If you find yourself facing foreclosure (or even threatened by the prospect of it), it’s absolutely critical to understand how the foreclosure process works in New England.
Understanding the Foreclosure Process in New England
What is foreclosure anyway?
Foreclosure is a formal legal process that a mortgage lender follows to reclaim ownership of a property securing a loan, typically after a borrower fails to make the required mortgage payments.
Although foreclosure can be a challenging experience, it is not the end of the road. If you understand the foreclosure process in New England, you can better prepare and navigate the situation to achieve the best possible outcome.
By being informed about the foreclosure process and the legal procedures involved, you can take appropriate measures to protect your rights and interests. With the right guidance and resources, you can manage the foreclosure process effectively and emerge from it in a better position.
Stages of the Foreclosure Process
The foreclosure process varies across different states, but there are some common stages that are significant. Two primary methods used in foreclosure are judicial sale and power of sale.
To learn about the foreclosure process in New England, please reach out to us via our contact page or call us at (781) 208-7362, and we will guide you through the specific steps.
In both approaches, foreclosure proceedings generally begin after 3-6 months of missed payments. Typically, the lender sends multiple notices informing the borrower about the overdue or late payments. However, it is not always the case.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- You’ll have 30 days to bring payment to court to avoid foreclosure (sometimes that can be extended).
- If you don’t pay after this period, a judgement will be entered and the lender can request the sale of your property – generally through an auction.
- Once the property is sold, the local sheriff serves an eviction notices and you must vacate the property.
Under Power of Sale (Non-Judicial) Foreclosure:
- The lender serves you with a notice demanding payment, and the courts are not required – although there may be some level of judicial review.
- After the established waiting period has gone by, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trusteed can then sell your property to the lender at a public auction (notice must be given).
So, What Happens After A Foreclosure Auction?
After a foreclosure is complete, the amount of the loan is paid off with the proceeds from the sale of the property.
Sometimes, if the sale of the property isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower. A deficiency judgement is where the bank gets a judgement against you, the borrower, for the remaining funds owned to the bank.
Some states limit the amount owed in a deficiency judgement to the fair value of the property at the time of the sale, while other states will allow the full loan amount to be asssesed.
Here’s a great resource that lists the state by state laws when it comes to deficiency judgements.
Generally, it’s best to try to avoid a foreclosure auction. Instead, call up the bank to negotiate, or work with a local, reputable real estate firm like us at Old Harbor Properties to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced invested can help you by negotiating directly with the banks – or even eliminate the prospect of a foreclosure, even if your home is worth less than you owe.
If you’re currently facing foreclosure and need to sell a property near New England, please let us know. We can help!
We buy houses in New England, New England like yours from people who need to sell fast!