Foreclosure
Find information and resources to help you get a handle on mortgage payments, avoid foreclosure, and get better prepared for the foreclosure process.
Welcome to FindLaw’s Foreclosure and Real Estate section. Here you will find information and resources to help you get a handle on mortgage payments and learn about how to avoid foreclosures.
In the event you’re in the midst of a foreclosure process, it’s important to know what to do. This section addresses all that you need to know about the process. Overall, this section will help you navigate the complex world of real estate. This section also provides key information on foreclosure alternatives and tips to help you avoid or stop foreclosure. This can be done through:
Foreclosure is a difficult process to undergo, as can be expected when the loss of one’s home is at stake. Knowing what to expect and having the right information can make it more tolerable.
Foreclosure at a Glance
A lender will foreclose on a home when the homeowner defaults on their mortgage. This often occurs after several mortgage payments are missed. Your lender will make efforts to contact you via mail or telephone with warnings. Those warnings will indicate that foreclosure is imminent and include certain deadlines.
Individuals who lose their homes through foreclosure will see a decline in their credit score. This often requires rebuilding their credit before reentering the housing market again.
If your home is worth less than the amount remaining on your mortgage, you may be hit with a deficiency judgment. If this happens, you, as the borrower, will have to pay the bank the difference. Otherwise, the bank will use the proceeds from selling your home in order to pay down the remaining loan balance. If the sale price is less than what you owe, the deficiency judgment will require that you pay the difference.
While deficiency judgments are possible in many states, some states have enacted or strengthened “anti-deficiency" laws in the wake of the COVID-19 pandemic. These state laws and regulations affect the manner in which foreclosures are executed and are mostly intended to prevent fraud and protect the parties involved.
For example, notice of default is a critical stage of the foreclosure process in New jersey. Homeowners in New Jersey should be aware of their rights and options in the housing and urban development sphere.
For more information on housing and urban development, consider contacting the Department of Housing and Urban Development (HUD). Homeownership is often stressful, but foreclosure is even more difficult. Being informed always helps.
Types of Foreclosure and Real Estate
There are two main types of foreclosure initiated in the U.S., although a handful of states employ a few other methods. It’s important to verify what your state does. The two primary types are:
In the first kind, the property is sold under the court’s supervision. The proceeds are used to pay off the mortgage lender and any lien holders. Most states also allow the second type of foreclosure. It involves the sale of the property by the mortgage holder, without the supervision of the court.
The older process known as "strict" foreclosure is now only available in New Hampshire and Vermont. In a strict foreclosure, a court orders the mortgagor (the homeowner) to pay off the mortgage. They are ordered to do so within a certain period of time. If the mortgagor is unable to do so, the lender gains automatic title to the property.
Avoiding Foreclosure in the Real Estate Market
No homeowner wants to go through foreclosure. For some struggling mortgagers, getting out from under their mortgage in any possible way is a bitter relief. The best tip for avoiding foreclosure is to pay your monthly mortgage each month, but that’s easier said than done.
Homeowners who are unable to make their mortgage payments on a regular basis can sometimes work out a plan to keep their homes. Lenders would rather receive payments from you than take on the responsibility of taking over your house or property.
Preferring monthly mortgage payments on the loan, some lenders may be willing to modify the loan by temporarily lowering or suspending monthly mortgage payments. This is a process called "forbearance." They might offer to come up with a repayment plan, or you could refinance.
Other options include seeking government assistance or filing for bankruptcy. You might simply sell the home yourself in order to avoid foreclosure through traditional methods or in an auction to the highest bidder. A court might do this at a public auction.
Real estate investors might purchase the house to relieve you of your situation. Investors in real estate often purchase foreclosure properties for development purposes. This is true because foreclosure homes often can be purchased below market value. Bank-owned foreclosed properties all sell at low amounts as well.
Foreclosure sales can be a quick way to eliminate the stress of a foreclosure. A foreclosure can cause a stigma on your credit report, and having a foreclosed property on your public record can follow you around for a long time. You’ll want to do everything you can to prevent such a situation.
Real Estate, Home Buyers, and More
For home buyers, it’s crucial to be aware of the market value, lender, and stage of foreclosure of the properties you are interested in. It’s important to research homes for sale and home values. When you find a home on a listing service, make sure to review whether the home is in foreclosure. In many cities, this information is required to be disclosed, such as in Omaha, Nebraska.
Real estate agents and realtors can provide valuable guidance throughout the home purchase process. Conducting a home inspection is a prudent step to ensure you’re making a sound investment in the real estate market. It’s also important to know about closing costs and a variety of other essential topics related to home buying. Choose a topic below to get started.
Fannie Mae and Freddie Mac: What Are They?
Fannie Mae and Freddie Mac are government-sponsored organizations. They play an important part in the housing finance system. They purchase mortgages and hold them in portfolios. They also package them into mortgage-backed securities.
By doing so, they make sure that timely mortgage payments are made on the underlying mortgages. This gives stability to the mortgage market. These organizations provide stability and affordability to the housing market.
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