With millions of homes across the country going into foreclosure, it’s important for both buyers and mortgage holders to understand the process.
So what is a pre-foreclosure in Madison anyway?
Many homeowners across America and Madison are facing difficulties making their monthly mortgage payments.
When a homeowner misses 3-6 months of mortgage payments, the lending institution will issue a warning, notifying the homeowner to pay or lose their home. This period is known as “pre-foreclosure.”
Banks and mortgage lenders typically provide three months for the homeowner to become current. Of course this number can vary by bank and situation sometimes.
If a homeowner fails to make the necessary payments, the bank will foreclose on the home, assuming ownership, and evict the homeowner. Thankfully, during this stage of the foreclosure process, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home.
Pre-foreclosure Options for Borrowers
If you’re behind on mortgage payments, your lender will likely issue a ‘notice of default’. This document will state that you have not made mortgage payments for the last 90-180 days. It’s important not to panic.
In Madison, lenders such as Associated Bank and BMO Harris typically follow this protocol, but it’s essential to review your specific loan agreement for exact terms. You have several options that can delay or even prevent losing your home. Here are some strategies tailored to Madison homeowners:
You have options that can delay or even prevent losing your home:
- If your mortgage is “above water,” (meaning you have equity in your house) you may be able to refinance your mortgage, receiving lower monthly payments. Check with your local Madison mortgage broker… or contact us and we can connect you with a reputable one.
- You may be able to quickly sell your home to a real estate investor that’s reputable in Madison like us at Northwoods Property Resources, using the cash acquired to pay the months of back-payments owed (or we *may* be able to work out something with the lender that relieves all or part of your back payments. We can buy your Madison WI area home quickly, often in just a week or two, will pay in cash, and takes the stress out of trying to find a buyer.
- You can contact the bank and ask them to permit a short sale. In a short sale, you’ll sell your home for less than it’s worth. The bank may accept the sale proceeds and forgive the remaining debt, which they often consider a better alternative to full foreclosure and will take the loss as a tax write-off. However, it’s important to note that some short sales might still require you to pay the difference, known as a deficiency judgment, depending on state laws and the lender’s policies.
- You may be able to declare bankruptcy, which can buy you time to pay your debt. Bankruptcy will remain on your credit report for years, and can cause significant damage.
Lenders are very much aware of the widespread financial troubles across the country and they’re willing to work with borrowers a lot of the time.
If you’re honest and communicate with your lender, you’ll often find that there are options that will allow you to remain in your home, or at least salvage your credit rating.
A foreclosure can often negatively affect your credit score by 200-400 points and can prevent you from obtaining a loan of any sort for 5-7 years, so be very dutiful if you’ve received a Notice of Default from your lender. Working with experienced professionals can help mitigate these risks and explore alternatives like refinancing or short sales.
But if you’re not able to find a solution with your lender working directly with them… connect with us. We may be able to help.
Ways We Can Help If You’re In Pre-Foreclosure
- We can potentially help with a short sale – Submit your info on this website so we can evaluate your situation to see if we can help.
- We can buy your Madison area house – We buy houses in Madison and would love to make you an all-cash offer on your house too. Just fill out the form here to get started >>
- You can ask us questions and we can provide you FREE guidance and resources so you can make a well educated decision. This costs you nothing, there’s absolutely no pressure, no obligation… just free guidance without a catch.
Proactively engaging with your lender can open up potential solutions. Madison’s major lenders, including U.S. Bank and Chase, have been known to work with borrowers to find manageable solutions. If direct negotiation isn’t fruitful, consider reaching out to us at Northwoods Property Resources. Our team includes certified real estate professionals. We offer free guidance, assess your situation comprehensively, and provide cash offers tailored to your needs. Learn more about our expertise and our services on our About Us page.
If you’re in the pre-foreclosure stage, don’t lose hope—there are still viable options to address your situation. According to the Consumer Financial Protection Bureau, nearly 70% of homeowners who proactively seek help are able to find a solution that prevents foreclosure. Connect with your bank to explore available programs or contact us if you’d like to see what we can buy your house for or to tap into our free foreclosure foreclosure resources. Remember, timely action is critical to safeguarding your home and credit score.