How to stop eviction after foreclosure is something that comes foremost to anybody’s mind, whose mortgaged property has been auctioned. Here is a general rundown on the process of foreclosure and the eviction process and what can be best done in this situation.
What is Foreclosure?
When you buy something on loan, the debt can be secured or an unsecured. The secured loan is backed by collateral. The loan is then known as a mortgage. The mortgage can be the house itself, for which you have taken the loan.
Sometimes it so happens that you are unable to repay the installments Reluctantly, after a few notices, if you still are in default, the lender auctions off your property. This process is known as foreclosure. Once your property has been foreclosed, you are no more owner of that property.
Taking over and auctioning the collateral house on non-payment of loan installments is termed as a foreclosure.
Description of the process followed in foreclosure and eviction
Foreclosure occurs when you have missed installments for mortgage repayment, usually, for not less than 90 days. This translates to 2-3 missed payments. Lenders will not pounce on you at the very first missed EMI. However, they have the legal rights to do so.
When you start defaulting on second or third EMI, your bank or NBFC (lender) warns you via email. If such emails go unanswered and without any corrective action, they send the legal “Notice of default.”
Notice of Default
NOD is the first legal step towards foreclosure, and you should also take a similar concrete action to come current with your missed payments. You will get a period of around 30 – 90 days to rectify the error.
This is the time when you should contact your lender stating your difficulties and try to negotiate the repayment terms.
If you respond unsatisfactorily, next concrete step will be the“Notice of Trustee/Notice of sale”. Again you will get a Grace Period between 15 to 30 days or some more, to come current with your missed payments.
If your state allows “judicial foreclosure,” the bank will petition the court for starting the foreclosure proceedings. You will know the auction date.
At this point, try to sell the property on your own to avoid foreclosure. A foreclosure will run your credit ratings for seven years.
In case the bank does not get any new customer willing to buy your property, it will take the property under its wings.
Now the asset is no more yours, and if you stay after the grace period of foreclosure, you become “unlawful detainer” liable to get evicted.”
If you do not take corrective actions at this stage, sooner or later you will get notice of eviction. Stay put, subsequently the sheriff will attach summons on your name and ultimately forcefully evict you.
Do you wonder what happens before foreclosure sale?
No one wants a foreclosure. It creates unnecessary overheads for the lender. More so if your state demands judicial foreclosure.
The banker/financial institute gives you enough time (90 days) to make up the missed payments by a lump sum amount termed as “reinstatement amount.”Else they help by spreading the due amount to be paid in equal installments over a longer period. This is termed “forbearance.” The main aim here is to avoid an extension of the foreclosure action until it’s rendered inevitable.
If this does not work, the bank will obtain permission from local magistrate or court to proceed with foreclosure. At this stage consult a foreclosure attorney and scan through the “house mortgage deed” to find out whether you can have more time to pay your dues. Check if you have given the right to the lender to attach your personal property in case of remaining deficit.
If you cannot escape Foreclosure, quickly try to sell the house yourself at the prevailing market rates. After the Notice of Sale grace period expires, the bank may auction your home anytime, so be quick.
What happens after foreclosure sales?
One thing we have not discussed is the slide in your credit rating. Once the foreclosure is done with, you will have a drop of about150 points in your credit score.
Naturally, you will be apprehensive about eviction after the foreclosure action.
However, before eviction, you will have a period of few days for the redemption of the auctioned property. In that case, you have to pay the full auction purchase price, along with processing charges and penalty.
Consult your lawyer. Let him go through your home buyer’s agreement to see if the due process has been followed for foreclosure. The process should go as defined in your “home buyer’s agreement.”
You can also delay or stop an eviction if you are on the right side legally.
Here you can take the aid of “Making homes affordable program” or the counselling of “US Department of Housing and Urban” to help you in reinstatement.
How to stop eviction after foreclosure or how can you delay an eviction?
Some states allow a grace period after foreclosure. It also gives a reinstatement period during which you can pay the full price along with penalty to own your property.
If that’s not possible, do not tag yourself as “Unlawful Detainer.”Instead, negotiate with the new homeowner or the bank for increasing your grace period, which will be sufficient to find your new accommodation. In this period, agree on a rent that is acceptable to both parties. As a tenant, pay these rent regularly to delay your eviction.
Use your brains. Why not have some extra money and time by negotiating “cash for keys” scheme? This scheme entails negotiating money with the new homebuyers for evicting the property in good condition and within a negotiated period.
Else you can take your sweet time, compelling the new owner to file an eviction notice, get it and then let the Sheriff forcibly remove you. This activity is categorised as “Unlawful detainer action”.
But if it comes to a point where you are not avoiding by the law and resisting leaving in spite of court orders, the last legal step of the court will be the writ of restitution, which will empower the sheriff to their you out with all your belongings, are confiscate them.
Enjoy your time until then as an illegal detainer.
Another way to stop eviction after foreclosure is by negotiating with the lender/new homeowner to allow you to live in the property as a tenant for a fixed period. This is the best method available to delay eviction, as this is beneficial to the new owner as well as the debtor.
How long do you have to get out of your house after foreclosure?
Usually, the grace period is 90 days. However, this differs state wise. Anyway, if the new homeowner is not in a hurry to get in, then you can get time way above the stipulated period.
You need to negotiate with the bank/owner to let you stay as a tenant in lieu of regular rent and no disturbance.
- Do you still owe money after foreclosure?
If your property sells for an amount less than the amount payable to the lender its termed deficit money.
If you luckily reside in a state where foreclosure is by non-judicial process, and your home buyer’s deed does not give the right to your personal property even in case of deficit money, then the lender has to forego the deficit amount after foreclosure.
However, in cases, where the state has judicial foreclosure laws, the lender can easily sue you. They can get a ‘deficiency judgment” for the deficit amount.
In case the deficit amount is beyond your means, take the advice of bankruptcy attorneys to file for bankruptcy.
- Is foreclosure eviction?
Foreclosure does not mean immediate eviction. However, foreclosure will ultimately turn to eviction in case you cannot reinstate your property. Eviction occurs when you do not leave the property in spite of being tagged “unlawful detainer.” If you leave the property within the stipulated period after foreclosure, you need not be evicted.
David Galler is an experienced bankruptcy attorney based in Atlanta, Georgia. For the last 29 years he has filed over 10,000 bankruptcy cases. He has a FIVE STAR client rating on Avvo, Kudzu.com, RateABiz.com, and Google+, among other sites. Over 99% of all Chapter 7 cases he filed have been discharged.