaluate your request, and some require that you also be delinquent with your mortgage payments, usually by 60 days. Be prepared to provide certain information:. The application process can take several hours.
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Your application might be pushed aside—or worse, rejected—if something your lender asked for is missing or outdated, such as a tax return that's three years old. It might be several weeks before your lender gives you an answer, and it can take even longer to actually change your loan when and if you get approved. Keep in frequent contact with your lender during this time.