Free Articles
Below are some helpful articles if you are
facing a foreclosure.
facing a foreclosure.
What happens if I cannot pay my mortgage?
If a homeowner fails to make payments upon the mortgage, the lender may foreclose on the property.
Depending upon the terms and agreements made within the original mortgage contract, the lender may do a
statutory foreclosure or a judicial foreclosure. A statutory foreclosure (California) can be performed without
bringing a court action. The lender does have to follow strict state regulations as to the proper notices and
opportunities to provide payment by the homeowner before a sale of the property occurs. This procedure is
relatively fast.
If a judicial foreclosure action is required, the lender must file a complaint with the court system and go through
the litigation process to obtain the right to foreclose on the property. In several state jurisdictions, the homeowner
is allowed the right to stay in possession of the home until the foreclosure process is finalized or a sale of the
home occurs.
Since some lenders prefer to avoid the cost of foreclosure, they are sometimes willing to work out an agreement
with the homeowner. The lender may accept "interest only" payments or partial payments for a while in order to
assist the homeowner. There are detailed regulations regarding foreclosure procedures. It is best to consult with
an attorney if your home is endangered by a foreclosure proceeding.
What happens if I cannot make a mortgage payment?
If you default, your lender can begin foreclosure proceedings. If you are unable to pay the default amount, the
title to your property is transferred to the lender who will re-sell the property to recoup its loan. If there is a
difference between the sale price of the property and the outstanding balance under the loan, the lender can sue
you to recover the difference. If successful, your wages can be garnished or your other assets seized to pay the
deficiency amount. However, not all states allow the lender to institute such action (see below).
What can protect me for any potential deficiency balance after foreclosure?
Some states have anti-deficiency laws which protect purchasers of residential real property used as his/her
primary residence pursuant to a purchase money mortgage. In the event that the purchaser fails to make the
mortgage payment and the property is foreclosed (title taken by the lender through a legal procedure) and sold to
pay the mortgage, a deficiency between the sale price and the outstanding balance of the mortgage could occur.
Under anti-deficiency laws, if the mortgage is a purchase money mortgage for the purchase of a dwelling
occupied by the purchaser, the purchaser will not be held responsible for any deficiency - the lender can only
recover the property and the proceeds of a subsequent sale - the purchaser does not pay any deficit between
the sale proceeds and the outstanding loan balance.
Anti-deficiency laws typically provide no protection for non-purchase money mortgages (such as a second
mortgage obtained after the original acquisition) and there is no protection when the property is not used as the
primary residence of the purchaser.
Will my filing bankruptcy stop a foreclosure?
Filing a Chapter 7 bankruptcy temporarily stalls your lender’s right to foreclosure, until it gets permission to go
forward with the foreclosure proceedings. However, doing so could have other very serious consequences.
We caution visitors against falling for some of the schemes that have been developed that entice a homeowner
who is facing foreclosure to transfer a portion of the title to his home to a third person, who then files for
bankruptcy. While that may temporarily delay the foreclosure courts are getting wise to the scheme and the delay
may be very temporary. Typically the homeowner pays large fees and loses his or her home anyway. Some of the
people engaging in such schemes have also been charged with fraud.
If bankruptcy seems to be an option, consider a Chapter 13 or "wage earner" repayment bankruptcy as an
alternative to a Chapter 7 straight bankruptcy. Under a Chapter 13 plan, it is possible to make up the missed
payments out of your income through the repayment plan.
If you face foreclosure, bankruptcy may or may not make sense, depending on your other obligations and income
sources, and the advice of an attorney will be very helpful. Click on our discussion of
If a homeowner fails to make payments upon the mortgage, the lender may foreclose on the property.
Depending upon the terms and agreements made within the original mortgage contract, the lender may do a
statutory foreclosure or a judicial foreclosure. A statutory foreclosure (California) can be performed without
bringing a court action. The lender does have to follow strict state regulations as to the proper notices and
opportunities to provide payment by the homeowner before a sale of the property occurs. This procedure is
relatively fast.
If a judicial foreclosure action is required, the lender must file a complaint with the court system and go through
the litigation process to obtain the right to foreclose on the property. In several state jurisdictions, the homeowner
is allowed the right to stay in possession of the home until the foreclosure process is finalized or a sale of the
home occurs.
Since some lenders prefer to avoid the cost of foreclosure, they are sometimes willing to work out an agreement
with the homeowner. The lender may accept "interest only" payments or partial payments for a while in order to
assist the homeowner. There are detailed regulations regarding foreclosure procedures. It is best to consult with
an attorney if your home is endangered by a foreclosure proceeding.
What happens if I cannot make a mortgage payment?
If you default, your lender can begin foreclosure proceedings. If you are unable to pay the default amount, the
title to your property is transferred to the lender who will re-sell the property to recoup its loan. If there is a
difference between the sale price of the property and the outstanding balance under the loan, the lender can sue
you to recover the difference. If successful, your wages can be garnished or your other assets seized to pay the
deficiency amount. However, not all states allow the lender to institute such action (see below).
What can protect me for any potential deficiency balance after foreclosure?
Some states have anti-deficiency laws which protect purchasers of residential real property used as his/her
primary residence pursuant to a purchase money mortgage. In the event that the purchaser fails to make the
mortgage payment and the property is foreclosed (title taken by the lender through a legal procedure) and sold to
pay the mortgage, a deficiency between the sale price and the outstanding balance of the mortgage could occur.
Under anti-deficiency laws, if the mortgage is a purchase money mortgage for the purchase of a dwelling
occupied by the purchaser, the purchaser will not be held responsible for any deficiency - the lender can only
recover the property and the proceeds of a subsequent sale - the purchaser does not pay any deficit between
the sale proceeds and the outstanding loan balance.
Anti-deficiency laws typically provide no protection for non-purchase money mortgages (such as a second
mortgage obtained after the original acquisition) and there is no protection when the property is not used as the
primary residence of the purchaser.
Will my filing bankruptcy stop a foreclosure?
Filing a Chapter 7 bankruptcy temporarily stalls your lender’s right to foreclosure, until it gets permission to go
forward with the foreclosure proceedings. However, doing so could have other very serious consequences.
We caution visitors against falling for some of the schemes that have been developed that entice a homeowner
who is facing foreclosure to transfer a portion of the title to his home to a third person, who then files for
bankruptcy. While that may temporarily delay the foreclosure courts are getting wise to the scheme and the delay
may be very temporary. Typically the homeowner pays large fees and loses his or her home anyway. Some of the
people engaging in such schemes have also been charged with fraud.
If bankruptcy seems to be an option, consider a Chapter 13 or "wage earner" repayment bankruptcy as an
alternative to a Chapter 7 straight bankruptcy. Under a Chapter 13 plan, it is possible to make up the missed
payments out of your income through the repayment plan.
If you face foreclosure, bankruptcy may or may not make sense, depending on your other obligations and income
sources, and the advice of an attorney will be very helpful. Click on our discussion of
 | |  | |  | |  | |  |