Instead of spinning your wheels, you should relax a bit and try to get acquainted with your basic legal and financial obligations. There are lots of ways to avoid foreclosure even when you have received a Notice of Default, but you will be able to understand your options only if you are familiar with basic real estate lingo.
Notice of Default
This is a notice from your lender to formally communicate to you that you have missed a certain number of mortgage payments and are now delinquent on your home loan. You are given the option of paying off your dues and penalties to avoid foreclosure. If you ignore this notice and don’t pay the outstanding mortgage payments, your lender will have the notice recorded at your county’s records office in a non-judicial foreclosure. In a judicial foreclosure, the notice will be recorded after a hearing in a court.
Judicial Foreclosure Vs Non-Judicial Foreclosure
First and foremost, understand that foreclosure laws are state-specific. Foreclosures are judicial in some states in the U.S, while others are non-judicial foreclosure states. New York is a judicial foreclosure state. The foreclosure process officially begins when you receive a notice of default usually after three or more missed mortgage payments. Because Westchester County is in a Judicial State, what this basically means that your lender will have to obtain an order from a court to repossess your home or sell it at an auction. In non-judicial foreclosure states, the lender can initiate foreclosure proceedings without any judicial involvement.
Deed in lieu Vs Short Sale
If you transfer the title to your lender, it means that you are paying off your mortgage under a ‘deed-in-lieu of foreclosure’ agreement. Your lender will own the property and be authorized to sell it at an auction or in a traditional way. A short-sale occurs when you sell your home to a buyer (not the lender) before the foreclosure process concludes – in other words, before the lender repossesses the property in foreclosure. In a short sale, the lender agrees to accept less than what is owed by the borrower. You have to obtain a written approval from your lender in order to short sell your home. More info on a short sale HERE
Deficiency judgement after foreclosure
Most homeowners assume that once their home is foreclosed upon, they won’t owe anything to their lender. If this is your understanding, read up on deficiency judgement. In some states, lenders can file a lawsuit against the borrowers if they fail to recoup the amount of money that they lent. In New York, lenders can obtain a deficiency judgement.
Bankruptcy is advertised as a foreclosure alternative. Any individual can file bankruptcy applications under different laws, but Chapter – 7 Bankruptcy and Chapter 13 Bankruptcy are the most popular options. Which one you should choose depends on your current financial situation.
We hope this list brings a bit more clarity when you hear legal and financial terms in regards to a foreclosure situation. If it is still confusing to you and you do not want to deal with banks or lawyers, you can also sell your property for cash. Many investors are experienced with short sales and will be able to help you. Check out our page online or call (914) 999-2293 to hear about your options.
E2F Properties is Westchester County’s premier real estate redevelopment company. If you have a home that you need to sell or if you know of a property in your neighborhood that you think needs renovation, please call us to discuss your options! We are a solutions company and are available to help! (914) 999-2293