Foreclosures

Foreclosures have always been around but the number of foreclosures that have taken place in the last 2 to 3 years has been staggering.  RealtyTrak reported that in June of 2009 over 300,000 homes in the U.S. received some type of foreclosure notice!  This was a record number since RealtyTrac started keeping track of this information in 2005.  In the first half of 2009 RealtyTrac reports that 1 in every 84 houses in the U.S. received a foreclosure notice!  What is even more frightening is that many project that foreclosures will not peak until 2014! While not everyone is going to face a foreclosure, we are all learning that there are many factors that we do not control that can force us in to a foreclosure situation. 

Small business owners are struggling and as their income falls, so does their ability to pay their mortgage.  Illness can strike at any time and can leave you in a financial mess.  Layoffs and four day weeks are becoming more common place.  Some of our largest employers are going through bankruptcy.  So while you may not ever have to face a foreclosure, everyone should understand that something beyond their control may force them into a foreclosure situation.  If you are not facing a foreclosure you should be planning your finances to help avoid a future foreclosure or to put yourself in a better situation if one is forced upon you.  If you are facing a foreclosure you have to understand the process and how it may affect you.  As soon as you are in default, your lender can start a foreclosure.  Normally, they will wait for about 3 months before they start the foreclosure.  Due to the immense number of foreclosures that lenders are dealing with, in some cases, they do not start the foreclosure for many months after the first default.  Once the foreclosure by advertisement is started, it takes about three months to get to the Sheriff's Sale.  Recently, we have begun to see lenders voluntarily postpone a scheduled Sheriff's Sale for no apparent reason.

Prior to the Sheriff's Sale the borrower can cure the default by paying the past due amount and certain costs set out in the statutes.  If cured before the Sheriff's Sale, the foreclosure is terminated.  Once the Sheriff's Sale has been held, the mortgage is gone and the borrower must pay the amount bid at the Sheriff's Sale plus some costs to stop the foreclosure.  After the Sheriff's Sale, there is a Period of Redemption in which the borrower has the right to continue to occupy the property and can stop the foreclosure by paying off the amount bid at the Sheriff's Sale and some miscellaneous costs.  The most common period of redemption is for six months but in some situations are shorter or longer or can be changed by the lender after obtaining an order of from the District court.  Once the Period of Redemption expires without the borrower paying off the holder of the Sheriff's Certificate, the borrower has lost the property.