It is impossible to turn on the news these days and not hear about the financial meltdowns of corporations, large companies and individuals. It is distressing to hear of the housing bust and of people losing their homes to foreclosure. Foreclosures occur for a variety of reasons, the most common being because of loss of employment, death, separation or divorce. We are also learning that many foreclosures are occurring because of very poor lending practices on the parts of the banks; however we won’t go into the politics of that here.
So what is foreclosure exactly? It is the final step a lender will take against a borrower who cannot pay their debt. The lender will try to collect all or part of a previously uncollected debt against the real estate. Each state has it’s own foreclosure process but typically begins when a lender files a notice of default or lis pendens against the property owner. All interested parties are now officially alerted to the pending foreclosure action. Clearly you do not want to get to this point. The most important advice for anyone facing foreclosure is to not avoid phone calls or certified letters. Rather, it is very important that you contact your lender as soon as possible. It may be possible to negotiate or re-structure the terms of your loan to make your payments more affordable.
If you do not contact your lender or if the lender is not amenable to your proposals the next step for the bank will be to set the date of the foreclosure sale if you the borrower is not able to satisfy the bank demands within a specified period of time. The sale is actually an auction where the lender sets the price that is will be sold for. If the price is not met the bank will then take ownership of the property. If this occurs the property is then termed REO, or Real Estate Owned. Banks really don’t want to own your real estate and the borrower has the right to either satisfy the loan or sell the property right up until the auction. Keep in mind though, that if you are able to sell the property prior to, or even during auction, that proceeds from the sale will go towards satisfying the debt. You really need to find the funds to speak to a good property attorney about your options and rights.
In some states there is a statutory redemption period. What this means is that statutory redemption allows the mortgagor (the homeowner) to regain ownership of the property after foreclosure sale. About half of the states have statutory redemption laws. Generally, these laws give anywhere from six months to a year for the mortgagor to redeem the mortgage by:
- Payment of the foreclosure sale price, and
- A statutory rate of interest to the sale purchaser.
Junior lien holders also have a right to redeem under statutory redemption laws (in order of their priority) though not until after the period for the mortgagor to redeem runs out. As a rule, the mortgagor can retain possession of their property during this statutory redemption period.
For More Information:http://www.floridalawattorney.com