| Foreclosures in Washington If you fall behind in your monthly house payments, the seller or lender may try to take your house back. This is generally called foreclosure. If your house is foreclosed, you may lose not only your house, but also all the money you've invested in it. A foreclosure is very serious. Not only is your home in jeopardy, but also your credit rating. The foreclosure procedure will vary depending on the type of financing you used when you bought your house. Financing of a home is usually through one of the following methods:
Look at the documents you signed when you bought your home to find out what type of financing you have. The general procedure for foreclosing a house is outlined below depending on your financing arrangement: 1. Mortgage If you fall behind in your monthly mortgage payments, the lender (usually a bank or mortgage company) can begin the foreclosure procedure immediately, although they often wait until you've missed several payments. A mortgage can only be foreclosed by filing a court action in the Superior Court of the county where your house is located. The lender must notify you of the lawsuit by serving you with court papers called a Summons and Complaint. In the lawsuit, the lender will ask for a money judgment against you for the full unpaid balance of the mortgage. The lender will also ask the court to order the county sheriff to sell your house at public auction ("sheriff's sale") in order to satisfy the money judgment against you. If you receive a Summons and Complaint, call us immediately. Attorney Fabio Ambrosio can determine whether you have any defenses to the foreclosure and how you can stop the foreclosure process. If the judge orders the sheriff to sell your house at a sheriff's sale, you may still be in time to stop the foreclosure process in any of the following ways: - If you can claim your home as a homestead under Washington law, you may be able to live in your home for at least eight months after the sheriff's sale. In some cases, you may be able to live in your home for up to twelve months after the sheriff's sale.
- Anytime during the foreclosure action and up until eight months after the sheriff's sale, you have the right to sell your home and pay off the mortgage debt. In some cases, you may have this right up until twelve months after the sheriff's sale. In either case, you may be able to sell your home for enough money to pay off the mortgage debt and keep the surplus funds from the sale, if any, for yourself.
- Whether or not you live in your home after the sheriff's sale, you may be able to buy back ("redeem") your house from the purchaser at the sheriff's sale up until eight months after the sheriff's sale, or in some cases, twelve months after the sheriff's sale.
- You may be eligible to file for Bankruptcy under Chapter 13 of the Bankruptcy Code. To learn more about a Chapter 13 Bankruptcy and how it can help you, click here.
Note: If your house is sold for less than the balance you owe on the mortgage, you may be personally liable to the lender for the difference.
2. Deed of Trust If you have a deed of trust and you fall behind in your payments, the lender has two options: it can either foreclose on your house by following the same identical process outlined under "Mortgage" above ("Judicial foreclosure") or it can foreclosure on your house without going to court ("Non-judicial foreclosure"). If the lender forecloses on your deed of trust like a mortgage, he/she must follow the procedures for foreclosing a mortgage described in the preceding section. You'll have the same rights in the foreclosure action as a person with a mortgage. If the lender forecloses on your house without going to court, he/she must first give you a "Notice of Default" and, not less than 30 days later, you should receive a "Notice of Trustee's Sale and Notice of Foreclosure." When you receive any of these notices, contact us immediately.
You can make up the delinquent payments at any time until 11 days before the sale. You'll also have to pay the lender's expenses in starting the foreclosure process. The house can't be sold until at least 190 days have passed from the date you fell behind in your payments. You can continue to live in the house during this period. If your house is sold, you must move out within 20 days after the sale or an eviction action may be filed against you. If you fail to move within 20 days after the sale, the purchaser may immediately file an eviction (unlawful detainer) action, after providing you with a notice. Once your house is sold, you have no right to get it back and the money you've put into the house will be lost. If your house is sold for less than you owe the lender, you ordinarily cannot be required to make up the difference. 3. Real Estate Contract If you have a real estate contract and you fall behind in your payments, the seller has two options: it can either foreclose on your house by following the same identical process outlined under "Mortgage" above ("Judicial foreclosure") or it can end ("forfeit") your contract without going to court ("Non-judicial foreclosure"). If the seller forecloses on your deed of trust like a mortgage, he/she must follow the procedures for foreclosing a mortgage described in the preceding section. You'll have the same rights in the foreclosure action as a person with a mortgage. If the seller intends to forfeit your real estate contract without going to court, he/she must first send you a "Notice of Intent to Forfeit," and then you should also receive a "Declaration of Forfeiture." If you receive any of these notices, contact us immediately. Your real estate contract can't be forfeited until at least ninety (90) days have passed from the date the seller records the Notice of Intent to Forfeit. You can avoid forfeiture by making up the delinquent payments at any time until the date stated in the Notice of Intent to Forfeit. You'll also have to pay the seller's expenses in starting the forfeiture action if payment of these expenses is required by the terms of your contract. If your real estate contract is forfeited, you must move out within ten (10) days after the day the seller records the Declaration of Forfeiture. If you don't move out, the seller may start a lawsuit to evict you. If your real estate contract is forfeited, the money you have put into the house will be lost. You won't, however, owe the seller any more money. | | Alternatives to Foreclosures Here is a short list of possible alternatives to foreclosure: Special Forbearance
Your lender may be able to temporarily reduce or suspend your payments for a fixed period of time. At the end of that time, you must make a lump sum payment or enter into a long term repayment plan to pay back the reduced or suspended amount. Forbearance may be a good option when the cause of your default is specific and temporary and it is reasonable to assume you will be able to resume making payments at the end of the forbearance period. Repayment Plan
Your lender may be able to arrange a simple repayment plan whereby you make your mortgage payment plus an amount of the total in default. The plan could be a few months long, or may extend to a year. At the end of the time period, you would have paid off the past due amount and your payments go back to the original payment amount. Your lender or servicer may require a good faith payment upfront to begin the plan. A repayment plan may be a good option when the situation that caused your default is resolved. For example, the default may have occurred because you were unemployed for a period of time, but you have now become employed again. Mortgage Modification
You may be able to refinance the debt and extend the term of your mortgage loan. This will help you catch up by possibly reducing the monthly payments to a more affordable level. You may qualify if you've recovered from a financial problem but your net income is less than it was before the default. Chapter 13 Bankruptcy You may be eligible to file for Bankruptcy under Chapter 13 of the Bankruptcy Code. To learn more about a Chapter 13 Bankruptcy and how it can help you, click here. Partial Claim
Your lender may be able to work with you to obtain an interest-free loan from the U.S. Department of Housing and Urban Development to bring your mortgage current, if you qualify. Pre-Foreclosure Sale
This will allow you to sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating. If you're unable to afford the house long-term, you may sell the house yourself before the foreclosure sale and save some of your equity. Special FHA, HUD, RHD, and VA Requirements If you have an FHA or HUD insured loan, a VA guaranteed loan, or a RHD-financed home, there may be special requirements that the lender must follow if you fall behind in your payments. In some cases you may be entitled to a reduction in your monthly payments or even a temporary suspension of your monthly payments. Foreclosures for Unpaid Property Taxes and/or Special Assessments If you're a senior citizen or are disabled and you're facing a foreclosure action because of unpaid property taxes and/or special assessments, you may be eligible to have your property taxes reduced or postponed. Contact us for more information. Deed-in-lieu of foreclosure
As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but may help your chances of getting another mortgage loan in the future. Tips for Avoiding Foreclosures If you are unable to make your mortgage payment: 1. Don't ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house. 2. Contact your lender as soon as you realize that you have a problem. Lenders do not want your house. They have options to help borrowers through difficult financial times. 3. Open and respond to all mail from your lender. The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court. 4. Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can't make your payments. Educate yourself on foreclosure laws and timeframes in Washington State. 5. Contact a foreclosure attorney. Attorney Fabio Ambrosio can help you understand the law and your options, organize your finances, and represent you in negotiations with your lender. 6. Prioritize your spending. After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses--cable TV, memberships, entertainment--that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage. 7. Use your assets. Do you have assets - a second car, jewelry, or a life insurance policy - that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home. 8. Avoid foreclosure prevention companies. You don't need to pay fees for foreclosure prevention help--use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services that you can get for free elsewhere. 9. Don't lose your house to foreclosure recovery scams! If any firm claims they can stop your foreclosure immediately and if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney. | |