If you fall behind or fail to make timely payments of your mortgage loan, the lender will issue a 90-day foreclosure notice, and when the period expires, will take legal action to repossess your home.
This is the typical situation in which homeowners lose their home to foreclosure, unless they resort to any defenses suggested by their foreclosure defense attorney. While it is true that your home is safe if you are making payments on time, there are certain conditions outlined in the mortgage agreement that, if violated, can trigger the lender’s right to sell your home.
The following are some mistakes that may lead to foreclosure even when you are current with your mortgage payments:
Not Paying the Homeowners Insurance Premiums
Every mortgage contract requires the homeowner to have their property insured. The logic behind making homeowners insurance a part of the agreement is that if the property is damaged by a natural disaster, fire breakout, or any other incident and the homeowner goes default on their payment, the lender may not be able to reimburse the full amount of the loan.
The homeowners insurance policy is made mandatory to ensure any substantial damage is covered that may devalue the property. The lender may not send you reminders for paying the insurance premium. If you don’t pay it, they will wait for the insurance company to cancel your policy, and purchase a lender-placed or force-placed insurance policy. The lender will then add this cost to your loan payment, and if you refuse to pay this amount, they consider it as a default payment and may foreclose the property.
Not Paying the Property Tax
It is imperative for a homeowner to stay current on their property taxes. If they don’t, the taxing agency has the right to file a property tax lien, enabling them to sell the house and use that money to pay off the tax debts. In order to avoid losing the property to the tax agency, the lender will send reminders to pay the property taxes. If they are still unpaid, the lender will make the payment to ward off a tax sale, and add the bill to your loan.
Under the mortgage agreement, the lender has the right to add this amount to your total loan amount. If you don’t reimburse the lender for the property tax they paid, they might foreclose your home. If you settle the debt, the lender may ask you to open an escrow account to ensure the tax is paid regularly in the future.
Other mortgage violations may include breaching the due-on-sale clause by transferring the title to another person and not maintaining the property that may affect its market value, among others.
It is essential to read the terms and conditions of the mortgage agreement carefully to ensure you don’t make such mistakes and lose ownership of your property. However, if you are facing foreclosure and want to keep your home, you should talk to an experienced foreclosure defense attorney to evaluate your options. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today. We have offices in Schaumburg, Illinois, Warrenville, and Naperville.