When a homeowner doesn’t make his mortgage payments on time, the lender has the legal right to claim the residence under foreclosure rules. Typically, the lending institution will attempt to sell the home to recoup its losses. Foreclosure rules such as the time frame required before the lender can legally sell your home really depend upon your state of residence and what type of mortgage contract you signed, according to the United States Foreclosure Laws website.
Judicial foreclosure requires a thorough court procedure before the lender can legally take your home, based on United States Foreclosure Laws. In California, the lender must sue the borrower at a local courtroom; the homeowner may have as long as 12 months to cure the mortgage default or lose your home. On the flip side, Florida residents usually have just about 6 months to either make up the mortgage payments or lose the property.
Not every state allows nonjudicial foreclosure, and if your lender can actually even practice this type of foreclosure actually depends upon your contract. A California resident whose contract includes a nonjudicial foreclosure supply could lose his home without even going to court; nonjudicial foreclosure allows the lender to just put a notice of sale to the home. Sometimes, the borrower may have just about a month to prevent a nonjudicial foreclosure sale. On the flip side, homeowners in states such as Florida and Illinois do not need to worry about nonjudicial foreclosures; just judicial foreclosures are allowed in a few states, based on United States Foreclosure Laws.
Bankruptcy and Foreclosure
Bankruptcy filings can at least temporarily stop or stop the foreclosure procedure, according to the book”How to File for Chapter 7 Bankruptcy.” Under United States bankruptcy rules, a lender should prevent any impending lawsuits including foreclosures or hold off on filing such group actions once a borrower declares bankruptcy. But unless a homeowner can”reaffirm” the debt in Chapter 7 or has been approved to settle the mortgage under court supervision in Chapter 13, a bankruptcy filing can generally only buy about 120 days’ time for the borrower to find a new place to live. Attempting to sell the property or work out a deal with the lender might be a much better plan of activity, notes Bank Rate. (References 4 and 5)