What are the Steps in the Foreclosure Process?

 

Video Summary

Like any other lawsuit, a foreclosure begins with a summons. The party who was served has 20 days to respond to the summons. Attached to the summons is a complaint stating that you have failed to make payments in accord with the terms of your mortgage, and a Lis Pendens, notice of pending action that has been filed.

If you do not respond to the complaint, you will receive a notice of default, and the allegations against you are presumed to have been admitted. After several pleadings, a Motion for Summary Judgment will be filed stating that all the facts are undisputed. The court then sets a hearing with a judge. When a Summary Final Judgment for Foreclosure has been entered, a sale date is set for the property (roughly 30-45 days later). Your property will be sold in an auction for a cash sale. The mortgage holder can bid as much as the amount owed.

Approximately 14 days later, a certificate of title is issued to the purchaser. At this point, the purchaser has the right to request a Writ of Possession which is served on anyone residing in the property. This allows 24 hours to vacate the property, after which the Sheriff can remove the old tenants from the property.

Currently it takes about 1 year to foreclose a mortgage. Some may be pending for 18 months, 2 years, or more depending on the parties involved. If you are in danger of foreclosure, Waller & Mitchell would be happy to provide guidance and will likely be able to extend the length of the foreclosure for you. Please give us a call at (727) 847-2288.

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What is a Short Sale?

 

Video Summary

A short sale occurs when the buyer of a property gets behind on payments and, rather than enter the foreclosure process, he attempts to sell the property for less than the amount owed. “Short” refers to the difference between the sale price and the amount owed on the mortgage(s). Many properties are being sold as short sales now because of the recent dip in home values. MLS listings usually indicate when a property is a short sale. The lender must agree to the sale price of the property and agree to negotiate with the original buyer as to whether the debt will be given or there will still be a debt. The process can take a very long time to negotiate a sale price and terms that the lender, the borrower, and the new buyer can agree on.

 

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How Will a Short Sale Affect my Credit?

 

Video Summary

A short sale itself will not have as much of an effect on your credit as will the period leading up to the short sale. Every late payment on your mortgage will have a detrimental effect on your credit score. A higher credit score will drop more quickly.

Currently, lenders are not inclined to begin negotiating a short sale until the borrower is at least two months late. The short sale process takes 3 to 4 months or longer to complete, so by the time it is complete you will likely have at least 5 or 6 instances of 30-day late payments which will hurt your credit score.

When a short sale is completed, the loan may show “paid as agreed” or “paid off.” Waller & Mitchell is not qualified to advise you as to the effect on your credit score at that time. Another factor affecting your credit is whether you are paying your other debts in a timely fashion.

After selling your house by short sale, you will be unable to obtain a mortgage from a federally insured lending institution for at least two years. In some cases, it may take as long as 4 years. However, if the property is foreclosed rather than sold in a short sale, the minimum time before you may be able to obtain a mortgage from a federally insured lending institution is 4 years.

If you have questions about short selling your house, please call us at (727) 847-2288.

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Foreclosures Video Index

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Short Sales Video Index

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