Rights of Borrowers in Foreclosures
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When Can a Creditor Foreclose on My House?
When you take out a loan or mortgage on your house or other real estate, you must give the creditor a security interest in case you do not completely pay back the loan. The security interest usually comes in the form of a deed to the property so that the creditor can take your property and sell it to someone else if you do not make payments on your loan.
The law on when a creditor may foreclose your property if you do not make repayments varies from state to state. Though some state laws allow for foreclosure as soon as 10 days after nonpayment by the borrower, typically a mortgage is not considered delinquent until 3 months after payments on the loan have stopped. However, be sure to read the laws on foreclosure in your state, because while your creditor may give you some leniency on due dates of payments, statutes in all states give a specific time frame after which the creditor may foreclose if the borrower has stopped repaying the loan.
Does My Creditor Have to Give Me a Notice if they Are Going to Foreclose on My Property?
Yes. Most states require that a written Notice of Foreclosure must be given to the borrower by the creditor usually more than a month in advance of the actual resale of the property.
At this time the borrower can still prevent the foreclosure by paying the creditor. The creditor will usually have instituted an acceleration clause so that borrower will have to pay not only the missed payments, but also the rest of the mortgage as a whole. In addition, the borrower will have to pay any interest and late penalties owed to the creditor in order to stop foreclosure.
Is there Any Other Process the Creditor Must Follow when Foreclosing the Property?
The creditor must advertise the property for sale anywhere from a week to over a month before foreclosing the property. The creditor must follow strict guidelines when doing this by providing the following information::
- Borrower's name
- Original amount of the loan and how much the borrower currently owes
- Description of the property
- Creditor's attorney
- Time and place of the auction
Is there Anything Else I Can Do to Prevent an Impending Foreclosure on My Property?
Generally you may prevent creditors from instituting collection procedures by filing for bankruptcy. Filing for bankruptcy is not something that should be taken lightly and you should consult a bankruptcy attorney before filing to see if it is an appropriate remedy for your situation, and if so, which kind of bankruptcy to file. If you want to hold off on filing for bankruptcy and want to know if you have any other possible remedies, contact an experienced real estate attorney who will be able to advise you of your rights and what action you can take.
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Last Modified: 04-30-2013 03:02 PM PDT
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