When you are receiving a loan to purchase a Rhode Island home, you will probably sign a promissory note and a mortgage. The promissory note says that you will pay back the loan as well as meet any terms of repayment. The mortgage provides a security interest in the property for the lender. It’s also likely that your mortgage includes what is known as a power of sale clause. This basically says that in the event that you do not make the payments of which you are required, your lender can sell your home nonjudicially (most foreclosures in Rhode Island are nonjudicial).
Missing a Payment
For most mortgage loans there is a grace period of 10-15 days, which allows you to still make a payment after it’s due without being hit with a late charge. However, if you still fail to make your payment, you will receive a late charge. Your specific grace period is likely located in your promissory note.
Missing Multiple Payments
If you fail to make multiple payments, you will likely receive a letter and a phone call from your servicer. The servicer is generally allowed under the law to contact you by phone within 36 days of a missed payment in order to talk with you about alternatives to foreclosing on your property. These alternative options are called “loss mitigation.” Then, within 45 days of a missed payment you will receive possible loss mitigation options in writing. The servicer is required to send this to you as well as to assign you people to assist you. It is important to note that if you have filed for bankruptcy or have told the servicer not to contact you per the Fair Debt Collection Practices Act, the servicer may not contact you.
Your mortgage may also have a provision that requires your lender to send a breach letter to you should you miss more than one payment. This lets you know that your loan is in default and that if you fail to make the payments to cure it, the lender can accelerate the loan and begin the foreclosure process. This process usually begins when the loan is more than 120 days past due.
Prior to beginning the foreclosure process, Rhode Island requires that the lender provide you with written notice that it cannot foreclose on the property prior to participating in what is called foreclosure mediation. This holds true so long as it is a first-lien mortgage, owner-occupied, and a one-to-four-unit residential property, that acts as the individual’s primary residence. The foreclosure mediation must take place within 60 days of mailing the notice, either over the phone or in person. This mediation does not cost anything. Should you fail to respond to the notice after two attempts or you don’t meet any of the program’s requirements, or fail to show up for the foreclosure avoidance agreement, the lender can then receive a certificate from the mediation coordinator and begin with the actual foreclosure process.
Palumbo Law Helps Those in Rhode Island with their Real Estate Needs
The possibility of foreclosure on your property can be daunting. However, it’s important to understand that you may have options for keeping your home and avoiding foreclosure. That’s why it’s so important to speak with a knowledgeable and experienced Rhode Island real estate attorney.
At Palumbo Law, our experienced Rhode Island Real Estate lawyers will help to review and ensure that you understand all of your options. We have experience with mortgages and have a deep understanding of the law surrounding them. To learn more or to schedule a free consultation, call us today!