The foreclosure crisis in the U.S. is still very much alive. Despite the fact that there are fewer homes entering the foreclosure process now, two-thirds of home loans that are currently in some state of the foreclosure process entered that process between 2004 and 2008. According to RealtyTrac who tracks these foreclosures, the average foreclosure now takes 629 days to reach completion. That’s the longest the process has ever taken since RealtyTrac began tracking the length of foreclosures in 2007.
What is Foreclosure?
Foreclosure is a legal process where a creditor, such as a lender or mortgage holder, can repossess or sell property in order to repay the debt that is owed on the property. A mortgage holder is able to foreclose on property any time after a borrower starts missing payments on the mortgage, unless it has been otherwise stated in the mortgage paperwork. These rules are also dependent on the state in which the property is located. Each state will have their own rules regarding timelines for foreclosure, so you’ll want to work with an attorney that specializes in your own state’s rules regarding foreclosure.
States Still Fighting High Foreclosure Numbers
The amount of homes entering foreclosure are at a 10-year-low but still it’s taking forever to get the ones that have been started through the process. New Jersey has consistently had a high foreclosure rate and with that a long process. Foreclosures that were completed during the first half of 2015 took an average of 1,206 days. That number is from the notice of default (or notice that a lawsuit has been filed for the ownership of the property) to the actual bank sale or repossession of the home. That means, on average, the foreclosure process took more than three years.
States with High Foreclosure Rates
Though the national foreclosure rate is down 3% from where it was from January through June of 2014, there are some states where the foreclosure rate remains particularly high:
Total properties with foreclosure filings: 11,479
Foreclosure rate: 1 in every 187
Change from 2014: down 13%
Total properties with foreclosure filings: 15,227
Foreclosure rate: 1 in every 184
Change from 2014: down 13%
Total properties with foreclosure filings: 9,328
Foreclosure rate: 1 in every 126
Change from 2014: up 10%
Total properties with foreclosure filings: 21,880
Foreclosure rate: 1 in every 109
Change from 2014: down 1%
Total properties with foreclosure filings: 32,713
Foreclosure rate: 1 in every 109
Change from 2014: up 24%
Total properties with foreclosure filings: 95,129
Foreclosure rate: 1 in every 95
Change from 2014 down 22%
Despite the fact that Florida has seen a decrease in foreclosure activity, the state still has a record number of houses in the foreclosure process. It also has the fifth longest timeline for foreclosure completion: an average of 989 days.
Avoid Home Foreclosure
If you are falling behind with your house payments and see foreclosure looming, you must act quickly. There are ways to avoid foreclosure, but the longer you wait to take action, the greater the chance of losing your home.
Get a Picture of Income and Expenses
Though it may be difficult to take a head-on look at your income and expenses, you need to know this information in order to work with your lender or a bankruptcy attorney. Working with a bankruptcy attorney can increase your chances of keeping your home.
Create a budget you can present to your lender or attorney. This will allow you a chance to put together a realistic view of your debts, the interest rates you are currently paying, and minimum payments. This budget should include your regular monthly expenses and estimates for variable expenses like groceries and gasoline. Take note of the debts that you owe, including if you are behind on credit cards, utilities, or other bills.
A home loan is what experts refer to as a “priority deb.” This should be the number one debt you pay every month. Falling behind on your mortgage can quickly lead to bankruptcy or foreclosure. Other ways to increase your income and help you pay your mortgage include: taking a second job, selling household items on ebay, and taking in a renter. Credit counseling is a great way to get aid when figuring out how to manage your money. These can provide relief for credit card debts so that you can ensure that you pay your mortgage.
Consider refinancing your home or taking out a home equity loan if your credit hasn’t been negatively impacted yet and you still have equity.
Ask for Help
Foreclosure is an expensive and time-consuming process for lenders too, so the last thing they want to do is pursue that option. Because of this, lenders are often very willing to help you work out ways to save your home, including: allowing you to make lower payments for a period of time, or adding any missed payments to the end of the loan. When working with a lender, you will need to prove the hardship you are facing and why you cannot pay your mortgage. All agreements should be made in writing and you should make sure you have copies of everything you and the lender have agreed to.
If the lender is unwilling to help, you can reach out to the Department of Housing and Urban Development which maintains a list of approved counseling agencies. There are a number of programs that have been designed to help people stay in their homes.
Private agencies and bankruptcy attorneys are also familiar with foreclosure laws and can help protect you from predatory lending, violations of consumer protection laws, or other legal problems, while also providing advice to help keep you in your home.
A last resort, but one that can help you stay in your home, is filing for bankruptcy. A bankruptcy attorney can help you decide if this option makes sense for you. While you will still be required to pay your mortgage payments, you will have the protection of the court while you catch up on delinquent payments.
A bankruptcy attorney will also provide a realistic approach to the advice he or she gives. Sometimes holding onto your home might be impossible. If this is the case, you will need to recognize this before you lose your home and any equity you may have. In this case, selling your home will be the best option and you will need to be realistic about the sales price.
If you have little or no equity in your home, you might need to consider working with a real estate investor who can “short sale” your home. This means an investor gets a lender to agree to accept less than what is owed on the sale. This is often an effective way for you to sell your home quickly and move on from the debt you would have incurred had you tried to remain in the home. If you decide this is your best option, ensure that you get an agreement in writing that states you will not be held responsible for the “deficiency” amount. This amount is the difference between what you owed and what was paid.
Working with an Attorney
Facing foreclosure is a scary thing. There are ways to avoid it and still keep your credit intact. Working with a bankruptcy lawyer will ensure you are made aware of all the options available to you. They might suggest bankruptcy or can help you negotiate with your lender so that you can stay in your home. If bankruptcy is advised, know that bankruptcy law can be hard to understand. Because of this, it’s highly advised that you work with a bankruptcy attorney that can walk you through the process and clarify any questions or concerns you might have. There can be a lot of questions during this extremely stressful time. Let the lawyers at RHM LAW LLP walk you through the process so you can achieve the best outcome possible.