A Guide to the Foreclosure Process and Law

Foreclosure involves the recovery of mortgaged property in the event that a mortgagor fails to keep up with his/her repayments. If you are caught up in this situation, your lender needs to go through all the necessary legal channels in his/her quest to collect the outstanding debt.When buyers acquire property via mortgage,they typically give lenders a security interest on the property. This guarantees that the repayments will be made.

In case the mortgagors stop making repayments, the property can be sold without their consent so that the amount owed to the lenders can be recouped. In as much as the foreclosure process differs slightly from state to state, its basic tenets are similar. When faced with foreclosure, the most significant thing that you must figure out is how the process proceeds in your state.

How Much Time Do You Have?

For homeowners who are finding it hard to make their mortgage repayments, keeping their homes is not an option as far as foreclosure is concerned. Fortunately, such individuals don’t have to necessarily wait for the lenders to foreclose. They can either choose to undertake a short sale or pursue a deed-in-lieu of foreclosure. These options particularly come in handy for defaulters who have a short foreclosure notice from their lenders.

More often than less, foreclosures involve a judicial process. However, your property can sold without the approval of a judge. This is popularly referred to as non-judicial foreclosure. Court foreclosures often take longer than non-judicial foreclosures. This means it is easier to raise defenses to foreclosures when faced with judicial foreclosing because you have time to face the judge.

Liability for a Deficiency Judgment after Foreclosure

In case your house is sold at a less amount that you owe your lender, you are allowed to claim part of the difference. In as much as there are certain homestead laws that are meant to protect your home from creditors, these laws won’t help you much because mortgage debt is typically prioritized over the rights that homeowners have towards their property.

If you think that a foreclosure process looms in the horizon, you should consider alternatives such as checking whether you are eligible for assistance under a federal program. In addition, reinstate the current loan by catching up on your payments, costs, and interests. You can also negotiate solutions such as loan modification or forbearance.