Stop A Foreclosure Auction Immediately With Any of These 3 Options
Has your mortgage lender begun a foreclosure auction? What next? If you have been falling behind on your mortgage payments, several options are available to help you stop a foreclosure auction. You can file for bankruptcy, reinstate the mortgage loan or file a lawsuit. Each of these options has its unique advantages. One can delay the foreclosure for a while as the other permanently stops the foreclosure. Read on to understand these options and identify which is best for you.
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What Can I Do To Stop a Foreclosure Auction Immediately?
Foreclosure can be scary since it means losing your home and the mortgage payments you have made till now. However, it isn’t the end of the road. Fortunately, there are different actions you can take to stop a foreclosure auction.
The only way to avoid foreclosure and retain ownership of your home is by staying on top of your mortgage repayments. So, you can stall or stop the foreclosure process through either of these options;
1. File for Bankruptcy
When you have mortgage payment arrears, your mortgage lender will hire debt collectors to barrage you to pay. If you still default, your mortgage lenders can decide to file a foreclosure action. Although you can use this phrase, which is 11 word phrase to stop debt collectors, you need to do more to stop a foreclosure, like filing for bankruptcy.
Bankruptcy could be tricky, but it helps stop the foreclosure auction. Once you file for bankruptcy, the court will place an automatic stay on your accounts and assets, including your house. Therefore, any foreclosure proceedings will be halted.
The risk in filing for bankruptcy depends on which bankruptcy you file. If you file Chapter 7 or Chapter 13 bankruptcy, you might lose your house as the bankruptcy trustee liquidates your assets to help repay outstanding debts. That said, a Chapter 13 calculator can help you estimate your Chapter 13 repayment plan. So, if you would like to file bankruptcy to help with a foreclosure auction, always seek legal representation. A bankruptcy attorney can advise accordingly and guide you to ensure you don’t lose your home.
However, before filing for bankruptcy, you also need to know the number of costs involved. The cost will depend on your state. Here is a guide on how much does it cost to file bankruptcy in Alabama and how much does it cost to file bankruptcy in Utah. Always look at the costs of filing bankruptcy in your state for an accurate estimate of how much it will cost.
2. File a Lawsuit
When your lender begins the foreclosure process, they should adhere to the terms stipulated in your signed mortgage agreement. So, if your lender is not following the contract, or they overstep their legal boundaries, you can choose to file a lawsuit against them.
For example, you can file a countersuit if they begin the foreclosure process earlier than they should or don’t give you an opportunity to catch up with the missed payments. However, filing a lawsuit can be expensive due to court and attorney fees, and if you lose, the foreclosure will continue.
As you file your lawsuit, you need to include a motion for a preliminary injunction to stop a foreclosure sale and a temporary restraining order. However, this may not work if the foreclosure is judicial since you will have been given an opportunity to be heard in court.
In your case, you need to prove that the foreclosure should not continue because;
- The lender did not follow the legal steps outlined in the foreclosure process according to the state law
- The lender cannot prove they own the promissory note
- The lender violated state law, for example, the Homeowner-Bill-of-Rights law
- They made a grievous error
- Did not comply with the state mediation requirements.
3. Reinstate Your Loan
This is a practical option, but you will need considerable cash upfront. Your lender might agree to stop the foreclosure proceedings if you can pay your arrears, including late fee charges and interests. They can allow you to resume making regular monthly payments. So, your current situation will help decide if you qualify for a loan reinstatement.
You have these three options to stop foreclosure. However, before taking these measures, consider communicating with your lender. Sometimes, the lender might be reasonable and help you find a workable alternative to ensure you keep your home.
What Is Foreclosure?
Buying a house is a significant investment. When signing your mortgage papers, the last thing on your mind is seeking protection against foreclosure since you already have an elaborate plan on how to make payments. However, sometimes, things don’t go as planned. Unexpected events like illnesses, divorce, and unemployment can disrupt your financial life, making it hard to keep up with your mortgage payments. When you fall behind on your mortgage payments, your lender might begin foreclosure.
Foreclosure refers to the legal proceeding where a lender attempts to seize the property of a borrower and resells it to recover missed mortgage payments. Usually, the time between missed payments and the lender taking foreclosure auction is 90 and 120 days. However, the exact period will depend on your state. Fortunately, the three options above will help you stall or stop the foreclosure.
It is always advisable to discuss your financial problems with your lender to avoid them taking extreme measures like foreclosure. Your lender might offer any of these options; forbearance agreement, loan modification, repayment plan, and financing. All these are suitable options, and the best solution will depend on your case. If you are far behind on your payments and none of these options works for you, your lender might file a foreclosure action against you. Here is an overview of the process.
Overview of Foreclosure Process
Foreclosure proceedings follow a distinct process. Although the process varies from state to state, here are the five standard processes;
- The Borrower Defaults
When you miss your first mortgage payment, the lender begins taking note of the number of days since you last made your latest payment. If 30 days go by, your lender will reach out to inquire about the payments and discuss loss mitigation options.
These options help offer you an alternative and convenient option to help you make your payments. If you can, choose an alternative that works best for you. If you aren’t in a position to make payments, most of these options presented may not be helpful in your case.
2. Your Lender Issues a Notice of Default
If you still haven’t made payments in 120 days, your mortgage lender will file a notice of default and file a foreclosure lawsuit. The lender will need to prove you took out a mortgage for the house and you have fallen behind on your payments.
After providing the necessary proof, the court can grant them an order to proceed with the foreclosure auction. Although the chance of working out alternative payments with your lender is slim, you can try to negotiate alternative payment methods. Your lender might be willing to work with you to find an alternative.
3. The Lender Sells the Property at an Auction
As soon as the court grants your lender authority to auction the house, they can begin advertising the house’s auction. The public can bid on the house. However, two things can happen during the auction. A third party can bid the house for a higher price than your current outstanding payments. In this case, you won’t owe the lender any money.
On the other hand, a third party may bid for the house at a lower amount than what you owe you. In this case, you will be accountable for the difference between what you owe and what the house sold for.
4. Notice of Eviction
After a successful auction and the house is sold, you will receive a notice to vacate. The letter will include a time limit to vacate from the premises.
The foreclosure process is long and can take between 141 days to 6 months, depending on the regulations in your state.
Conclusion
If you face a foreclosure auction, you are probably searching for immediate options to stop the auction immediately. We have outlined the three options above. Note that when filing for bankruptcy, you need to ensure you qualify. So take this Chapter 7 means test calculator to know if you are a good candidate for Chapter 7 bankruptcy. If not, you can consider the other two options.
