WLCCI

Delinquency

When a borrower fails to make a monthly payment on time, the lender sends a friendly reminder letter. If the payment is not received within a few days, another letter is sent warning of potential foreclosure.

At some point in time, usually within thirty to sixty days, the lender turns the matter over to an attorney. The attorney contacts the borrower by mail and explains that if the mortgage is not brought current within a certain time, formal foreclosure proceedings will begin.

This is known as the redemption period. The last date given for bringing the mortgage current is known as the cure date. During this period, most borrowers and lenders are extremely interested in talking to you as an investor about buying the property.

The cost of bringing the mortgage current is at its lowest during this time because expensive forclosure proceedings and large atttorney fees have not been added into it. Usually only the interest, principle and penalties would be due at this point in time plus a small attorney fee.

Once the cure date is reached, the foreclosure period begins. In most states the attorney will file a notice of the action at the county courthouse in which the property is located. The attorney will also go to court and ask for a judgement directing the sale of the property. A copy of the summons and complaint will be served against the defendant (the borrower).

You, as an investor, can still buy the property at this point. However, the cost will have risen substantially primarily because of attorney fees. Also, you will have no assurance if you do buy the property that there are not other liens which must be satisfied. For example, other mortgages or even judgments from local professional people or credit card companies may be outstanding.