1. What is bank foreclosure?

Bank foreclosure is the legal process through which banks and mortgage companies force the sale of your home to repay a debt, which is usually the mortgage on your home. You are considered in default even if you miss only one payment. A foreclosure notice is usually filed after you miss three or four payments and attempts to collect the debt you owe have failed.

2. How long does the foreclosure process take?

The foreclosure process is different in each state, but the law requires that the borrower receive ample warning or notice before the foreclosure can take place. More specific rights and responsibilities may be outlined in the mortgage or loan documents you signed upon purchasing your home.

3. What options do I have when facing foreclosure and how do I exercise them?

If you own your home and act quickly, you may have several options available. Yet once your house is sold, either by you or through foreclosure, many of those options disappear. Figuring out exactly what options are available puts you in a much stronger position to deal with the foreclosure process effectively.

4. What about companies that claim they can save my home?

It becomes a matter of public record when foreclosure documents are filed, and many people review these records on a regular basis for various business purposes, including compiling lists to sell to bankruptcy attorneys, investors, real estate professionals, and other people who may be interested in either purchasing your home or helping you save it. While you should be cautious if approached, some of these offers may be legitimate and worthy of your consideration.

5. Is it possible to keep my home?

The best place to start is to honestly assess your situation and discuss what options may be available with your bank or mortgage company. If your lender is unwilling to work cooperatively with you, then call a foreclosure hotline or consult with a local attorney.

6. Is it possible to sell my home instead of losing it to foreclosure?

Yes, you can sell your home instead of going through foreclosure. It is sometimes called the “compromise sale” – or the “short sale” or’ pre-foreclosure sale’ – and a foreclosure notice does not prohibit you from putting your house on the market if you still own it. However, you must act quickly. Contact us today and we will work with you, your realtor and your mortgage company to sell your home before foreclosure.

7. I don't want to keep my home and I don’t want to bother trying to sell it. Can I just walk away?

You could face serious consequences if you just walk away from your home. There is a legal procedure for walking away or forfeiting your property, and you should seek the advice of an attorney with experience in the field before taking either of these actions.

8. What is a “Short Payoff?”

A “Short Payoff” is when your lender agrees to accept less than what you actually owe in exchange for releasing the mortgage as a lien on the property. You may also hear this be called a pre-foreclosure sale, short sale, pre-sale, or compromise sale. WARNING! There may be tax consequences to such a deal. Consult with a CPA in your area before taking action.

9. What happens if the bank sells my house for less than I owe?

Banks are not in the business of owning or selling homes, and they do not like to foreclose on a property because they typically end up losing money. They must prepare the home for sale, hire a real estate agent to bring it to the market, and until the home is sold, it remains on their books as a non-producing asset. Lending institutions would often rather take a loss on the home than have it remain on their balance sheets as a non-producing asset. However, if the home is sold for less than is owed, the balance is called a deficiency and your bank can use whatever means they deem to be necessary to collect the remaining balance. Most states treat this as an unsecured debt (similar to a credit card debt) and give the bank or creditor the same legal rights to go after the balance, usually by suing you in court. We will work with your lender or bank to have the deficiency judgment against you waived.

10. Do I get any money if I sell my house for more than I owe?

Yes! If your house sells for more than you owe, any amount over the total debt owed will be paid to you upon the transfer of ownership.

11. How does a “Sheriff's Sale” work?

A “Sheriff’s Sale” could take place if you fail to pay your property taxes and the city to whom the taxes are owed decides to foreclose through such an action. Some cities will take this route after one year of unpaid taxes while other cities may wait longer. Also, any creditor or lien holder can exercise this option once you default on a loan. However, any overdue taxes must be paid first, followed by any mortgages, before any other liens or judgments can be paid. Please consult with your county offices for more details.

12. How many days notice do I get before I am evicted?

Typically you will only get three days notice before eviction. Most banks will start the eviction process immediately following foreclosure, but the FHA, HUD, and VA usually take a much slower response. If you own rental property, your tenants will normally be given a notice of 30 days. Contact your lending institution immediately to ask for an extension if you need more time than is given.

13. Is it really possible to save my home from foreclosure?

Yes! It is possible to save your home from foreclosure! The first step is knowing and understanding what options are available. The faster you act, the better your chances of success.

14. What happens if I have missed a few mortgage payments?

Foreclosure could occur if you miss even one mortgage payment. This is the legal means through which your lender can repossess your home. When the foreclosure occurs, you must find a new place to live or you will be evicted. Also, you may still owe the lender any outstanding balance if they sell the house for less than you owe. You should avoid foreclosure and deficiency judgments by all means necessary because they could negatively affect your ability to qualify for credit in the future.

15. What options do I have after receiving a foreclosure notice?

There are several option available after receiving a foreclosure notice. The most popular options include:

Special Forbearance
Your lender may be able to arrange a repayment plan to better fit your financial situation. Your lender may even be able to provide for a temporary reduction or suspension of your payments. You may qualify for a reduction or suspension if:

• You have recently lost your job or source of income;
• You or a spouse have suffered a hardship;
• You have had an unexpected increase in living expenses.

You must be able to provide information to prove that you would be able to meet the requirements of a new payment plan.

Mortgage Modification
You may be able to refinance the debt and/or extend the term of your mortgage loan. This may help you catch up on your payments by reducing the monthly expense to a more affordable level. You may qualify for a mortgage modification if you have recovered from a financial hardship, but your net income is less than it was before the default. This is known as a “failure to pay” situation.

Pre-foreclosure Sale
You can sell your home and pay off your mortgage loan to avoid foreclosure and serious damage to your credit rating.

Deed-in-lieu of Foreclosure
You may be able to voluntarily “give back” your property to the lender as a last resort. You may qualify to do so if:

• You are in default and do not qualify for any other options;
• Your attempts at selling the house before foreclosure were unsuccessful;
• You do not have another FHA mortgage in default.

Check with your lender for any other requirements if they have this option available.

Bankruptcy
You should consider this option carefully. It will seriously damage your credit rating. We can work with you to avoid bankruptcy and foreclosure, thereby saving your credit.

16. What about foreclosure scams?

If something sounds too simple or too good to be true, be careful. It could be a scam. If you are selling your home without consulting an experienced professional, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial struggles. Be especially on alert for the following:

Equity Skimming

This is a scam where a “buyer” approaches you and promises to pay off your mortgage or give you a sum of money when your home is sold. The “buyer” may suggest that you move out quickly and deed the property to him or her. The “buyer” then collects rent on the property for a time, does not make any mortgage payments, and allows the lender to foreclose. It is important to remember that signing over the deed to another party does not necessarily relieve you from your loan obligations.

Phony Counseling Agencies

Groups calling themselves "counseling agencies" may approach you and offer to perform certain services for a fee. They will not present you with all the options that may be available, but rather only the one(s) that will most benefit them. You can usually spot a phony counseling agency when they rush you to sign a contract agreement and/or ask for the deed to your home.

17. WARNING!!

Legal information is NOT the same as legal advice. You should consult with an attorney for legal advice and help with the foreclosure procedures.

CAUTION: The use of any information contained herein, such as opinions, instructions, suggestions, advice, and other similar content is at the user’s own risk. You are strongly encouraged to consult with one of our foreclosure specialists regarding the specifics of your situation.

If you have any questions about foreclosure, short sale, or bankruptcy, our attorneys are always ready to help.

Contact us to speak with one of our lawyers, for no charge and at no obligation.