How to Avoid a Public Eviction or Foreclosure

Nobody wants to see an eviction notice on their door. If you’re struggling to pay your bills, the last thing you need is a public reminder that you cannot meet your financial obligations. Evictions, and foreclosures, can be embarrassing and frustrating. Avoiding eviction and foreclosure can be difficult, but there are options.

What is required for a lender to evict a homeowner?

Federal laws say lenders cannot begin the foreclosure and eviction process until your payment is at least 120 days past due. Typically, lenders won’t ask the homeowners to move out of the house until after the foreclosure has been processed to ensure the property isn’t vacant and that the home is maintained.

Sometimes a lender can evict a tenant before the completion of the foreclosure. This may happen if you don’t follow the agreed terms of the foreclosure or damage the property.

When a lender wants to foreclose and evict a tenant, they must follow a set process. Depending on your state, the lender must typically provide between 3- and 30-days’ notice to vacate the property. Utah law requires a 30-day notification, while North Carolina requires the resident to receive at least 20-days’ notice.

What type of foreclosure can I expect?

There are three types of foreclosures; depending on which type your lender chooses, you may see a slightly different process.

Judicial foreclosure: This is the most common type of foreclosure; it’s available in all states, and some states require lenders to use the judicial foreclosure process. In this type of foreclosure, the lender files a lawsuit with the courts. The homeowner gets a notice that they must pay their overdue balance within 30 days to avoid a foreclosure. If the homeowner can’t pay, the home is sold through auction by the court or a sheriff’s office.

Power of sale:  This type of foreclosure is allowed in some states, and only if the mortgage contract includes a power of sales clause. In this type of foreclosure, the lender sends notices asking the homeowner to make their payments. The mortgage company can sell the house if the payments are not made within a predesignated amount of time.

Strict foreclosure: This is the least common type of foreclosure and is only an option in a few states. In a strict foreclosure, a lender files a lawsuit and demands the homeowner make their late payments. If the homeowner cannot make the payments in the set amount of time, the property is returned immediately to the lender. These are most common when property owners are underwater on their homes.

Why foreclosures are public, and what to expect

Lenders must notify all individuals associated with a mortgage loan about any legal action against the house, including foreclosure. State foreclosure laws may vary the type and timing of public notifications.

For example, Utah requires that lenders publish a notice of sale once weekly for three consecutive weeks in a newspaper circulated where the home is located. A notice must be placed in plain sight on the property at least 20 days before the date of sale. The notice must also be placed at the county recorder’s office.

North Carolina, on the other hand, requires that the notice of sale be published in a newspaper within the county where the home is located at least three weeks before the date of sale. Lenders must post notices on the courthouse door at two other public locations within three weeks of the sale.

Foreclosures are public domain, which means the information is readily available in public records.

Most states require that the lender sell the foreclosed home at a public auction. The lender must provide ample notification so interested parties have adequate time to participate.

Alternatives to eviction and foreclosure

Foreclosure and eviction are damaging to your credit. A foreclosure can affect your ability to purchase a new home for up to 10 years. A history of eviction can make it difficult to even rent a property. Avoiding foreclosure and eviction may not keep you in your house, but you’ll be able to reduce the effect on your credit score and make it much easier to relocate your family.

Some alternatives to foreclosure include:

Loan modification: Your lender agrees to modify your loan terms so you can repay missed payments. Modifications can help make your monthly payments more affordable too.

Forbearance: Lenders allow you to skip payments for several months. Some lenders require a balloon payment at the end of forbearance, so you must communicate with your lender about the process.

Short sale:  Your lender agrees to accept less than what you owe on the home as repayment.

Deed-in-lieu: Your lender agrees to accept the deed to the house as repayment for the property.

Sell your home for cash: If you want to walk away from the property and get a fresh start, selling to a cash buyer could be a good option. Cash buyers, like brick, make quick cash offers. Since these buyers don’t undergo financing, the sales process can go much faster. Brick also buys homes in any condition, so you can skip out on expensive repairs.

If you’re facing foreclosure, there’s still hope. Reach out today to see if we can make a cash offer on your property so you can start over fresh.

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