How Can You Protect Your Home From Foreclosure?
If you are a homeowner in this state who is behind on your mortgage payments, and if you are concerned about foreclosure, promptly arrange to consult a North Carolina foreclosure attorney to discuss your rights and options for avoiding a foreclosure.
What are your legal rights as a homeowner? Can you stop a foreclosure? A North Carolina foreclosure lawyer can explain how the law specifically applies to your own situation, but generally speaking, your legal rights as a homeowner in North Carolina include your right to:
- receive preforeclosure and foreclosure notices from your lender
- apply to your lender for a loss mitigation arrangement
- get current with your payments or pay the loan off and prevent a foreclosure sale
- file a bankruptcy petition
What is Preforeclosure?
If you are behind on your mortgage payments, but a foreclosure on your home is not yet underway, you are in what is known as the “preforeclosure” period. At this time, your mortgage lender may impose late fees and inspection charges.
If you miss a payment, most mortgages require the lender to notify you about preforeclosure and advise you about how to avoid foreclosure by sending you a “breach” letter. When a payment is late, most lenders allow a period of ten to fifteen days before imposing any late fee.
When mortgage payments are late, some North Carolina mortgages also allow lenders to protect their stake in a property by conducting drive-by property inspections to make sure that a home is still occupied and maintained. Lenders may charge homeowners for these inspections.
What is Loss Mitigation?
Under federal foreclosure laws, a mortgage lender must contact you or attempt to contact to explain loss mitigation options no more than 36 days after you’ve missed a payment. Loss mitigation options include loan modification or the creation of a repayment plan.
Within 45 days of missing a mortgage payment, your lender must apprise you in writing about the options that may be available to you for loss mitigation, and the lender must try to help you find some way to avoid a foreclosure.
Federal foreclosure laws prevent a lender from conducting the foreclosure process if your application for loss mitigation is pending. Most mortgages in this state also require lenders to send a breach letter to a homeowner before that lender may launch the foreclosure process.
How Does Foreclosure Work in This State?
Federal foreclosure laws prevent lenders from starting a foreclosure until a homeowner’s payments have been past due for at least 120 days. This gives a North Carolina homeowner time to catch up on payments, apply for loss mitigation, or begin the bankruptcy process.
Lenders in this state may use either the “nonjudicial” or the “judicial” foreclosure process:
- Most North Carolina lenders use the nonjudicial foreclosure process, which is faster and costs less than the judicial process and typically involves only a single court hearing. After meeting the legal requirements, a lender may sell the property through a foreclosure sale.
- A judicial foreclosure starts when a lender sues a homeowner and asks the court to allow a foreclosure sale. If a homeowner contests a foreclosure lawsuit, the court will review the case. If the lender prevails, the judge will allow the home to be sold at an auction.
Can You Prevent a Foreclosure?
You can prevent a foreclosure on your home in several different ways: by having your mortgage loan reinstated, by “redeeming” the property, or by declaring bankruptcy:
- Loan reinstatement, also called mortgage reinstatement, happens when you restore your mortgage after a default by paying off the full amount past due.
- To redeem a property, you must pay the full loan amount prior to the foreclosure sale. North Carolina requires a ten-day “upset-bid” period after the report of the sale has been filed. This gives a borrower ten more days to pay off the debt and redeem the property.
- When a foreclosure sale becomes imminent, you can immediately stop foreclosure from happening by filing a bankruptcy petition. The bankruptcy court will issue an automatic stay which will prevent the lender from pursuing the foreclosure as long as the STAY is in place.
What Should You Know About Bankruptcy?
A Chapter 7 bankruptcy will delay a foreclosure for several months, but to keep your home, a Chapter 13 bankruptcy may be the better choice. Bankruptcy, however, is a last-resort option. Your credit rating will be affected.
However, to fully understand the long-term affects of a bankruptcy and how the bankruptcy will affect your particular situation contact a North Carolina foreclosure attorney. Also, a North Carolina foreclosure attorney can help you prepare the legal paperwork and guide you through the bankruptcy process to protect your home.
A North Carolina foreclosure lawyer can also advise you if you apply for loss mitigation, negotiate on your behalf with your mortgage lender, or represent you in court if you are targeted with a lawsuit in a judicial foreclosure proceeding.
What is a Deficiency Judgment?
After a foreclosure sale, you may still be liable for the difference (the “deficiency”) between your total debt and the foreclosure sale price. For instance, if your total debt is $350,000, but the home only sells for $275,000, you may be liable for the $75,000 deficiency.
However, to collect a deficiency, a lender must seek a deficiency judgment from the court, and in this state, deficiency judgments are not allowed if a loan was a purchase-money, seller-financed mortgage or a deed of trust.
Gillespie & Murphy is Here for You
In North Carolina, if you’re unable to make your mortgage payments, consult Gillespie & Murphy as quickly as possible. An attorney at Gillespie & Murphy will discuss your rights and options and help you deal with a potential foreclosure in the way that works best for you.
We are award-winning bankruptcy and foreclosure attorneys who also handle vehicle repossessions, wage garnishments, and debt lawsuits for families and businesses across Eastern North Carolina. Our offices are located in New Bern, Greenville, Jacksonville, and Wilmington.
If you are unable to make a mortgage payment, if you receive a breach letter from your mortgage lender, or if a foreclosure sale is imminent, act now by calling Gillespie & Murphy at 252-659-5045. When you become our client at Gillespie & Murphy because of a potential foreclosure, we will provide the guidance, advice, and representation you need.