Foreclosure – Your Rights
A Basic Understanding of the Foreclosure Process
Foreclosures are a matter of public record.
When a foreclosure is filed, many shady speculators, lawyers,
and loan sharks will tell you that they can solve your problems.
Before you fall victim to any scams your best defense is to
have a basic understanding of your rights.
Types of Foreclosures
Foreclosure laws vary by state. There are two types of foreclosure
proceedings used in the United States:
- In a Foreclosure by Advertisement the
lender publishes a notification that the mortgage will be
sold at public auction. The notification appears for several
weeks and then the mortgage and the property it secures
are sold at a public auction.
- Some states require a Judicial
Sale. This means that you have the right to appear in a
hearing with a judge who determines if you have defaulted
on a loan. If the court determines that you are in default,
the home will go to public auction. Several weeks later,
the court will confirm the sale, and you cannot get the
property back.
The Foreclosure Process -Notice
- The notice is when most homeowners learn
about the foreclosure.
- The notice is sent by certified mail
or posted on your door.
- The notice does not mean that your home
is lost. Read the entire notice and learn about your legal
rights.
- In most states, it takes four to five
weeks before the home is sold once you receive notice.
- Notices are public. At this point,
speculators, loan sharks, and attorneys searching for foreclosures
will find out about your foreclosure and will contact you
either with the intent to help you or hurt you.
Receiving a foreclosure notice is
just the beginning of a process that can
last up to a year. But don’t delay – act
now to save your home!
Divorce
In a divorce, unexpected foreclosures
can happen when one spouse is supposed to pay the mortgage
but falls behind. The other spouse does not find out until
the notice is served. For more information, see an advisor
in our resource directory.
Reinstatement
Before your property is sold, you may have
the right to get caught up on your mortgage payments. Known
as “reinstatement”, you may be able to:
- Negotiate a forbearance agreement
- Refinance or
- Sell your home
The amount needed to reinstate will include
the delinquent mortgage payments, late fees, interest, lender
attorney fees, and monies advanced by the lender for taxes
and insurance. The lender is required to tell you the correct
reinstatement amount.
The lender cannot deny you the ability
to reinstate. But once the foreclosure sale occurs,
the right to reinstate expires and the entire mortgage balance
becomes due.
The Foreclosure Sale
The foreclosure sale is conducted like a
public auction. The lender can bid on it’s own mortgage,
or a third party (real estate investor) can buy out the lender.
In our experience, a successful third party bidder will be
more difficult to deal with because they are usually trying
to profit from the foreclosure.
Redemption
Even after the sale, it’s not always
too late. You have the right to redeem the mortgage by paying
off the entire balance of the mortgage. You cannot be evicted
from your home during the redemption period. Redemptions periods
vary by state, from 6 to 12 months. The foreclosure notice
usually states the redemption period. Don’t hand your
home over to a scam artist during the redemption period. Work
with a reputable
mortgage lender or real estate attorney or explore your
options.
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