It’s obviously very important to understand foreclosure if you feel it is looming.
You might feel like getting right with your lender, or fighting the foreclosure, or walking away with the help of a short sale, deed in lieu of foreclosure or going straight to bankruptcy court.
Big Issues with Foreclosure:
There are some questions you will need to answer before you decide on next steps.
How much time will you have before your house is sold?
You will of course take different action based on if your house can be sold at auction in just 30 days after you first get notice of the foreclosure, or if you have three or four months during which you can negotiate with the lender. Even in short-notice states in which your house will be sold at auction within 30 days of notification, you can pretty much count on learning about the intended sale in time to take action.
Will your foreclosure go through court? In some states foreclosures go through court. In the others your house can be sold without going through the court and without a judge’s approval. So if you know you won’t lose your house unless a judge rules so, your strategy will likely be different than if your foreclosure can occur without judicial oversight. Court foreclosures usually take longer than nonjudicial foreclosures.
Will you be liable for a “deficiency judgment” if the foreclosure goes through? In many states, if the house sells for less than you owe on it the lender can sue you for at least some of the difference. Homestead laws, which are state laws that protect your home equity from creditors, can’t help. This is because mortgage debt has priority over any homestead rights. This is one reason that many people file for bankruptcy when faced with foreclosure -bankruptcy eliminates the liability for deficiencies.
For information and guidance on foreclosure, you need the experts at RHM LAW LLP.