A foreclosure is the process where the lien holder (usually the mortgage company or tax entity) is attempting to collect a debt by exercising their lien against your property.
Over 100 foreclosures happen in Austin every month, thousands in Texas, and hundreds of thousand across the country. While a foreclosure is a scary situation that most people only have to deal with once in their life, we deal with hundreds per year. You are not alone it just takes ACTION on your part to prevent the foreclosure process by reaching out to the experts to guide you along the way.
A foreclosure is called the 10 Year Nightmare for a reason;
There are several basic ways to avoid being foreclosed on once the process is put into place.
All the banks want is the money it takes to bring the loan current. It is in their best interest and your best interest to keep the loan current and NOT foreclose. Here are some of the options available to you to do this while working with the bank:
A loan modification is a permanent restructuring of the terms of the loan to help make the loan more affordable. This can be done by a variety of ways to include but not all-inclusive:
Loan mods can take time, typically a 2-4 weeks before they are either approved or denied. If you have limited time before the foreclosure auction, always make sure you have a back-up plan in place. In my experience;
Although rare, a lender/mortgage servicer may be willing to accept a repayment plan for the delinquent amount. This can be spread out over future payments or as additional payments.
This option typically must be done early in the delinquency period. The longer the homeowner goes without making a monthly payment, the less likely it will be to get a repayment plan. Most banks will see the lack of ability to pay or attempt to prevent the delinquency from getting worse as a red-flag not to accept a repayment plan.
If you are not able to reinstate the loan and after doing a budget analysis, cannot afford to stay in the home going forward, selling your home is your best option. There are several ways to do so and each one is dependent on time, reinstatement fee, condition of the home, and ultimately finding a buyer.
This is an agreement made between the homeowner and the mortgage company to temporarily suspend payments and allow you to make up the shortfall. This requires the lenders approval and needs to be implemented early on in the delinquency/foreclosure process. The key here is immediate, consistent, and open communication with the mortgage company.
Thinking of filing for Chapter 7 Bankruptcy to stop a foreclosure?
This option will provide TEMPORARY relief from the pending foreclosure but will not eliminate it all together. A mortgage is a SECURED debt, meaning filing for bankruptcy to avoid foreclosure doesn't eliminate the money owed the bank and doesn't stop the foreclosure. At any time the court can order the temporary relief from the bankruptcy removed and the foreclosure proceedings go forward like normal.
Thinking about filing a Chapter 13 bankruptcy to avoid a foreclosure? While this will allow you to restructure your debt and allow you to keep your home, it is dependent upon getting approval which is harder than just filing the paperwork and not always approved if you don't meet the requirements for a Chapter 13. On top of it all, you have additional court costs and lawyer fees to pay out.
Q: What happens if my home goes to the foreclosure auction?
A: If you are not able to work out a deal with the bank, reinstate the loan or sell the home, your home will go to the county auction held on the first Tuesday of the month regardless of weather or holidays. From there, homes will be placed on the auction block one by one to the highest bidder. The bank will have a minimum bid in place to ensure it recoups the balance owed on the house.
Q: What if my house goes to the auction block but does not get bid on?
A: Homes that go to auction and are put up on the block but are not bid on, are foreclosed on and assumed by the bank. The home is now a bank owned property per the mortgage agreement to satisfy the debt. The bank will then attempt to sell at a later date on the retail market
Q: What happens if my home doesn't go up on the auction block on the scheduled auction date?
A: Any home that is scheduled for auction but does not make it to the auction block, will be rolled over to the next month. Not going up on the block will not prevent the foreclosure, just prolong the process, incur more fees and make it harder to negotiate a deal with the bank.
Q: Can I bid on my own house at the auction?
A: No, once the house goes up for auction, you are not allowed to bid on your own home and are not allowed to have anyone bid on your behalf.
Q: If I sign a contract to sell and get my loan modification or reinstatement done, do I still have to sell you my home?
A: No, if you are able to avoid the foreclosure by reinstatement, loan modification, forebearance, or payment plan but have a contract to sell with us in place, you DO NOT have to sell. Many homeowners still do want to sell and find a place that is more affordable but that is dependent on you the homeowner.
Q: What happens if I decided to sell to you?
A: If you agree to sell, we will negotiate the terms of that sale that are in your best interest. We will go over all steps in the process and the different strategies we can apply to purchase your home and avoid the foreclosure. This will often give you more time in the house and help you realize the equity you have built up in the house when you sell.