Many people are unclear on the basics of foreclosure and what they can do to save their homes. As homeowners, at one time or another, we have all worried about the risk of losing our house to fire, flood or other terrible act of nature. We board up our houses at the first sign of a hurricane or ty down lawn furniture before a thunder storm. We buy fire extinguishers, insurance and alarm systems. Protecting your home is one of the ways you protect your family. Therefore, the thought of losing your home to something other than an accident or act of nature is simply unthinkable, but it happens every day.

Thousands of people lose their home to foreclosure. What may have started out as a lost job, bad investment choice, or failed business often ends with a sheriff knocking at your door and your family hastily moving out boxes until you find a new home. It is a scene played out in almost every neighborhood – rich or poor – across this country and will continue to play out day in and day out. We all want to blame somebody even ourselves, but what you need to be asking is WHAT ARE MY OPTIONS?

Educate yourself. “Foreclosure” is the legal process by which a bank who owns the mortgage on your house obtains the house from you. This means: if you can’t pay your mortgage, then the bank has a legal right to take the house back from you and sell it to someone else to cover your unpaid mortgage.
Understand the timeline and take the necessary steps. In North Carolina, if you are behind at least 2 mortgage payments, then you are in danger of losing your home to foreclosure. Most banks and mortgage companies will contact an attorney to represent them in the foreclosure process when you are 75 days behind on your mortgage. If you are only behind 1 payment and feel that you can catch up, then call your mortgage company immediately to see if you can delay their timeline. You will likely be responsible for the missed payments, late fees and the attorney fees for the mortgage company. If you can stop your bank from calling their attorney, you will save money and will buy you and your family some much needed time.
You will receive a letter known as a “Right to Cure” which will tell you exactly how much you owe. It is important that you stay in contact with your mortgage company to ask for extensions on your mortgage payments or a “loan modification” to perhaps make your mortgage more affordable. These requests may delay the bank by a few weeks or in some cases a few months to a year. However, you cannot rely on the bank to not call their attorney, even if they seem to be working with you on your payments. You have to be prepared for the bank to not work with you.

Attend the foreclosure hearing. If the bank has already called their attorney, then you will receive, by certified mail or sheriff, a “Notice of Foreclosure” hearing. By law, this Notice of Foreclosure hearing must be delivered to you at least 30 days before your hearing. If the Sheriff knocks on your door, remember you have at least 30 days before your hearing and another 20 days until the bank would sell your house. Two months to take action!

The foreclosure hearing is a rather informal affair from what most folks expect. The hearing normally takes place not in a Courtroom in front of a Judge, but normally in North Carolina you are sitting a small conference room or clerk’s office in the back of a Courthouse somewhere in front of a clerk. The clerk’s role is to review the paperwork to determine whether four factors are present: 1.) Did you get the Notice of Foreclosure Hearing 2.) Was there a mortgage (called a Deed of Trust) and note that you signed? 3.) Was there a default (it does not matter if was one dollar or one million dollars)? 4.) Is all the paperwork in the file (meaning did you get all the notices that were required and did the bank file all the paperwork properly with the Court)?

Most people are surprised that the whole hearing can take less than 5 minutes and many homeowners do not even show up to their foreclosure hearings. Again the only factors that are considered are the factors above, not the fact you were unfairly laid off or that your child was sick. Unfortunately, it is a rather cold process that results in an “Order for Sale”. Once the “Order for Sale” is executed, your family’s home is heading to auction either in the lobby of the Courthouse or stairs in less than a month.

Know your sales date. Your sale date is an important day, as it is not only the day your house will be offered for sale to the highest bidder but it is also the day that a special 10 day window starts. You only have 10 days from the day of the sale to try to save your house by paying the full amount due or to file bankruptcy. Yes, you can file bankruptcy to save your house. Your case must be filed within 10 days from the sale so time is of the essence.

If this is a plan you are considering, then before you begin this process, be better prepared by talking to a bankruptcy attorney before your sales date.

To many, the thought of bankruptcy is a scary thought, but we will show you how bankruptcy can be a tool for you to use, similar to the alarm systems and insurance policies you buy, to protect your home and family. Keep copies of all mailing from your bank or mortgage company  and contact our bankruptcy practice immediately. We are here to help.


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