Foreclosure

What Is foreclosure?

Foreclosure is a legal process a ender uses to take possession of your real property if you have failed to maintain your monthly payments or failed to fulfill other obligations. The most common type of foreclosure is a deed of trust foreclosure.

How Does It work?

The deed of trust foreclosure process begins with a formal document called Notice of Default. This document tells you that you are behind in your payments or other obligations and you have 30 days to cure or fix the problem. This is sent to you by regular and certified mail.

If you do not cure the default within the time specified, the trustee will file a Notice of Trustee Sale with the county and will send to you, by regular and certified mail, both the Notice of Trustee Sale and Notice of Foreclosure.

The first document will tell you that your real estate will be sold at public auction on a certain Friday that is approximately 90 days after the Notice of Trustee Sale is filed.

The second document tells you that the trustee is foreclosing on your property and that you have certain rights. The most important right is your ability to stop the foreclosure by paying what is owed. The document will tell you how much you need to pay now to stop the foreclosure and how much you must pay 11 days before the sale to stop the foreclosure.

You can stop the foreclosure by bringing your payments current and paying the foreclosure fees any time up to 11 days before the sale. During the last 11 days, the lender can insist that you pay the entire debt in full. If you do not stop the foreclosure, the trustee will sell your home to the highest bidder on the date of the sale. The sale is final and you cannot redeem the property later.

How Much Time Do I Have?

Once the Notice of Default is sent, the clock starts ticking down. Approximately 30 days later you will receive the Notice of Foreclosure and Notice of Trustee Sale. The sale will take place approximately 90 days later. The sale is final. You will be given roughly 20 days to move out. If you do not move, the new owner can get an eviction order and force you to move.

What Happens To The Other Liens On The Property?

The rights of lenders and other lien holders are based on the date of filing. The oldest take priority over the younger liens, regardless of size. That's why your primary lender insists that all older liens be paid off by its loan. If the oldest lender forecloses, it "bumps off" the newer or junior liens. Those junior liens can only protect their interest in the property by buying out the foreclosing lender. If junior lenders or lien holders are "bumped off" at the foreclosure, they can still enforce the debt against you personally.

What Are The Additional Fees The Lender Tacked On To The Loan?

The lender is entitled to charge you for the costs of the foreclosure process. These fees can exceed $2,000. You will be charged for postage, service of the documents, publication costs and trustee fees. The longer it takes you to stop the foreclosure, the higher the fees.

Can I Make Partial Payments?

Generally, no. The mortgage company will usually not accept partial payments unless you enter into a repayment agreement. When you are behind, expect the bank to take an "all or nothing" approach.

Is A Repayment Agreement Possible?

Some lenders will agree to a workout plan, sometimes called a forbearance agreement. Be very careful and read everything! The lender can use the slightest violation of the agreement as an excuse to complete the foreclosure, even without your knowledge. We are familiar with several cases where the foreclosure sale was continued to a new date. In one case, the owner was not told of the new date. When the owner failed to meet one of the terms of the forbearance, his home was sold. He did not even know that his home was sold until the new owner knocked on his door several weeks after the sale!

Can I Sell My Home While A Foreclosure Is Pending?

Yes. However, keep two things in mind. First, the sale must be completed before the foreclosure is finished. Remember, once the bidding is completed, the home is no longer yours to sell. Second, most buyers will know that the foreclosure is pending and will treat this as a desperation sale. You are not going to get what your home is worth if the potential buyers know you cannot wait for a fair market price.

Can I Refinance My Home While The Foreclosure Is Pending?

Yes, but you are at a distinct disadvantage right now. Most lenders will not refinance your loan if you are behind on your payments. The remaining lenders are high-risk lenders. They will charge a high interest and will have large loan fees. They often will not lend unless you have a substantial amount of equity. If you apply with a lender, make sure the loan will close well before the foreclosure sale date. Some of these lenders will lead you on, only to drop you days or even hours before the foreclosure. If the loan has not closed more than three weeks before the scheduled sale, you must seek legal advice. DO NOT WAIT UNTIL THE LAST MINUTE TO PROTECT YOURSELF!

What About These Sale/Leaseback Arrangements?

P. T. Barnum supposedly said, "there's a sucker born every minute!" These arrangements are often scams and seldom work in your favor. Let's face it, if someone is going to invest a large amount of money to buy you out of the foreclosure, he is going to want a big return on his investment.

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Fortunately, there are several ways to stop foreclosure.

Work It Out With The Lender

Most lenders do not want your home. They are willing to reinstate your loan if you bring your payments current and pay the fees they incurred to start the foreclosure process. Some lenders will enter into a forbearance agreement. This can be a good solution. However, as pointed out previously, you must be very careful and very diligent. You should probably review the agreement with an attorney.

Sell Or Refinance The Home

As previously discussed, you can attempt to either sell or refinance the home. The obvious advantage is that you have preserved at least some of your equity. The two problems with this option are:

  • Your bargaining power is weakened by the pending foreclosure
  • You have a limited time period to complete the process because of the pending foreclosure sale.

File For Bankruptcy Protection

In order to protect your home, you cannot wait. The new Bankruptcy Code imposes some additional obligations on you that must be completed before we can file a bankruptcy for you. If you wait until a few days before the foreclosure sale to call us, you have waited too long!

Foreclosure is something no one wants to encounter. If your home has entered a pending foreclosure or you are several payments behind and worry that the foreclosure process may begin soon, don't hesitate to get in touch with us. Our friendly, knowledgeable staff will help you understand the process and evaluate your needs so we can help you make the decisions that are right for you.

More Than Three Decades Of Experience In Kitsap County

The Law Office of David Carl Hill is here to help you get the answers to your legal questions. To learn more about how we can help in your case, call 360-329-6223, or send us an email and schedule an initial consultation with a knowledgeable lawyer. Our office is located in Port Orchard, Washington.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.