Foreclosure Attorney
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What is Foreclosure?
Foreclosure is the process by which a bank determines that your mortgage is behind in payments to a sufficient degree that it wants to take possession of your home and sell it, to recoup its losses. The process is sometimes handled through the courts; other times, it’s not—instead going through what’s known as a nonjudicial foreclosure.
In either case, the lender’s goal is to sell the property through a legally allowed process, such as a sheriff’s sale, and use the funds gained to pay off your remaining balance on the loan. If the price paid is higher than your debt, the balance may be owed to you.
How does foreclosure work?
Foreclosure becomes possible when your loan is in default, usually after one or more mortgage payments have been missed. At this point, the lender begins to see your property as a potential foreclosure, but it can’t legally begin the process yet. Ideally, contact your lender about the situation before you miss even one payment—you’ll have more options available at that point. Even if you’re two or more payments behind, contacting the lender may help you avoid an actual foreclosure by giving you time to get caught back up or creating a payment plan. If the 120 days have passed, the foreclosure process can look different, depending on where you live, but many states at that point still have ways to stop a sale or even cancel it if you can pay back what you owe in sufficient time. This time frame is known as the redemption period.
Three Different Types of Foreclosures
The three types of foreclosure are judicial, non-judicial and strict foreclosure.
- Judicial: The form of foreclosure that most people are familiar with, judicial foreclosure is the process in which a court orders the sale of a property in order to satisfy a mortgage. The lender files a lawsuit against the homeowner and a formal notification is made. The homeowner is given a set amount of time to pay their debt. If they do not pay it, the property is sold at an auction and the proceeds from the sale are used to pay off the mortgage and any lien holders. This process is long and doesn’t provide a particular advantage for either party. Judicial foreclosures costs the lender and prevents them from gaining revenue while the process takes place. For homeowners, being sued and having an official notice appear on your property can be demoralizing. Foreclosures, in general, also damages your credit tremendously. A great alternative to a judicial foreclose is a deed in lieu. With a deed in lieu, the homeowner formally returns the property to the lender. If the lender accepts the property, no legal action takes place and your credit record is not damaged.
- Non-Judicial: If your mortgage has a power of sale clause or if you are in a state in which a deed of trust is used instead of a mortgage, the lender has to right to foreclose on property without the approval of a court. As with judicial foreclosure, a formal notification is made, but the window of time before a property is sold may be shorter. This process presents an advantage to lender because it takes less time and money to foreclose on a property. The borrower has less time to resolve their debt and potentially keep their home.
- Strict Foreclosure: Strict foreclosures are less common than judicial and non-judicial foreclosures. In a strict foreclosure, the lender seeks a court order to seize property from a homeowner. Once approved, the homeowner is given a set period of time to resolve the debt. If they are unable to do so, the property returns to the lender who is free to do with it as they choose. While it’s not much of an advantage for the homeowner, at least they have a designated time to pay their debt before losing their home.
Foreclosure is an emotional and financially difficult process to endure. The smartest choice you can make is finding a foreclosure lawyer that understands the process and can help you make sound choices for your future.
Foreclosure Process
The foreclosure process in 5 steps
If your mortgage payment is a few days late, you are probably not at risk of foreclosure. Your lender may have a grace period of up to two weeks for you to make your payment without serious penalties. After the grace period, however, your payment is considered late and you’ll be charged late fees. You might also receive a warning from your lender about a potential foreclosure if you fail to make the payments.
After three to six months of missed mortgage payments, your lender will file a Notice of Default with the local recorder’s office. Your lender will also send one to you via certified mail, and depending on your state, might post the notice on your front door. This notice specifies how much you owe in order to bring your mortgage back into good standing.
A Notice of Default could show up on your credit report and affect your score. This can make it more challenging to obtain other types of credit or refinance your mortgage.
A Notice of Default doesn’t equate to the lender immediately or automatically foreclosing on your home, and it doesn’t mean you don’t have options to prevent the foreclosure from happening. You can put a stop to the proceedings by getting current on your payments.
Preforeclosure is the time period between the Notice of Default and the auction or sale of your home. During this time, if you can get your hands on the amount specified in the Notice of Default, you’ll be able to stop the foreclosure process from going any further. The exact amount of time you have depends on your state. During preforeclosure, you might also have the option to sell your home and pay back the money owed, in what is called a short sale.
If you don’t have the money to bring your mortgage into good standing within the allotted time frame, your lender will file a Notice of Sale, and your home will be placed up for auction at a specified time and location.
How the Notice of Sale is published depends on your state. For example, in North Carolina, the notice must be published in a local newspaper and posted on the door of the local courthouse, while in California, it must be posted on the property as well as a public place in the county.
Because the Notice of Sale is public information and has been advertised, several buyers, including investors, might be interested in buying your home. Depending on laws in your state, you might have the ability to exercise right of redemption (meaning you can reclaim your home) up until the foreclosure sale, or even after.
Following the auction and sale of your home, you’ll generally have a few days to gather your belongings and move to a new residence. If you do not voluntarily move out, law enforcement personnel are legally allowed to remove you and your belongings from the premises.
How To Respond To A Foreclosure Lawsuit
After you receive a summons—the formal letter notifying you of the foreclosure lawsuit—you have a number of options:
- Ignore the summons altogether. If you simply ignore the summons, your lender will probably win the case and take possession of your home as soon as they receive court approval.
- Fight The case in court. If you decide to fight to save your home, your lender will be represented by a team of highly-skilled attorneys. In order to level the playing field, you should consider retaining an experienced foreclosure defense attorney to fight for and protect your rights.
- File for Chapter 13 bankruptcy. If you qualify, Filing Chapter 13 stops a foreclosure action in its tracks and gives homeowners three to five years to catch up on their mortgage payments. However, there are some exceptions and homeowners may still risk losing their homes but an attorney can help explain the legalities.
How Long Does Foreclosure Take?
Properties foreclosed in the second quarter of 2021 had spent an average of 922 days in the foreclosure process, according to the U.S. Foreclosure Market Report from ATTOM Data Solutions, a property data provider. This is down slightly from the previous quarter’s average of 930 days, and up 34.5%, from 685 days, in the second quarter of 2020.
The average number of days varies by state because of differing laws and foreclosure timelines. The states with the longest average number of days for properties foreclosed in the second quarter of 2021 were:
- Hawaii (3,068 days)
- New York (1,822 days)
- Indiana (1,617 days)
States with the shortest average times to foreclose during the same period were:
- Wyoming (173 days)
- Arkansas (253 days)
- Tennessee (270 days)
How to avoid foreclosure
Facing home foreclosure can be extremely scary. Fortunately, there are plenty of ways to avoid foreclosure, even if your current financial situation is making it difficult to pay your mortgage on time.
Ultimately, avoiding foreclosure starts by communicating with your mortgage lender or servicer. It is unlikely that your lender will let you off the hook completely, but it can help you take action so you do not lose your home.
Here are some of the best ways to avoid a home foreclosure:
- Take advantage of forbearance programs: During the COVID-19 pandemic, the federal government established a mortgage forbearance program that has since expired. However, you can still apply for forbearance if you have a federally-backed loan from Fannie Mae or Freddie Mac.
- Adjust your loan terms: If you are struggling to afford your monthly loan payment, ask your lender if they can adjust the terms of your loan. In exchange for a longer amortization schedule, you might be able to lower your monthly payment.
- Get a deed-in-lieu of foreclosure: Some states allow homeowners to choose a deed-in-lieu of foreclosure, in which you agree to turn over your home to a lender in order to avoid a foreclosure. With this option, you are not required to pay your mortgage, but you might still be responsible for paying the difference between your home’s value and the mortgage balance.
- Set up a repayment plan: If you know that you are unable to make your mortgage payment for a given month, let your lender know as soon as possible. Your lender can probably set up a payment plan that involves more frequent, but lower payments, or deferral for a month or two.
Consequences of foreclosure
There are several financial consequences to foreclosure, and they can be devastating. For one, getting a mortgage after foreclosure can be challenging because of the impact on your credit and the fact that you’ll likely be subject to a waiting period before having a chance at a new loan. The other implications of foreclosure include:
- Losing your home, which puts you in the position of having to find a new place to live with a foreclosure on your record
- Damage to your credit, since a foreclosure stays on your credit report for seven years
- Losing your property and equity, which can have far-reaching impacts on your overall wealth
- Owing money on the remaining balance if it’s a judicial foreclosure, and being subject to litigation, wage garnishment and more if you can’t pay
Do I Need a Foreclosure Attorney?
Facing foreclosure is something that millions of people have been through. Some homeowners won’t go down without a fight. In that case, it is essential to have a foreclosure attorney in their corner.
If you are up against a possible foreclosure, please keep reading about whether or not you need to hire a lawyer to represent you during this process. We’d gladly answer any questions you have during your free consultation with our foreclosure defense attorneys.
When to Hire a Foreclosure Attorney
You have a right to defend your home if the bank is trying to take it. The following are a couple of reasons why you should hire a lawyer if you are facing the possibility of foreclosure.
You Want to Defend Your Home
If you have a valid reason to fight for your home, you will likely need a foreclosure attorney to help you. Depending on your circumstances, you may use a few defenses which would allow you to save your home from foreclosure.
First, if your mortgage lender did not correctly follow foreclosure procedures, you can fight this. There are several steps that they need to go through before they foreclosure your home. If they don’t follow the procedure, it is time to call a lawyer.
Further, if the mortgage lender cannot show proof that they own your loan, you can fight foreclosure.
Lastly, if a huge error is made to your mortgage account, you can call on a foreclosure attorney to help you. An error may include charging you unreasonable fees, forcing you to pay for a homeowner’s insurance policy that was bought improperly, etc.
We can help you determine valid reasons to fight foreclosure.
You Are an Active Servicemember
If you are in the military, you are given special protections under the Servicemembers Civil Relief Act, which provides several benefits. Essentially, if you are facing foreclosure as a military member, you are protected against this court action. You cannot face foreclosure while serving our country. We would be glad to discuss this further during your free consultation.
When Not to Hire a Foreclosure Attorney
In some cases, it may make sense for you to throw your hands up and surrender to foreclosure. The following are reasons why you may not need to hire a foreclosure lawyer.
You Don’t Want to Save Your Home
You will not need to hire a lawyer if you have no intention of fighting foreclosure. Many homeowners have chosen not to fight foreclosure because they are trying to stay in their homes for free until the new owner gets the title to the house.
You can do this because you technically still have legal ownership of the home until the title is transferred.
However, it may be preferred to have a lawyer if you intend to do this because some banks will try to take out your property or change the locks to your home before the title is transferred. In this case, you may need legal assistance.
You Don’t Have a Valid Defense
You may very well not have a legitimate defense for your foreclosure, so you may decide not to fight it. This would be when you give up your home to the bank. It may have been a willful decision to stop paying your mortgage without having any intentions of beginning payments again.
If you believe this foreclosure is warranted and don’t want to stop it, there would be no real reason to hire a foreclosure attorney.
Please understand that you do have options that could save you from foreclosure. We would be happy to discuss those options with you.
