If you are behind on your mortgage payments, you may receive paperwork regarding default and foreclosure from your bank or another institution that services your mortgage. You may not be sure what these letters mean, what foreclosure technically is, how to respond, or whether you need to move out. In any case, you need to take these documents and the foreclosure process seriously from the very first notice you receive. Your situation could be serious, but you have options to consider. If you are ever contacted about being in foreclosure, contact an Ohio foreclosure lawyer at Luftman, Heck & Associates.
By working with an experienced Ohio consumer law attorney, you can learn more about bank foreclosures, how to defend yourself, and what steps you can take. Contact Luftman, Heck & Associates through our online form or at 888-726-03181 to schedule an initial consultation.
What Is Foreclosure?
Foreclosure is the legal process through which your lender, usually a bank or credit union, takes repossession of the mortgaged property, typically your house, because you are delinquent on mortgage payments. Through a forced sale of the property, the lender receives a payment that covers all or some of what you owe on your mortgage.
There are two main types of foreclosure in the U.S.: judicial and non-judicial foreclosure. Judicial foreclosure requires that a lender goes through the court system to lawfully foreclose on a homeowner. Ohio is a judicial foreclosure state.
The Foreclosure Process
If you reach 30 to 90 days behind on your mortgage payments, you will generally be contacted by your lender. Usually, this comes in the form of a Default letter. This letter will give you a specific time to cure the delinquency. You may be given only 30 days to make up all of the missed payments.
If you do not become current on your mortgage within that short period, then the lender can begin the foreclosure process. Under Ohio law, once you are 120 days delinquent on a mortgage, the lender may begin the foreclosure.
Foreclosure is a legal proceeding, which means the lender has to file a complaint in the appropriate court. The complaint is a legal document that states the lender holds a note and mortgage on the property. In other words, the lender proves to the court that it has a right to the property. The complaint will also layout the type of mortgage you have, the amount due, the amount you are delinquent, and why the lender is seeking to foreclosure on the property.
After the complaint is filed, you will be served with notice of the foreclosure and a summons to court.
Responding to the Foreclosure Complaint
You need to respond to this foreclosure complaint. You should contact our lawyers to help with the foreclosure. We will carefully review your situation, ensure you appropriately respond to the foreclosure complaint, and go over your options with you. There may still be ways of avoiding or fighting the foreclosure.
In Ohio, you only have 28 days from the date you are served to answer the complaint. In your response, you may disagree that you are behind on your mortgage or mount some other defense. Or, after speaking with an attorney, you may decide that foreclosure is in your best interests. If this is the case, we can also help you cooperate with the foreclosure, so the process moves smoothly.
If you do not respond to the foreclosure complaint, the lender can seek a default against you. This means your home will be foreclosed on without your input.
After you respond, then the case will move forward like other lawsuits. Your mortgage lawyer may work with the bank to resolve the case without a foreclosure order, such as refinancing your mortgage or a short sale. However, if the lender is not amenable to other options, and the court grants a foreclosure order, then your home will be put up for sale.
The Foreclosure Sale
The home will be sold through a foreclosure auction, managed either by the sheriff’s office or, when approved by the court, a private party.
Before the sale can take place, the lender has to follow certain procedures. Your property must be appraised by at least three disinterested persons, to ensure it is assigned a fair value. Next, prior to the sale, an advertisement must be placed in the local newspaper for at least three weeks. The sale of your house must be public and have an open bidding process.
Additionally, Ohio law requires that your home not be sold for less than two-thirds of the appraised value. This is to protect you and limit the amount of deficiency you may be liable for—the amount between what you owe on the mortgage and the amount the home is sold for.
Can a Landlord Kick You Out?
Many people call our foreclosure attorneys confused about their right to live in their homes during the foreclosure process. During the foreclosure process, the lender cannot evict you, throw your stuff on the curb, or change the locks until they obtain the legal right to do so.
Houses in foreclosure are still the property of the homeowner until the lender legally obtains possession of the property, which typically comes through a final sale of the property to another party.
You cannot be removed from your home until the sheriff’s sale is conducted and the sale to a new party is confirmed. Then, you will receive an eviction notice, which will give you a certain period of time to vacate your home. The amount of time you have may depend on which jurisdiction you live in.
If your mortgage lender is trying to get you off the property before you have been legally foreclosed on, call Luftman, Heck & Associates immediately.
Do You Still Owe Money After Foreclosure?
In Ohio, you can be held responsible for a balance of your mortgage after a foreclosure.
Sales of foreclosed homes do not always obtain prices that cover the amount owed on the mortgage. When the amount obtained through the sheriff’s sale is lower than the full amount owed due on the mortgage, the difference is known as a deficiency. You can be liable for the amount of the deficiency after an Ohio foreclosure.
For example, you may owe $150,000 on your mortgage. Your home may only sell for $110,000. You are left responsible for $40,000.
To obtain this amount, the lender may return to court and seek a deficiency judgment against you. This judgment remains valid for two years, and during this time, the lender can take several steps to obtain the money, such as wage garnishment.
If you are worried that the market value of your home is less than want you owe the lender, you should speak with our Ohio foreclosure lawyers right away. If you cannot afford your home, but want to avoid a foreclosure on your record, then we may work to negotiate a short sale with the lender, and we may seek to have the lender waive their right to a deficiency following a short sale.
How to Stop the Foreclosure of Your Home
If you know you are behind on your mortgage payments, whether or not you have received a Notice of Default yet, you should contact our foreclosure attorneys, who can develop a foreclosure defense. We will review your circumstances, talk with you about your finances and priorities, and then discuss your options to avoid foreclosure.
If you were a victim of predatory lending, we can take steps to protect you. Another way to stop a foreclosure is to come current on your mortgage. However, we recognize this may not be possible for various reasons. You may have been laid off, suffered an injury, or a lost a relative’s financial contributions. We know that many unexpected turns in life can make it difficult or impossible to pay your mortgage.
Mortagge Modification & Refinance
A second way to stop a foreclosure is to modify or refinance your mortgage. You may be in a position to obtain a mortgage with different terms, particularly, monthly payments you can manage.
If you cannot afford to keep your home, or you do not want to remain under the weight of a mortgage, we may recommend negotiating a short sale with the lender. A short sale is a quick sale of the property to a buyer other than the lender.
The lender may agree to take the price earned through a short sale in fulfillment of your entire mortgage. This has the benefit of avoiding a foreclosure on your financial history.
Deed in Lieu of Foreclosure
A fourth option is a deed in lieu of foreclosure. Depending on your circumstances, you may agree to sign the deed of your home over to the bank. Whether a lender will be amenable to this solution depends on a variety of factors, including whether you have any other mortgages or liens on the property and whether a short sale is likely.
Finally, another option is for you to file for bankruptcy.
Bankruptcy and Foreclosure
A common question we receive is “does bankruptcy stop a foreclosure?” The answer is yes because by filing for bankruptcy, federal law requires that all collection proceedings against you be paused. The day your lender is informed of the bankruptcy, it must stop pursuing the foreclosure of your home.
However, bankruptcy does not stop foreclosure in the sense that it ensures you keep your home. The entire point of bankruptcy is to ensure as many of your creditors are paid as much as possible before the court ends your obligation to pay and gives you a fresh start.
Bankruptcy & Your Mortgage
During the bankruptcy process, you will have to address your mortgage. Your bankruptcy and mortgage lawyer will work with the bankruptcy trustee and lender to obtain the best possible outcome, which may be a short sale or deed in lieu.
Chapter 7 Bankruptcy
If you filed a Chapter 7 bankruptcy, this is known as a liquidation bankruptcy. Most of your non-exempt assets are sold to pay your debts. Then, the rest of your debts are wiped away to give you an entirely clean slate to start from.
Under this type of bankruptcy, you may have the right to keep your home. However, this may not be the right option for you financially. You will need to work closely with an Ohio foreclosure lawyer to determine the best way to handle your house during Chapter 7 bankruptcy.
Chapter 13 Bankruptcy
If you filed a Chapter 13 bankruptcy, and you have a source of steady income, you may be able to refinance your mortgage for better payment terms. The delinquent loan payments may be addressed in your Chapter 13 payment plan.
If you are facing foreclosure on your home, and you have debts you cannot pay each month, then call Luftman, Heck & Associates right away. We are highly experienced foreclosure defense and bankruptcy lawyers who can ensure you know your rights and options during this challenging time.
Consequences of Foreclosure
The consequences of foreclosure can be difficult to overcome. If your home is foreclosed, you may lose your right to the property and forced to move out. You may no longer own or live on the property, yet you may still owe money on the mortgage. This can be very stressful on a financial and practical level.
A foreclosure will remain on your credit history for a long time, and it will hurt your credit score. This may seem like an abstract consequence. However, a lower credit score will make it difficult for you to be approved for credit cards, loans, and rental properties. You may be required to obtain a co-signor for an apartment, or you could be charged more for auto insurance. In certain circumstances, poor financial health is a detriment to obtaining certain jobs or professional licenses.