Foreclosure Process Lawyers
What is foreclosure?
Foreclosure occurs when a home owner or property owner is unable to complete their payments on the property loan such as a mortgage from a bank. The lending institution can then take possession of the home, and it will become the property of the bank. The bank can then put it up for sale on the market in order to collect funds for the outstanding mortgage payments.
A foreclosure is basically a forced sale of the property. Failure to make mortgage payments is called being in “default”. Repeatedly being in default on a loan can usually initiate the foreclosure process.
What does the foreclosure process involve?
Foreclosure proceedings usually vary from state to state. In general, before a lending institution can foreclose a home, they must give the homeowner sufficient notice that they are in default on their loan. Then, they must provide the property owner with a reasonable amount of time to make back payments in order to lift the default status.
If payments on the loan are still in default, the lender is then entitled to take the following steps:
- Initiate a judicial foreclosure- this is a lawsuit filed by the bank ordering the property owner to sell the real estate OR
- Initiate a non-judicial foreclosure- this allows a third party to act as trustee. They will then foreclose the home and sell it without a formal judicial ruling
- The property will usually be sold at a public auction. If no one bids high enough, then the lender can repurchase the home
- If there are still residents living in the house, the bank can file an unlawful detainer suit in order to evict any persons still in the house at the time of the auction.
Regardless of whether the lending institution pursues a judicial or non-judicial foreclosure, they must provide sufficient notice informing the parties that the home is in danger of being foreclosed. This is probably the most important part of the process for the home owner, since they must be given a chance to render the proper payments.
What is the role of mortgages in a foreclosure?
Most people cannot afford to purchase a house using one single payment. Instead, most home buyers must take out a loan called a mortgage in order to buy the property.
In a foreclosure situation, the mortgage then acts like a lien on the property. In other words, the mortgage creates an obligation to make payments on the house, and it is this obligation that allows a bank to repossess the home if the loan is in default.
Sometimes an acceleration clause is included in the mortgage provisions. An acceleration clause basically allows the bank to collect on the entire loan amount if a borrower has missed payments. Accelerations clauses can therefore increase the chances of foreclosure, since most homeowners cannot afford to pay the entire loan amount.
What can I do to avoid foreclosure?
The main way to avoid foreclosure is to ensure that your mortgage payments are made regularly and on time. Most banks allow borrowers to make back payments at any time. This is known as “equity of redemption”. Also, there may be a variety of other protections against foreclosure, such as “right of redemption”, which allows a home owner to pay off debts even after foreclosure and repossess the home.
Finally, filing a lawsuit can also prevent or delay foreclosure. This is especially true if there are suspicions of fraud or foul play with regards to the mortgage. Also, if the lending company has failed to provide notice of foreclosure, it may lead to legal penalties. Most courts will not hear frivolous claims, so be sure that you have a solid case before attempting to file a lawsuit.
How can a lawyer help with foreclosure?
Foreclosure can be a costly and time consuming process. You should speak with an attorney regarding your foreclosure situation in order to determine your possible courses of action. A foreclosure lawyer can provide valuable legal information as well as representation in a court of law should a lawsuit become necessary. Contact a lawyer to learn more about your state’s foreclosure laws.
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Last Modified: 06-29-2011 03:10 PM PDT
