1. What is foreclosure?
The legal process that banks and mortgage companies use to force the sale of your home to repay a debt; usually the mortgage on your home. Even if one payment is missed the lending institution can take the property back and then sell it to repay the money owed them. A foreclosure notice is typically filed after three or four payments are missed.
2. What is the foreclosure process and how long does it take?
Each state governs the foreclosure process differently. As a minimum, the law requires that the borrower receive sufficient warning or notice before the foreclosure can take place. Other rights and responsibilities may be outlined in the mortgage or loan documents you signed when you purchased the home.
3. Do I have any options and if so, how much time do I have to exercise my options?
You have several options available to you as long as you own your home. Once your house is sold, whether by you or through foreclosure, many of your options disappear. Knowing what your options are, puts you in a much stronger position to deal effectively with the foreclosure process. Armed with the right information, you may be able to save your home from foreclosure and, in some instances, avoid the foreclosure process altogether.
4. I get letters and notices from people claiming they can help me save my home - are they for real?
When foreclosure documents are filed they become a matter of public record and many people review these records for various purposes such as compiling lists to sell to bankruptcy attorneys, investors, real estate professionals and other people interested in either purchasing your home or . . . helping you save it.
Some of these offers are probably legitimate but, none of them have your best interest at heart. Never forget that these offers come from people who are in the business of making a profit from your foreclosure situation!
5. So, how can I keep my home?
The best place to start is to familiarize yourself with your state foreclosure process, forbearance and other options available to you, and then, contact your lending institution to discuss your options .
If your lender is unwilling to work with you then I highly recommend hiring a 3rd Party Foreclosure Specialists.
6. I would rather sell my home than lose it to foreclosure . . . is this possible?
Yes! It's called the Compromise Sale or the "Short Sale" and a foreclosure notice does not prohibit you from selling your home as long as you own it. However, you must act quickly and select the right real estate professional, one well versed in these type of sales.
7. I don't want to keep the house nor bother with trying to sell it. What would happen if I just walked away?
There is a legal process for walking away from your home or forfeiting your property. You should seek the advice of an attorney and a real estate professional well versed in this area because you could face catastrophic consequences if you just walk away.
8. What happens when the bank forecloses?
While the actual process may vary from state to state, typically a trustee is appointed and announces the sale by aution of your home by informing the public. The usual announcement includes the name of the lending institution, who the borrower(s) is/are, the amount of overdue debt, and your total indebtedness.
After a specific period of time, the trustee opens the bidding process, (in some states your lending institution may do this). Then, either someone purchases the property or it reverts back to the lending institution. Once the property is sold or reverts back to the lender, the eviction process begins!
9. What does "Short Payoff" mean?
Your lender agrees to accept less than the total owed in exchange for releasing the mortgage as a lien on the property. (it's also called pre-foreclosure sale, short sale, pre-sale and compromise sale).
WARNING! There may be serious tax consequences
10. Can they sell my house for less than what I owe?
Yes! Banks are not in the business of owning or selling homes and they do not like to foreclose on property because it's expensive and they usually lose money. They must prepare the home for sale, hire a real estate agent to sell it, and until it's sold, it remains a non-producing asset on their books. The lending institution would rather take a loss on the home than have it remain on their books as a non-producing asset. (see next question on profit)
11. They sold my house for more than I owe, do I get any money?
Yes! Any amount over the total debt owed will be paid to you upon the transfer of ownership (closing).
However, if they sell it for less, the balance is called a deficiency and your bank can use whatever means they deem necessary to collect the outstanding balance. Most states treat this as an unsecured debt (just like credit card debt) and give the bank (or creditor) the same legal rights to pursue you, usually by suing you in court.
12. Who can bid on my home at the auction?
Anyone, including yourself can bid at the auction. However, some states require a cashiers check in the amount of the purchase price or bid, some states require a deposit and the ability to fund within a specified period of time as required under the terms of the contract.
13. What happens if no one bids on my property?
The bank simply takes possession of your property, through eviction if necessary, and then hires a real estate agent to sell the property.
14. If I'm evicted, how many days notice do I get?
Typically you'll get 3 days notice! Most banks will start the eviction process immediately after the foreclosure process but the FHA, HUD and VA are usually much slower. If you own rental property, your tenants will normally be given 30 days notice. If you need more time than given, contact your lending institution immediately to ask for an extension.
15. Do I really stand a chance of saving my home from foreclosure?
Yes! If your willing to fight for it. Knowing and understanding what options are available to you is the first step. The most utilized option is LOAN MODIFICATION or Bankruptcy.
Your success depends on you implementing the proper option in a timely manner.
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Legal Disclaimer: This information on this site is NOT legal advice. You should consult with your attorney prior to signing anything.
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