Understanding the foreclosure process in NC is an important part of navigating your own home foreclosure.
Before we dive in…
Understanding the Foreclosure Process in NC
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments.
Foreclosure is no fun. But just know that it’s not the end of the world.
When you know how foreclosure in NC works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.
The Basic Stages of A Foreclosure
There are a few stages that are important to any foreclosure process.
Foreclosure works differently in different states around the country.
The two ways different states use to foreclose upon a property are: judicial sale or power of sale.
Connect with us by calling 1-866-591-5507 or through our contact page to have us walk you through the sp
The Basic Stages of a Foreclosure
Understanding the foreclosure process is crucial for anyone facing this challenging situation. While foreclosure procedures differ from state to state, the stages involved typically follow a similar pattern. Here’s a breakdown of the essential stages in the foreclosure process:
- Missed Payments: The Starting Point Foreclosure usually begins after you’ve missed several mortgage payments—typically between 3-6 months. During this period, the lender will send out notices informing you that your payments are overdue, and that you are in arrears. It’s important to take these notices seriously and explore all your options as early as possible.
- Notice of Default If payments continue to be missed, the lender will issue a Notice of Default (NOD), formally beginning the foreclosure process. This notice is often the last warning before legal action is taken and provides you with a final opportunity to pay the overdue amount or negotiate a solution with your lender.
- Foreclosure Proceedings: Judicial vs. Non-Judicial Foreclosure Depending on the state you’re in, the foreclosure process can proceed through one of two paths—judicial foreclosure or non-judicial foreclosure (also known as power of sale).
- Judicial Foreclosure: In states that require judicial foreclosure, the lender must file a lawsuit in court. You will receive a court notice demanding payment, and typically, you’ll have 30 days to bring your mortgage current to avoid foreclosure. If you cannot pay, the court will issue a judgment in favor of the lender, allowing them to sell the property, usually through a public auction. After the sale, the sheriff will serve an eviction notice, requiring you to vacate the property immediately.
- Non-Judicial Foreclosure (Power of Sale): In non-judicial foreclosure states, the lender does not need to go to court to foreclose. Instead, they will serve you with a notice demanding payment. After a specified waiting period, a deed of trust is created, transferring control of the property to a trustee, who can then sell the property at a public auction. Notice of the sale must be provided to all interested parties.
- Notification to Interested Parties During either type of foreclosure, any party with a financial interest in the property, such as contractors or secondary lienholders, must be notified. These parties may be entitled to a portion of the proceeds from the auction.
What Happens After a Foreclosure Auction?
Once the foreclosure process is complete, the property is sold at auction. The proceeds from the sale are used to pay off the loan balance. However, if the sale does not cover the full amount owed, the lender may seek a deficiency judgment against you. This judgment allows the lender to pursue the remaining balance of the loan from you directly.
The rules around deficiency judgments vary by state. Some states limit the amount owed to the fair market value of the property at the time of sale, while others allow the lender to seek the full remaining balance. It’s essential to be aware of your state’s laws regarding deficiency judgments to understand your potential financial liabilities after foreclosure.
Avoiding Foreclosure and Protecting Your Interests
Foreclosure auctions should be avoided whenever possible, as they can result in significant financial loss and damage to your credit. Instead, consider contacting your lender as soon as you encounter difficulties making payments. Many lenders are willing to negotiate to avoid the costly and time-consuming foreclosure process.
Alternatively, working with a reputable real estate firm, like Nova Home Buyers, can help you explore options to avoid foreclosure. Experienced investors can negotiate directly with banks on your behalf, potentially reducing the amount owed or even eliminating it, especially if your home is worth less than the loan balance.
We’re Here to Help You Avoid Foreclosure
If you need to sell your property quickly to avoid foreclosure, we’re here to help. We specialize in buying houses in Wilmington, NC from homeowners who need to sell fast. Contact us today to discuss your situation, and let us provide you with a fair cash offer that can help you move forward with peace of mind.
ecific foreclosure process here locally in Wilmington.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property to the lender at a public auction (notice must be given).
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Nova Home Buyers to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
If you need to sell a property near Wilmington, we can help you.
We buy houses in Wilmington NC like yours from people who need to sell fast.
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Another Foreclosure Resource For Wilmington NC HomeOwners: