Most people do not pay outright for their homes on their own. Instead, they borrow money from a bank to cover the cost of the house and pay it back in monthly installments over a long period of time. This type of loan is called a mortgage. Defaulting on a mortgage happens when the person who took out the loan can no longer make the payments on time or at all. Many defaults happen quickly. With a month, 2, or 3 of nonpayment or underpayment, the bank can begin the foreclosure process. This means the homeowner loses legal rights to the property and must vacate the premises.
The bank will issue notices to the homeowner. These notices let the borrower know they are behind in payment, as well as whether foreclosure processes are being considered or when these processes will be initiated. This gives the homeowner some time to make good on the terms of the loan before the foreclosure occurs.
The property will be sold once the home is foreclosed on. At this point, the home is legal property of the bank until someone buys it from the bank, usually at an auction.
The first thing to try is reasoning with or working with the lender. Sometimes, there are plans or rehabilitation options that can reverse the road to foreclosure.
If that does not work, and the home is still being foreclosed on, you can present defenses to foreclosure to the lender. You can also file a lawsuit if you think the foreclosure is illegal.
Mistakes are made in mortgage agreements, promissory notes, and other real property documents. If you can locate a mistake in your mortgage or foreclosure documents, you can present this as a defense to the foreclosure. Predatory lending can sometimes be a successful defense if it can be proven that the conditions of the mortgage were fraudulent, scheming, scamming, or undue influence. Finally, if the foreclosure process violated any laws, it can be deemed illegal and thrown out.
Filing a lawsuit related to foreclosures is a different process in different states. If the bank has to sue you to start the foreclosure process, as is the process in some states, you can counter-sue on the same lawsuit. In some states, however, foreclosure lawsuits can proceed without court oversight. This means you will have to file a separate lawsuit on your own if you want to sue the bank over your foreclosure.
Yes. Foreclosures have longstanding implications on personal credit. It is important to speak to a foreclosure lawyer immediately if you are facing a foreclosure process.