What Happens After Foreclosure
If a third-party bought the property, the home would belong to them. If the lender takes ownership of the home, the property will then be known as a bank-owned property or real estate owned property. Local real estate agents can list the property on the open market or post the property on real estate websites such as Zillow, Realtor, or Trulia. The home can also be sold off at a liquidation auction.
Getting Help From A Texas Foreclosure Lawyer
This article contains details on foreclosure laws in Texas with citations to statutes so you can learn more. Statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consult with an attorney if you’re facing a foreclosure.
Also, foreclosure laws are complicated. Servicers and lenders sometimes make errors or forget steps. If you think your servicer or lender failed to complete a required step, made a mistake, or violated state or federal foreclosure laws, you might have a defense that could force a restart to the foreclosure or you might have leverage to work out an alternative. Consider talking to a local foreclosure attorney or legal aid office immediately to learn about your rights. A lawyer can also tell you about different ways to avoid foreclosure. Likewise, a HUD-approved housing counselor can provide helpful information about various alternatives to foreclosure.
Mortgagee Still In Control
For both a foreclosure and power of sale, the mortgagee essentially holds most of the cards in the process and benefits directly from the sale of the property. However, one of the potential advantages of a power of sale is that it can be a much simpler process that avoids much of the complexity of a formal foreclosure process.
As with most issues surrounding real-estate law in Richmond Hill, the GTA and beyond, do-it-yourself legal advice is not advised. Only qualified lawyers in the field of foreclosures, closings, etc., allow you to choose the best options available for you specific legal situation.
If you need a professional real-estate lawyer in Richmond Hill, the Greater Toronto Area , Ontario, or anywhere else in Canada, please phone us here at Hosseini Law Firm for a 15 minute free consultation: 416-628-4635, or please use the contact form provided on this page. Thank you.
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Phase : Notice Of Trustees Sale
Depending on the state, the process for initiating foreclosure is different. In some states, nonjudicial foreclosures can be done that only requires filing paperwork with the necessary court to start the process. With this, the foreclosure e process can move rather quickly. Other states have judicial foreclosures, which require court approval for each stepmeaning the process takes a bit longer.
Once forms are filed with the court or necessary approval is met, the lender’s attorney or foreclosure trustee will schedule a sale of the property. A notice of trustee’s sale is then recorded in the county where the property is locatedstating the specific time and location for the sale, as well as the minimum opening bid for the property.
The lender must also generally advertise the property in the weeks before the auction indicating that the property will be available at public auction.
The time from the notice of demand to the auction date varies by state, but can be as quick as 2-3 months. Up until the date of the auction the borrower can still make payment arrangements or pay the amount due, including attorney fees incurred by the lender to start the process.
What If I Have No Equity In My Home
If you owe more than you can sell the home for, you will probably want to get out of the situation with as little expense and trouble as possible. However, you should still take action instead of ignoring the problem. You may want to work with the lender to minimize costs by agreeing to the foreclosure. Normally, you would only do this if the lender will give you a full release from your mortgage, meaning you wont owe the lender any more money. If the lender wont agree to this, you can simply let the foreclosure proceedings go ahead and use the time as a rent-free period to get your finances back in order. If any other people or companies with debts registered against your home are not paid from the money from selling your home in the foreclosure, you will still have to deal with them. Otherwise, they can sue you for any money you still owe them.
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The Foreclosure Process In 5 Steps
From the time of your first missed mortgage payment to the foreclosure sale of your home, there are several steps in the foreclosure process. These phases can vary by state, but generally follow this timeline. Each state has its own laws pertaining to the process of foreclosure and foreclosure sales. These can govern the borrowers relief options if already in foreclosure, how to go about posting a Notice of Sale, the sale timeline and other parts of the process.
What Options Do Borrowers Have During Foreclosure
Getting that first public notice of potential foreclosure can scare homeowners. Especially if the homeowner is missing mortgage payments due to falling onto financial hardships, it might seem like foreclosure is inevitable, but its not. There are several options borrows have if theyre facing foreclosure.
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What Is Foreclosure And How Does It Work
While the dream of home ownership has become easier for many, staying in that home may not always be so easy.
You work hard and save to purchase that perfect home, but due to unforeseen circumstances, you can no longer afford your monthly bills, including your mortgage payment. As a result, foreclosure seems like a very real possibility on the horizon.
First and foremost, youre hardly alone. Millions of American homeowners face foreclosure every year. While this may not provide you with much comfort considering your situation, at the very least it will help you understand that many people go through something similar.
This article will cover what a foreclosure is, the steps you will have to follow in the event of a foreclosure, and then what you should do and not do during the foreclosure process.
When Does Foreclosure Start
Federal law generally requires the servicer to wait until the loan is over 120 days delinquent before officially starting a foreclosure. However, in a few situations, like if you violate a due-on-sale clause or if the servicer is joining the foreclosure action of a superior or subordinate lienholder, the foreclosure can begin sooner. .
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Borrowers Answer And Defenses
If the borrower wants to contest the foreclosure, it must file an answer within the time period set forth in the complaint or in the notice of default . The answer will include responses to all of the statements made by lender in its complaint, either accepting, denying or asserting it doesnt have enough information to accept or deny each claim.
Additionally, in the answer the borrower may assert any defenses or counterclaims it has to the foreclosure. Common defenses and counterclaims include:
- Violations under Fair Debt Collection Practices Act or Truth in Lending Act
- Loan has been paid in full
- Lender miscalculated the amount due
- State law, mortgage or deed of trust procedures werent followed
- Deficient affidavit of fact
- Improper plaintiff or assignment
Know And Understand The Six Key Steps
Foreclosure is the process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership of the property. Although the foreclosure process varies by state, there are six common phases of a foreclosure procedure.
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If You Default On Your Mortgage
A mortgage is a loan used to buy a home or other property. The lender, such as a bank or trust company, provides part of the purchase price of the property. The borrower promises to pay the lender back, plus interest.
Under the law in BC, a mortgage gives the lender a charge meaning an interest or a right against the property being purchased. That charge gives the lender rights if the borrower defaults on the mortgage. The most common way for a borrower to default is by not making payments under the mortgage as promised.
If you default on your mortgage, the lender has the right to accelerate the mortgage. This allows the lender to claim the full balance owed under the mortgage, plus interest and other costs, even though the mortgage term hasnt yet expired.
The lender can start legal proceedings to take the property or sell it to pay the mortgage debt. This legal process is called foreclosure.
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The Foreclosure Process Step By Step
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When a borrower fails to meet its loan obligations, the lender may try to foreclose on the property securing the loan. Foreclosure is just the series of steps a lender has to take in order to force the sale of such property and use the sale proceeds to recover its unpaid debt.
This is simple enough in theory. However, except for professionals who deal with foreclosures on a regular basis, few understand the many steps involved in the process. Given the complexity, and the fact that these steps can vary from state to state, residential or commercial property, and even depending upon the terms of agreements between individual borrowers and lenders, it isnt surprising the process may be a bit of a mystery.
Nonetheless, since compliance with the foreclosure process can greatly impact the length, cost and outcome of these actions, a solid understanding of the foreclosure process is critical.
In this article well take a deep dive into the foreclosure process, step by step.
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Mortgage Loans In Texas
If you get a mortgage loan to buy residential real estate in Texas, you’ll likely sign two documents: a promissory note and a deed of trust. The promissory note is the document that contains your promise to repay the loan along with the repayment terms. The deed of trust, which is very similar to a mortgage, is the document that gives the lender a security interest in the property and will probably include a power of sale clause. If you fail to make the payments, the power of sale clause gives the lender the right to sell the home nonjudicially so it can recoup the money it loaned you.
What Is The Term Preforeclosure Mean In Real Estate
A preforeclosure is the time period in which the bank gives notice of default, once the property owner has defaulted on the loan payments. A preforeclosure property exists during the first stage of the legal procedure, and therefore still belongs to the owner.
The length of the preforeclosure period depends on the type of foreclosure process mandated by provincial law, and the applicable legal documents the borrower signed with the lender when the property was originally purchased.
Preforeclosure is also the most crucial time in the foreclosure process. It is during this period that you as an investor stand to make the largest profits and can literally make thousands of dollars in months, weeks, days, or even hours!
A property owner is willing to let the property sell for well under market value so that they can negotiate a quick closing, thus stopping the foreclosure and ruining their credit rating. A foreclosure can stay on someones credit for up to seven years making it almost impossible to get another mortgage in the future.
Preforeclosures are seldom seen in the GTA and Ontario and are much more common in provinces and states where there are many more foreclosure sales. Power of Sale is by far the most common mortgage remedy that banks proceed with in Ontario.
This series of articles is brought to you by A. Mark Argentino and other real estate related resources, including Canadian Real Estate Association CREA and the Ontario Real Estate Association OREA.
Thank you,
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What Happens If You Miss A Mortgage Payment
If you miss a payment, the servicer can usually charge a late fee after the grace period expires. Most mortgage loans give a grace period of ten to fifteen days, for example, before you’ll incur late charges. To find out the grace period in your situation and the amount of the late fee, review the promissory note or your monthly billing statement.
If you miss a few mortgage payments, the servicer will probably send letters and call you to try to collect. Federal mortgage servicing laws require the servicer to contact you by phone to discuss foreclosure alternativescalled “loss mitigation” optionsno later than 36 days after a missed payment and again within 36 days after each following missed payment. No more than 45 days after a missed payment, the servicer must let you know in writing about loss mitigation options that could be available, and assign personnel to help you. Some exceptions to a few of these requirements exist, like if you file for bankruptcy or tell the servicer not to contact you under the Fair Debt Collection Practices Act. .
When Is It Too Late To Stop A Foreclosure
A homeowner can stop a foreclosure up to the auction. Once the house has been auctioned off, the homeowner no longer retains the rights to their property, and they will have taken a massive hit to their credit. However, the longer the foreclosure process continues, the harder it will be for a regular middle-class American citizen to get their home back, as the lender will require the homeowner to not only pay their missed payments but any legal fees accrued during the foreclosure process. Ideally, a homeowner would make up their payments a couple of months after missing a mortgage payment and halt the foreclosure process altogether, but the sooner the payments are made up, the better.
If the homeowner wishes to retain their property, they can do so even after its been foreclosed as many state laws allow homeowners to repurchase their property even after the lender has taken it back. This option wont avoid the reduced credit score or potential bankruptcy homeowner could face due to foreclosure.
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Recording A Public Notice
After several months of missed payments, usually between three and six, the lender indicates that the borrower defaulted on their mortgage with the County Recorders Office. Some states call this a Notice of Default. Others call this a lis pendens, which is Latin for suit pending.
Again, it depends on the borrowers location, but the lender might post a notice on the homes front door stating the house is in threat of being foreclosed. The official notice will be filed away. Both will say the homeowner can potentially get evicted and lose all right to their property if they do not continue paying their mortgage. Throughout these public notices, one message is clear: the threat of foreclosure is imminent.
What Causes A Foreclosure
The simple answer: Foreclosures are caused by not paying monthly mortgage payments. This is called default. The reason for failing to pay is usually not considered.
A lender must notify the homeowner before they intend to foreclose so there is an opportunity to explain the reason for a default and get caught up on payments. A lender may prefer to get paid instead of going through the expense and effort of foreclosure.
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Main Takeaways From Foreclosures
The best thing to know about foreclosures is to avoid them, as they only lead to headache, financial troubles, and credit pains. People should save up as much money as they can to create an emergency fund for when times get hard. Even if its saving 1% from every paycheck, that small fund can mean the difference between falling underwater on mortgage payments.
If a homeowner finds they might be starting on the path to foreclosure, they can talk to their lender to see what options are available. A lender wants to avoid foreclosure as much as the homeowner, so the two might be able to strike up an agreement that suits them both. In the case of an emergency, the homeowner can seek crowd-funding or put on an estate sale to get quick cash to pay their mortgage. While foreclosures are serious threats for anyone experiencing financial hardships, education, creativity, and humility are the best way to avoid them.
Get Approved For A Repayment Plan
Unexpected life circumstances happen to everyone, but lenders and servicers are aware of this and will work with you to find a solution before your home has to be foreclosed upon. If you faced financial difficulties for a time that have since resolved themselves, contact your servicer about what options you may have.
You may be able to get approved for a repayment plan to help make your loan current again. Under these arrangements, borrowers will typically pay a specified amount extra each month until the missed payment balance is satisfied, upon which theyll return to making regular mortgage payments like before.
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A Word Of Warning: Beware Of Mortgage Scams
Facing a foreclosure and the possibility of being forced out of your home can be extremely upsetting and can make homeowners feel desperate. Be aware: there are scammers out there that attempt to frighten homeowners into believing their home is being foreclosed upon in order to steal money from them. Before agreeing to anything or paying any money to a party that attempts to contact you about foreclosure, make sure the request is legitimate. The Consumer Financial Protection Bureau offers resources to help you spot and avoid foreclosure scams.
