WHAT IS FORECLOSURE? 

Foreclosure is a legal process by which a lender, or any other entity that has a claim on an asset due to unpaid obligations, attempts to recover the amount owed. This is typically done by taking ownership of and selling the property used as collateral for the loan. Foreclosure usually occurs when a borrower defaults or misses at least one payment, but it can also happen when the borrower fails to meet other terms in the mortgage. However, foreclosure is not limited to mortgages and can be enacted due to unpaid taxes, liens, or any other unpaid debts where the debtor’s property was used as collateral.

CONSIDER THESE POSSIBLE OPTIONS:

Repayment Plan - A repayment plan lets you spread out your past due amount over several months being added to your current mortgage to bring it current.

Mortgage Relief - The Covid-19 pandemic has left millions of homeowners wondering how they will make their payments. The Biden-Harris Administration has made provisions to help millions of Americans with the American Rescue Plan Act 2021. You are encouraged to research and seek out assistance through COVID-19 Relief programs made available throughout the state.

Loan Modification - A loan modification is a change to the original terms of your mortgage loan and does not pay off your current mortgage. For example, the modification may include extending your loan term, modifying your interest rate, or changing your loan from adjustable to a fixed rate term.

Forbearance - A mortgage forbearance allows borrowers to pause or lower their mortgage payments while dealing with a short-term crisis, such as a job loss, illness or other financial setback. This can help protect struggling borrowers from becoming delinquent with payments, as well as avoid foreclosure.

Refinance - Refinancing is when a property owner gets a new mortgage loan to replace the current loan. Most people refinance in order to get a lower interest rate and lower mortgage payments.

Deed in Lieu of Foreclosure - A deed in lieu of foreclosure is a mutual agreement between you and your mortgage lender where you agree to voluntarily turn over ownership to the lender. You essentially walk away from the home and you no longer make your mortgage loan payments.

Short Sale - A "short sale" simply means the homeowner's lender has given permission to the homeowner to sell the home for less than the remaining balance of the loan. To accomplish this, the seller must show the lender why they are in distress, such as job loss or illness, or that home values have fallen to the point that the seller doesn't have enough equity in the home to break even or sell at a profit. If the seller can show means to continue paying the note, it's unlikely the bank will grant a short sale, but if it appears the seller is about to default, the bank may agree to a short sale in order to minimize its losses. The terms of the short sale allow the seller to walk away from the mortgage while avoiding foreclosure, but the loss to the lender will be reflected in the seller's credit report, possibly delaying their ability to repurchase a home in the near future. At the least, the next lender will require more down or demand a higher interest rate.

Standard Sale - If you have exceeded all other options and can no longer afford to make your mortgage payments, then selling your home might be a resolution. If you decide to sell your home, it is important to work with a real estate professional who knows the process of working with your lender while your home is in pre-foreclosure/notice of default status. In a default situation, a standard sale is achievable to homeowners with equity greater than back payments owed.

Mortgage Foreclosure Proceedings - When a homeowner defaults on a mortgage, the bank begins foreclosure proceedings when the owner has missed payments; approximately 3 months depending on your lender’s guidelines. Prior to any foreclosure, the homeowner has several opportunities to stop the sale by paying the amount owed before the home goes to public auction. Be aware, after the property goes to auction, the homeowner loses all ability to retrieve the home. If the home does not sell at the auction, it goes back to the bank as an "REO" which stands for Real Estate Owned. The home then becomes an asset holding of the bank. REOs are managed by asset managers who are employed or contracted by the bank. At some point during the process, you may be forced to move out. Foreclosure proceedings are quite serious, and you need an expert to help you navigate options.

Tax Default Foreclosure Proceedings - Tax default foreclosure proceedings occur when a property owner fails to pay property taxes, leading the taxing authority to initiate foreclosure actions. Typically, after a certain period of delinquency—often ranging from one to five years, depending on local laws—the taxing authority can place a lien on the property. Homeowners usually receive several notices and opportunities to pay their overdue taxes before the foreclosure process begins. Once the property is scheduled for auction, the homeowner must act quickly, as failing to pay the owed taxes results in the loss of the property. If the property does not sell at auction, it may become owned by the taxing authority, often referred to as a "tax deed" property. This can significantly impact the homeowner’s financial situation, and it's crucial to seek expert guidance to explore potential options and mitigate the consequences.

How Long Can I Stay In the Property After the Foreclosure Auction? - After a foreclosure auction, staying in the property is not advisable as eviction is imminent. If you are not evicted before the auction, the new owner can issue a 3-Day Notice to Quit, instructing you to vacate the premises. Failure to comply within this period will lead to an Unlawful Detainer Lawsuit being filed against you. Once filed, all occupants will be served with a Summons and Complaint, prompting a court hearing. If the court rules in favor of the new owner, a Writ of Possession will be granted, allowing law enforcement (usually the Sheriff) to execute the eviction. This process often involves law enforcement removing personal belongings from the property and placing them outside. If you find yourself unable to move out, it's crucial to consult a qualified real estate attorney to explore your legal options.

What Happens If My Property Sells at the Auction for More What I Owe? - If your property sells at auction for more than the amount owed, you could be entitled to surplus funds. It is essential to act quickly; you should immediately reach out to the trustee handling the auction or consult with an attorney to understand the next steps. Claiming these excess funds typically involves filing a formal claim with the local court or tax authority. Prompt communication is crucial, as there may be deadlines for submitting your claim.

If redeeming the property is not an option, we can assist you throughout the process, guiding you on how to file your claim and ensuring that you meet all necessary requirements to recover the funds owed to you. Our expertise can help streamline the process and maximize your chances of obtaining any surplus funds from the auction..

What Happens to My Credit After Foreclosure? A mortgage foreclosure may appear on your credit report within 30 to 90 days after the foreclosure proceedings begin. It can remain on your credit for approximately seven years, potentially impacting your ability to obtain new loans or lines of credit, as well as qualifying for rental housing.

When it comes to foreclosures, TIME IS OF THE ESSENCE, and you need to act immediately. If you have received a notice of default, pre-foreclosure information or notifications regarding dates of an auction, you need to act immediately. Our experts are here to help relieve the burdens that come with foreclosures. 

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