Posted: Wed Mar 31, 2004 4:09 am Post subject: How does foreclosure affect borrowers?
Foreclosure is a legal process by which a mortgage lender takes away a borrower's right to own his property. The lender proceeds to sell the property at a public auction only when the borrower falls behind on loan payments thereby being unable to follow the terms and conditions of the loan agreement.
The lender starts the proceedings depending upon the terms and conditions on the loan agreement, the note and the mortgage that you signed at loan settlement. There are loans having acceleration clause which allows the lender to call the loan due earlier. Otherwise, whenever a loan is around 150 days past due, the lender files foreclosure. Even after the filing is over, the borrower can occupy the property till the date of sale.
How long can borrower occupy property after the sale?
After the sale is over, the new owner may send a 3-day notice to the borrower so that he quits the property. In case, the borrower does not move out, the new owner may file an eviction lawsuit against him. As per the orders of the local Sheriff, the borrower has to leave the property with or without personal items within a month depending upon the state laws.
Does the borrower pay for deficiency?
If the lender is unable to recover the unpaid loan balance, the borrower has to pay for the deficiency between the unpaid debt and the sale price. However, some states have anti-deficiency laws according to which a borrower need not pay the deficiency if the loan is a purchase money mortgage taken for buying a property which is his primary residence. Such laws are inapplicable on second mortgages and properties which are not used as the borrower's primary residence.
Can borrower get back property after the sale?
The borrower has the right to save or repossess his property even after the sale. This can be done by paying the purchaser the amount at which he bought the property along with the interest accrued from the time of sale. But a lot depends on whether the purchaser is willing to sell off the property. However, the borrower can occupy the property as a tenant if the purchaser is willing to rent out his home.
What are the effects of foreclosure?
The process helps to wipe out all subordinate liens. If the subordinate lien holders want to recover their interest, they need to bid for the property at the foreclosure sale. They also have the chance to redeem the property by paying the lender the required amount after the sale is over.
As far as borrowers are concerned, they'll have an unfavorable credit rating on their credit report for about 7 years from the foreclosure sale. Hence, they may not be able to qualify for home loans within a few years and even if lenders are willing to sign a deal with such borrowers, they are likely to charge high interest rates of interest.
Posted: Wed Aug 17, 2005 2:01 am Post subject: RE:
Hi Guest
Welcome to MortgageFit forum.
A foreclosure allows a lender to sell the property to get back his dues in case a borrower defaults on his mortgage payments. But there is a way by which the borrower can get back the title to the property even when the foreclosure has been conducted. This however depends on the state at which the borrower has taken the mortgage.
The foreclosure becomes ineffective through the right of redemption which allows a borrower to retain the title of ownership of the property even after the property has been sold off to a public trustee. But the borrower has to pay the total amount of the high bid along with interest at the default rate on the mortgage note. The period of redemption varies from state to state .
Hope you will be benefited from this information.
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Posted: Wed Nov 14, 2007 3:04 am Post subject: Should mobile home foreclosure affect primary home?
We have a mobile home which is 4 years vacant since we have relocated ands are unable to sell it off. I have listed it with the realtor but non good luck with it. It has been 3 months now and we're still searching for a suitable buyer. On the other hand, we are current on both mortgages, the one on the mobile home and another on the home where we now live n. But it's getting troublesome paying off the two at a time and I am not able to afford the one on the mobile home. What should we do? Call the mobile home lender and talk to them frank;ly. will they offer us a short sale package? If suppose there is the foreclosure, what will happen to the house we live in, will that be affected by any lien or that sort?
If you have problem with mortgage payments on your mobile home, talk to your lender as soon as possible. See do not go for foreclosure. If you cannot make payments in anyway, go for deed in lieu or short sale as it will have less affect on your credit score.
“will that be affected by any lien or that sort?”
Now if it is foreclosed and after that you have deficiency to pay in full what you owe to your mortgage lender, than he may place a lien on you present house. So I shall suggest you to talk with your lender as soon as possible and go for the deed in lieu because in that case, there is no chance of placing a lien on your present house and your credit will be less affected.
Feel free to ask if you have any further questions.
I think the home was foreclosed after the bankruptcy, isn't it? Please let me know which type of bankruptcy you have filed? have you received a discharge yet? You'll have to wait for a year or so if it's chapter 13 and if you'd like to go for FHA loans. More important is that you should have a clean credit report. For that obviously you need some time. I suggest that you check out the following pages to know when you can buy after bankruptcy and foreclosure:
Posted: Wed Sep 17, 2008 9:30 am Post subject: jr. liens
My question is this... after an unsuccessful attempt at a shortsale of our home and our primary declining our request for a deed in lieu (due to a HELOC loan on the property), our HELOC jr lein holder is saying we still have to settle that debt. We've been tranferred to a collection agency for this debt and they gave us a settlement amount of 20% of the loan. I'm confused though, b/c I thought the jr. lien would be wiped out in the foreclosure. We don't know who to trust. Should we try to settle this debt or wait out the foreclosure process? The full 20% is still out of our reach, we'd have to use another loan to pay it off... from what I've read they could file a deficiency claim against us for the full amount, but most are saying that the odds of that are bad... but these are the same people who said we could sell this house fast a year and a half ago. We have no desire to keep the property as we've moved out of state... who can we go to for answers when the sharks have already smelled blood?
The junior liens are wiped away if you don't pay them off. The Heloc become unsecured debt when your house is sold off as because there's no collateral left. I think you should try to settle this debt.
To avoid foreclosure, you can rent out the property and start paying for the primary loan using the rental payment.
I dont want my house, have no equity in it, and cant get any help from my lender as they dont want to short-sell it. I need to be able to walk away from this bad investment, as the area has gotten dangerous for my family to live in.
To add to it, I have about $15K in cc debt. I'm current on everything, but looks like one way or the other, Im going to damage my credit over the house.
Since I need to get out of this property, I was thinking I would foreclose. Then when I consider the mountain of credit card debt I have, I figure I might as well throw it all into a bankruptcy.
So whats more damaging, long term? All the lawyers want me to file a bankruptcy, but I want the least negative approach.
As the lenders are not offering you a short sale, I don't think they will offer you a deed-in-lieu as well. Its better if you could go for a Chapter 13 Bankruptcy. This will help you in reorganizing everything. The loss mitigation department will chalk out an easy plan through which you will be able to clear off your debts in 3-5 years. Consult a lawyer for that.
Sam
