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Education for Justice |
FACT SHEET C-12 |
Fall 2010 |
YOUR RIGHTS
IN FORECLOSURE
BE CAREFUL! Foreclosure is complicated and
confusing. Make sure you understand the
process and your rights.
THE STEPS OF THE FORECLOSURE PROCESS
·
If you miss some mortgage payments, your lender
sends you a notice letter telling you that you are in “default” on your loan. The notice says that you must pay a certain
amount of money to catch up on your mortgage.
They may use terms such as “cure” the default, or “reinstate” the
mortgage. Both of those mean that you
need to catch up on your payments.
·
If you do not catch up on your payments within 1
month of getting the notice from your lender, the lender can start the
foreclosure process.
·
You will know that your home is in foreclosure
because you will get a letter from a local attorney. The letter will say that they have been hired
by your lender to foreclose if you do not catch up on your payments. The letter will give you an amount that you
need to pay to avoid foreclosure.
·
If you do not catch up, there will be a
sheriff’s sale of your home. The
attorney must publish a notice of the sale in a special newspaper at least 6
weeks before the sale happens. If you
are living in the home that is being foreclosed, a copy of the notice of
sheriff sale MUST BE SERVED on you or someone in your household at least 4
weeks before the sale date. This means
the papers have to be handed to someone in person.
·
At the sheriff’s sale, your home will be sold to
the highest bidder, which is usually the bank.
WHAT HAPPENS AFTER THE
·
After the sale, you can no longer “catch up” on
your mortgage payments. But you do have 6
months to try and “redeem”. This is
called the redemption period. This means
that if you can pay the sheriff the same amount as the highest bidder plus
other costs, you get to keep your house.
The other costs may include taxes, assessments, attorney fees, sheriff
fees and any interest that has built up until the day you pay.
·
During the 6 month period after the sale you can
also try and sell the house. If you can sell
the house for enough to pay off the amount bid by the highest bidder, plus
other costs (the same amount you would have to pay to redeem), you get to keep
any money that is left over.
·
You can live in your house during the 6 month
redemption period, even if you cannot redeem.
If you do not move by the end of the 6 month redemption period, the new
owner (usually the bank) can file an eviction in court to have you removed from
the property. NOBODY can kick you out of the property
without filing an eviction and getting a court order. BUT, it is a good idea to move before the end
of the redemption period so you do not end up with an eviction on your
record. An eviction on your record will
make it harder for you to rent an apartment or house in the future.
WHAT CAN I DO TO STOP THE FORECLOSURE?
Ÿ
If you have fallen behind on your mortgage
payments, DO NOT WAIT for the foreclosure to
start. You should try and get help right
away by calling a mortgage foreclosure prevention counselor. The number is listed at the end of this fact
sheet. You can also try calling your
lender directly. Many lenders have programs to help you re-structure your
mortgage so that you can avoid foreclosure.
Tell your lender you want to apply for a “Home Affordable Modification”.
If you qualify for this government
program, you will be able to lower your monthly payments and add your missed
payments to your principal balance. Even
if you do not qualify for this program, your lender may have other ways to help
you lower your payments.
The longer you wait, the more
difficult it will be for anyone to help you reach a solution that will avoid
foreclosure.
Ÿ
Any time before
the sheriff sale, you have the right to catch up on your payments plus costs
and fees that will be listed on the attorney letter or in a letter from your
lender. If you pay those amounts, the lender must stop the foreclosure process, and you can keep your house. Your mortgage will be back on track at this
point because you have paid everything you owe.
You must keep making regular mortgage payments if you want to avoid
going into a foreclosure again.
Ÿ
A new law was passed in 2009 that lets you
postpone your sheriff sale for 5 months.
To do this, you have to file an affidavit with certain information in it
with the county recorder’s office. Then
you give a copy of the affidavit to the sheriff’s office, and the foreclosing
attorney. You need to do this at least 15 days before the sheriff sale is scheduled
to happen. Also, if you do this, you only get a 5 week redemption period
after the sale instead of the normal 6 months.
You may want to consider
postponing the sale if you have reason to believe that you only need a little
bit more time to catch up on your payments.
For example, if you just got a new job or if you are expecting a sum of
money from some other source in the near future. However, since your redemption period is
shortened to 5 weeks, postponing the sale does not give you any additional time
in your home. If you want to try and
postpone your sale, you should contact an attorney right away for advice about
how to do this. Or, you can look on the
LOOK OUT FOR SCAMS!
When your house is in foreclosure, you will probably be
contacted by several people and companies who will offer to help you. You should be very careful when dealing with
anyone who is not part of a non profit organization
that you are familiar with. Some
companies will tell you that they will contact your lender and arrange for a
modification of your loan with payments that you can afford. They will charge you $1,500 - $3,000 or more
to do this. You should not give money to anyone (other than directly to your
lender) to help you get a loan modification. The non-profit foreclosure prevention
counselors are available throughout the state, and they will help you do this
for free. Also, you can contact the
lender yourself to try and negotiate with them.
Someone may also offer to buy your home and then rent or
sell it back to you. They say that they
want to help you, and that this will give you a chance to save your home or fix
your credit. Be careful! This may be an
illegal scam called “equity stripping.” Some
people giving these deals want to take your home so they can profit from the
equity you have earned. You
always have other options. Do not sign
anything that could put your home and equity at risk without talking to a
trusted real estate or legal professional or a foreclosure prevention counselor.
WHERE CAN I GET HELP?
Call the
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