What are Foreclosures?
A foreclosure occurs when a financial organization, such as a bank or mortgage company, forces the sale of a home or other piece of property. The majority of property owners utilize the third party to supply the additional monies necessary to finalize the sale unless they paid for their property in full (cash) at the time of purchase. The owner is then responsible for paying back the borrowed funds; this is known as a mortgage.
The bank or other lien holders may start foreclosure procedures to seize the property to fulfill the amount owing to them when a property owner fails to make payments as required by the loan agreement for their mortgage. A common feature of mortgages is an acceleration provision in the promissory note.
This feature frequently results in an early foreclosure action. If the property owner skips a predetermined number of mortgage payments, the acceleration clause allows the bank or mortgage holder to declare the whole sum due. Usually, the lending institution must provide the property owner adequate notice before using the acceleration provision.
A lawsuit filed by a bank or other lender to forcibly sell real estate in order to pay off an outstanding debt is known as foreclosure. After determining the real sum owed on the mortgage, the court will often order a sale of the property (this includes accrued interest).
The outstanding debt will then be paid off using the money raised from the sale of your house. Depending on the conditions of the original loan, you can still owe the lending institution the difference if the value of your property is less than the total amount owed. In order to keep your property, you have the right to make a payment to the bank prior to the foreclosure sale.
An expert attorney may be able to assist you to assess what additional choices are open to you, including declaring bankruptcy if you worry that you may fall behind on your mortgage payments and that you may lose your home via foreclosure. To ensure that your interests and rights are upheld, you can hire a lawyer to represent you in a foreclosure procedure.
What is the Foreclosure Process?
Although the foreclosure procedure differs from state to state and can take up to 6 months, it is normally relatively simple. Whether the foreclosure involves a judicial sale or a nonjudicial sale will affect the procedure.
- Pre-foreclosure: The property is said to be in pre-foreclosure once the owner misses two to three mortgage payments (30–60 days). Lenders often issue a demand letter requesting full and immediate repayment of the loan together with any accrued legal and late fees while the property is in pre-foreclosure. If the homeowner does not pay the obligation due within 30 days, the foreclosure procedure will start.
- Notice of Default: The foreclosure procedure begins whenever the property owner has been in default for 90 days. A bank will provide the local sheriff with a notice of default to deliver to the property owner. The government body will document the notice of default, and an auction date will be set for the foreclosure. An investor’s or other homeowner’s ability to consider a short sale on the property is also made possible by a notice of default.
- Public foreclosure auction: The property may be auctioned to the highest bidder in the public foreclosure auction. The lender issuing the default has the option to buy the asset and sell it privately on its own. If the homeowner continues to reside on the property after the sale, an illegal detainer will be issued to evict them. At this point, the homeowner must leave the property.
Post-Foreclosure: If the sale profits fall short of the amount owed, the lender may take legal action against the homeowner borrower to make up the difference. After a foreclosure, the borrower may have the option to redeem by paying the full selling price in several areas.
- Right of Redemption: The owner or mortgagee may redeem the property at any moment before the foreclosure auction by paying the outstanding debt. The right of redemption is what is meant by this. If the mortgage has an acceleration clause, the homeowner cannot redeem the mortgage unless the whole sum is paid.
Do I Need a Foreclosure Attorney?
Throughout the process, a real estate lawyer can support you in a variety of ways. In addition to representing you during the foreclosure process, an attorney will also work with your lender to come up with options that could allow you to keep your house.
To establish your options for handling the foreclosure scenario, you should consult with an attorney. If a lawsuit is required, a real estate attorney may offer helpful legal advice as well as representation in court. To find out more about the foreclosure rules in your state, speak with a lawyer.