Bellingham Foreclosures Caused by More Than Missed Payments

This question brings up an issue that most people never think about…

“Things have been pretty tight for us, but we have managed to keep our mortgage payments current.  We pay our own taxes rather than having them included in our mortgage payment, and we didn’t make the first installment payment due to the county in April.  Now the bank has sent a notice that they are foreclosing on our loan because the taxes aren’t current.  Can they do this?”  

The short answer is “Yes”, but I can understand that you may feel blindsided, so let’s talk for a moment about why this can happen.

When you get a loan on a house, you sign a bunch of papers, but the two most important are the promissory note and the deed of trust.  The promissory note is your promise to pay back the money and defines the terms of payment.  The deed of trust establishes a lien against the property so the bank has a way to get the money if you don’t pay.  This is the most common reason for a foreclosure:  the borrower stops paying on the note .

There is language in the deed of trust, however, wherein the borrower also makes some other commitments, the violation of which is grounds for foreclosure.  As you have learned, payment of taxes is one of these commitments.  Some others are keeping the property insured and maintaining it.  Talk to your lender ASAP about how to “cure” the problem.

If you have a thought or an experience to share, please feel free.  Pooled knowledge is really helpful.  Just post a comment – or a further question – and we can all help each other.

For more information on Bellingham Real Estate or to search for homes in the Bellingham and Whatcom County area visit www.JohnsonTeamRealEstate.com, your one stop Bellingham real estate and community information resource!