Foreclosure
Edwin P. Farrow, Attorney at Law
When you need aggressive foreclosure defense, contact the professionals at Edwin P. Farrow, Attorney at Law.
A foreclosure is a legal process, where a lender makes an attempt to recover the remainder balance on a loan, which the borrower has stopped making payments on. This is done by the lender forcing the borrower to sell the asset that was used for collateral on the loan that was taken out. The process usually takes place when the lender obtains a court order, or some other operation of the law, to retain possession of that collateral, in order to retain the payment on the loan, and be able to get back something, when the debtor has stopped making payments on the loan total.
The Process
When the property owner can no longer make the payments on the home (or other property), the property is seized, and resold. The payments that can't be made are to the principle or some cases the interest amounts due on the property, that aren't being paid. The process is fairly basic, and there are many instances where the home owner has the opportunity to stop the process from continuing, if they make the payment to bring the loan amount up to date, and current with the lender.
Approximately 3 to 6 months after the missed payments begin, the lender will order a trustee, and they will record a notice of default (NOD) on the property; this is filed with the county's recorder office. This is the document that puts the borrower on notice, and lets them know that they are facing foreclosure. Once this is filed, the reinstatement period starts (time the borrower has to pay the money that is owed), which is a period of about 5 days before the auction date (depends on the state and county), before the home is auctioned off for sale to the highest bidder.
If the default amount is not paid within a period of three months (bringing the home payments up to current), the lender has the right to set a foreclosure sale date, and publish it to the public. A notice of sale is sent to the home owner, and the notice is also posted on the property. It is also recorded with the county, it is published in local newspapers, and other sources to let buyers know the property is listed and has a set date for sale, for a period of 3 weeks.
The trustee sale of the foreclosed property will generally take place on the steps of the county courthouse, in the county the home is located in. The notice of sale gives potential buyers the time and date of when the sale will take place. During the trustee sale, the highest bid is what the house will sell for, and this high bid price has to be paid in cash. A deposit is usually required up front (the percentage will depend on the sale price, and the state), and the remaining balance is usually due in a period of 24 hours after the purchase documents are signed. Upon payment in full, the high bidder will receive the trustee's deed for the property they purchased.
The auction
During the foreclosure auction, a minimum bid price is generally set by the lender that is trying to recoup the highest value possible for the property. This low bid generally equals the outstanding balance due, interest, fees, attorney fees, and other costs that are associated with the foreclosure sale. If no bids are made than the opening bid, the attorney conducting the sale purchases the property.
If this happens, the property becomes listed as REO (real estate owned). This generally takes place when the homes put up for sale are considered to be worthless, or less than what is owed to the bank or lender. When a property is purchased at a foreclosure sale, all the liens and taxes that were owed by the previous owner are wiped out once the new buyer takes possession of the property. When purchased REO, the buyer will generally take the property with a clean title.
The owner's rights
Most home owners believe they have to pay what is owed, work out some kind of arrangement, or move out prior to eviction taking place. Borrowers, even when missing payments on the home, have the right to demand the bank (mortgage lender) follow certain procedures, prior to being able to take the home in foreclosure. These rights generally have to be defended in court, before the foreclosure sale date is listed.
Knowing your rights, and avoiding the bank's right to throw you out, is something most home owners are not aware of. In some states, if "power of scale" clauses aren't included in the mortgage, foreclosures are usually not sought out. If this is the case, the lender has to take the borrower to court; home owners will be served, and have the right to respond to this notice. The home owner has the right to raise objections to the foreclosure process, which can slow things down, and allow them to bring payments back up to date.
If a bank doesn't own the original mortgage, they will have a hard time proving legal standing of the home. And, for the home owners that were never served, they might have a right to bring up this defense if a lender tries to foreclose the property. Not having proper notice is generally the best defense for home owners facing foreclosure. If they were not served by the lender, they have the right to fight the foreclosure.
As a home owner, if you feel sufficient notice was provided, or if there are errors in notice, this is your best legal defense to avoiding a foreclosure. Not only does it give you more time in the home, it also gives you the legal right to stay in the home, by the court.
Why hire a lawyer?
If you have been served with foreclosure notices, many wonder whether or not to hire a lawyer. More often than not, having a lawyer is a great choice. Not only are they skilled and knowledgeable about foreclosure law, they might also know of certain loopholes or ways to get around it that you do not know about as an average citizen.
Once filed with notice, you only have a short period of time to respond (the number of days usually varies by state and county). Upon receiving a summons and complaint, you will only have a few days to assert the legal defenses that you have against the proceeding. If you do not respond in a timely manner, this can lead to several consequences, namely you might lose your right and ability to defend against the proceeding at all. When you work with a foreclosure attorney, they know what has to be done, how to respond, how to assert your defenses and all else that has to be done, to ensure you do not lose your home.
There are certain defenses to foreclosure and ways around it. As an average individual that does not have the legal training, you will not know about many of these defenses, and may simply believe you have to pay, or get out of the home - this is not the case. Foreclosure attorneys know the defenses, know how to file them, and know how to buy the client more time, so that they are not out of a home, within a few months’ time.
In many cases, to fight foreclosure, you have to go to court, and without the right representation, many can't hold their own, and will not be able to defend themselves, standing little chance of saving the property. But, a great attorney can stand by your side; can provide you with the right assistance, proof, and defense, to help you get past the proceedings.
Fighting foreclosure, finding viable defenses, and finding a way to stay in your home, can be hard to do, especially if you are not aware of the laws in your state. For this reason, hiring a competent lawyer, one that has experience in foreclosures, and one that can provide you the best defense, and possibility of staying in the home, are all things that should be taken in to account. When going through a foreclosure proceeding, things can be stressful, and you may lose sight of your goals, and what you have to do to stay in the home. But, with a great lawyer, you can avoid many of these issues, you can get defenses filed on time, and you can buy time, where you might otherwise be out of the home in a few months, trying to fight the foreclosure on your own.
How to avoid foreclosure
Today, there are several government programs in place to help home owners avoid foreclosure. For individuals who are at risk, or having a hard time making monthly payments, there are options for them, and there are ways to extend the time with lenders. HUD and the US Treasury Department offer most of the assistance to home owners going through a difficult time.
The first step a home owner should take, is contacting the lender when they are having a hard time making payments, to find out what can be done to avoid foreclosures. Most lenders will work with home owners, especially those who have generally made payments on time in the past, but are currently struggling to make ends meet.
The Obama Administration has a program called Make Home Affordable, helping home owners avoid foreclosure. This allows the owner to get a lower monthly payment amount, and gives home owners a way out of the home, through other means, without having to undergo the foreclosure process. For unemployed home owners, the program also has options available to them, especially for those who owe more on the property, than the actual value of the property.
Refinancing options are readily available today, bringing the total monthly mortgage rate down significantly. This is a great way to not only avoid foreclosure, but to avoid having to pay thousands out of pocket each month, when you can't afford it. Modifying the loan is also an option to many owners today. Depending on how much is still owed on the home, how late the home owners are, and what their current monthly mortgage is, these options may be a viable choice for many home owners.
There are ways to get out of foreclosure, and to avoid the process entirely. As a home owner, the first step you have to take is when you realize you are not going to be able to pay your mortgage. If you contact your lender, if you discuss the situation with them and if you let them know you may be late, this can avoid many headaches and hassles in the future. If you never contact them, this is a sign that you are just not paying on the mortgage, giving them the right to go after the home, and put it up for a foreclosure sale.
Many lenders are going to be willing to work with the home owner, namely those that have been fairly consistent on their monthly mortgage, and have made the payments in a timely manner in the past. Foreclosure can ruin your credit score, it can ruin your ability to buy again in the future, and worst of all, it can leave you and your family without a home; and, in many of these cases, there is nothing you can do about it. By taking the right steps at the first time you are struggling, and by reaching out to your mortgage lender, or a lawyer, you are at least giving yourself the opportunity to avoid the proceedings, by having taken some form of action. Simply avoiding the bill, and not contacting your mortgage lender, is more than sufficient cause for them to begin the foreclosure proceeding, put you on notice, and eventually put the home up for sale, to the highest willing bidder on the property that you have foreclosed on.