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Understanding the Foreclosure Process in

Understanding the foreclosure process in is an important part of navigating your own home foreclosure.

Before we dive in…

Understanding the Foreclosure Process in

What is foreclosure anyway?

Foreclosure is a legal process that allows lenders to recover the amount owed on a defaulted loan by taking ownership of and selling the mortgaged property. Foreclosure can occur when homeowners do not pay their mortgage payments, second mortgage payments, home equity loans or property taxes. Missing a payment is called default. After default, the servicer may send the homeowner a notice of default, usually after the loan is 30 days past due. This is the pre-foreclosure phase of the process. Servicers could start sending threats of foreclosure as early as 60-90 days past due.

Foreclosure can be tough. No one wants to lose their home, but this tough process can become easier when you understand the

When you know how foreclosure in works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.

The Basic Stages of A Foreclosure

There are a few stages that are important to any foreclosure process.

Foreclosure works differently in different states around the country.

The two ways different states use to foreclose upon a property are: judicial sale or power of sale.

Connect with us by calling (859) 912-7763 or through our contact page to have us walk you through the specific foreclosure process here locally in Northern Kentucky.

In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment.

Under Judicial Foreclosure:

Judicial foreclosure refers to foreclosure proceedings that take place through the court system. The Judicial foreclosure process consists of the following steps.

  • Your mortgage lender must file suit in the court system.
  • You will get a letter from the court demanding payment.
  • Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
  • If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
  • Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.

Under Power of Sale (or Non-Judicial Foreclosure):

  • The mortgage lender serves you with papers demanding payment.
  • After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
  • The trustee can then sell your property to the lender at a public auction (notice must be given).

Anyone who has an interest in the property must be notified during either type of foreclosure.

For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.

What Happens After A Foreclosure Auction?

After a foreclosure is complete, the loan amount is paid off with the sale proceeds.

Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.

When a foreclosure is final, the homeowner must move out of the house. If the servicer sells the property for less than what is owed, they or the U.S. Department of Housing and Urban Development (HUD) could seek a deficiency judgment on the homeowner. This means that the homeowner could still owe the servicer or HUD money even after the foreclosure.

If the property sells at the auction for less than two-thirds of the appraised value, the original homeowner has one year to buy back the property at the price paid by the winning bidder plus 10 percent to retake possession of the house.

A deficiency judgment is a court order allowing a lender to collect additional money from a debtor who has defaulted on a loan if selling the property that secured the loan isn’t sufficient to pay off the entire debt.

Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.

Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.

Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Cristo Rey Investments, LLC to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.

Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.

If you need to sell a property near Northern Kentucky, we can help you.

We buy houses in Northern Kentucky  like yours from people who need to sell fast.

Give us a call anytime (859) 912-7763 or
fill out the form on this website today! >>

Another Foreclosure Resource For Northern Kentucky HomeOwners:

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