Two Common Misconceptions Regarding Foreclosure

"I have to pay off my mortgage to keep my home" is what most homeowners believe initially because the default notice says it! When the lender "accelerates" the mortgage or deed of trust because the homeowner stopped making payments they call for the entire balance "due and payable". This does not mean that the default can't be cured by other means such as reinstatement but the language of the default notice doesn't stipulate other solutions. In certain types of foreclosures this time period to cure the default can be as much as 90 days and in other types, as little as a week. The "grace period" to cure a default is clearly outlined in the actual clauses in the loan agreement.

So banks may or may not want your home depending on the equity in your home and the financial decision of whether they can make a profit. The banks have a legal obligation to their shareholders to foreclose on delinquent loans and the bank's officers can be prosecuted if action isn't taken timely. The acceleration or default notice could include language in a separate document about the actual requirements to reinstate or cure the delinquent loan. But that is not the case currently. As a homeowner in default, your best course of initial action is to read your loan agreement and call you lender's representative for options to fix your situation.