Foreclosure > Foreclosure FAQs

Foreclosure FAQs

Q: What is foreclosure?
A: Foreclosure is a legal process that a lender uses to force the sale of the house to repay debt, generally the mortgage debt on your house. If even a single payment is skipped; the lender can acquire the house back and sell it to repay the money you owe. Usually, a foreclosure notice is filed after three or four payments are missed.

Q: How long does the foreclosure process take?
A: It takes several months for a lender to foreclosure on your property. If everything goes according to the schedule, the process may take up to four months.

Q: Are there any options to avoid foreclosure? If so how much time do I have to work with my options?
A: There are several options as long as you own your house. Once your property is sold, all the options will disappear. Put as much effort as you can in order to deal with the foreclosure process.

Q: Are there any ways to stop the foreclosure process?
A: Yes, there are various things available to stop your foreclosure process.
•       Do not neglect any letters from the loan agency.
•       In case you are having trouble paying the debt, contact your lender as soon as possible. Describe about your situation. Be ready to produce them with your economic situation, like the monthly revenue and also the expenses.
•       Stay in your house for now. In case you escape or leave your property, you may not qualify for any help.
•       Speak to a HUD – Approved housing counseling agency. They provide lot of information on programs and services that may help you. They may also provide credit counseling. These kind of services are generally cost-free. 
If you are really willing to fight against foreclosure, know and understand all the available options to you. The most preferred option is bankruptcy.

Q: Do I qualify for any alternatives to foreclosure?
A: A foreclosure attorney or consultant can help in determining, if any of the alternatives may meet your needs. Also discuss your situation with the lender.

Q: What will happen if I miss my mortgage payments?
A: Foreclosure may occur. Foreclosure is the legal right of the loan provider to claim or presume control of your house. If foreclosure occurs, you will need to leave your house. In case you pay back more than the worth of the property, the lender might follow a deficit judgment against you meaning that you do not only lose control of your house, also may wind up owing the lender or servicer extra money once you have been taken from the house.

Q: When I am in foreclosure, what help can I expect from my lender?
A: Following are the options through which your lender may help you:
•       Forbearance – Temporary elimination or suspension of the house monthly payments.
•       Repayment schedule – Temporary raise of the house payment for a certain amount of period to compensate for skipped payments.
•       Refinancing – A new loan at lower rate of interest to lessen the house payment.
•       Loan modification – Smaller house payment attained through the reduced rate of interest, decreased principal sum or a long-term of your present loan.
•       Short sale – Lender permits you to sell your property for less than full benefit.

Q: Can the lender sell the house cheaper than what I need to pay? 
A: Yes. Lenders are usually not in the business of possessing or selling houses and also they do not want to foreclosure a property as it can be more expensive and eventually they lose money. They have to prepare the house for sale and appoint a real estate agent to sell the property. Until the property is sold, it remains as non-producing asset.

Q: Do I get money when the lender sold my house for more than what I need to pay?
A: Yes. If the amount exceeds the total debt owed, then it will be paid to you after the ownership transfer.

Q: Should I get a foreclosure loan?
A: Be aware of lenders who contact you, providing help, particularly if they need you to give the rights on the property to them. If the lender gets rights on your property, you have no more control over the property and you will not be able to seek other assistance.

Q: Are there any foreclosure scams?
A: Yes. Don’t proceed with your foreclosure process without professional guidance. Some buyers trap you and try to rush you through the process. There are many individuals who try to take the advantage of your financial problem. Be aware of the below scams:
Equity skimming: In this kind of scamming, a buyer comes to you and offers some options to come out of your financial trouble and promises you to repay your loan amount or gives you an amount of money if the house is sold. Buyer suggests that you go out quickly and handover the house to him. Then he collects house rent for some time, he will not make any loan payments and permits the mortgager to foreclose.
Phone calls from few agencies: Several groups who consider themselves as counseling agencies approach you and offer to make some services for free.

Q: Are there any ways to avoid these foreclosure scams?
A: Here are few instructions that help you with these scams:
•       Do not sign on any documents unless you thoroughly understand the content.
•       All agreements and promises should be documented.
•       Check with the attorney, your lender or a real estate expert before proceeding any deal associated with your house.
•       If you want to sell the house personally to prevent foreclosure, make sure that there are not any issues against the prospective buyer.

Q: Will the lender make me move out of my house?
A: No. Mainly an order from the court called Eviction can make you leave your house. Your lender initially should file the foreclosure notice and then following the completion of the foreclosure procedure, the bank starts eviction proceedings.

Q: What happens during the eviction process?
A: The eviction process generally follows one of the two below mentioned processes.
First process: If you receive a notice to vacate the premises within 72 hours, you need to leave within the limit.
Send process: If you do not leave the house within the specified limit, your lender goes to the court to ask for a hearing to decide when you should be evicted. If the judge decides you are to be evicted, you will be given 10 days to appeal the order. If you have not moved out by the court designated date, then the bank or new owner executes the eviction process and it gives the sheriff the right to physically remove you from the house.

Q: How long does the eviction process takes?
A: National average for eviction process is 8 weeks from the day you are given the eviction notice. Sometimes it can take six months or more, but be prepared it could be as soon as a week also.

Q: Who will get the money when the house is sold at auction?
A: Initially, all the real estate taxes are paid. Then mortgages are paid, next any attaching creditors or lien holders. Finally, you will get any money after all the debts are cleared.

Q: What is the difference between foreclosure and a sheriff’s sale?
A: Foreclosure is auction held by a mortgage holder, whereas sheriff’s sale is held by a lien holder or attaching creditor. 

Q: Will there be a redemption time following house sale?
A: There is not any redemption period in the non-judicial sales for the past owner or junior a mortgage holder. The Internal Revenue Service (IRS) offers a 120-day right of redemption, when it got a properly documented notice of the federal tax loan following your deed of trust.

Q: What will the foreclosure effects be on my ability to buy another home?
A: The foreclosure will appear on your credit report for 7 years. However, some lenders will approve you for a home loan sooner than that.

Q: What is a deed in-lieu-of foreclosure?
A: It is a contract between the borrower and the lender to willingly deed the property to the lender to evade a foreclosure action. It is sometimes referred to as a "voluntary foreclosure".