Is Your Home-Based Business a Foreclosure Risk?

Foreclosure is the legal process by which the borrowers whose mortgage is in default are deprived of their interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

Foreclosure rates have set a record high in 2006 and will be increasing as Adjustable Rate Mortgages (ARMs) continue to reset. ARMs are mortgage loans that are made at low interest rates for a set period of time, after which the interest rates can adjust as the economy demands.

Thousands of ARMs adjusted to higher interest rates in 2006 and an estimated $1.3 Trillion ARM loans will adjust in 2007, forcing millions of home owners into Foreclosure. They will not be able to pay the higher mortgage payments because wages have not kept up with the interest increases.

This is this important to home-based business because if your business has not been increasing its revenue, you may fall victim to the Foreclosure process. When you get two months behind on your payments, your lender can issue a Notice of Default and set a Foreclosure date. That notice is generally sent through the mail and will include your rights, responsibilities to catch up on your payments and the amount due by the date the lender will begin the Foreclosure process.

If you receive a Notice of Default, make sure you read it thoroughly. That default notice will most likely state that your lender will no longer accept a individual monthly payments. Instead, they will demand all of the arrearages in one lump sum before getting you back to the regular monthly payments.

Contact your lender immediately to try working out arrangements. Sometimes they will accept 40%-50% of the arrearages and the balance within a few weeks. The amount they will accept is determined the individual lender. There are laws in every state that govern whether the Foreclosure process must be done in a court of law, meaning you are in a judicial state.

Being in a judicial state can work in your favor because the legal process takes longer than it does in Non-judicial states. With so many foreclosures being filed, the court system has a huge backlog of cases, which can extend the sale date of your home. In non-judical states, the Sheriff Sale can take place within a few months. Judicial states can take up to a year or more.

Once you get a notice of Sheriff Sale you must not waste time. If you contacted your lender before the sale date was set and have not made repayment arrangements, or defaulted on them, you could be looking for a new home soon.

Although lenders claim to be open to working out a plan with the home owners in default, they generally are not very cooperative. Instead of working out an arrangement, the lender’s representative sounds like they are reading from a script. Ask them a question and part of the script is repeated, never really answering your questions. This is not only frustrating for the home owner, it ensures that the lender maintains control of the situation.

Intimidation is another method of retaining control by either reminding the home owner that there is a sale date pending. Sometimes they will give the home owner a sale date. Other times they will say that a sale is imperative but not give a date. This is especially tough on a home owner because they never know how long they have to get the balance of the arrearages, or when to start packing their belongings before the Sheriff shows up at their door.

Foreclosure can happen to anyone. It is not restricted on race, religion, or public status. High profile celebrities have been in the news and lost their homes to Foreclosure. So have businesses of many sizes. Foreclosure is not something that happens to other people.

Foreclosure happens to your family members, friends, neighbors and looking at YOU. Foreclosure is like a virus epidemic that is plummeting out of control. If you have not increased your business revenue or made arrangements to guarantee your mortgage payments, you could be next. Scary, isn’t it?

So what happens if your lender will not work out arrangements with you? Contact Freedom Foreclosure Prevention Services for a no-obligation consultation to learn how they can work out arrangements with your lender.

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Jim Hutchinson manages Website Managers and helps small businesses build their Internet presence by designing and Hosting websites at rates that most home-based business owners can afford. Visit www.WebsiteManagers.net to learn how to get your blog, membership site or affiliate program online.

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