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Top 10 Questions To Ask About The Foreclosure Process In Your State

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Foreclosure has a lot of similarities throughout the United States, but there are slight differences in the law in different locations. The different laws can make a big difference in the effect of foreclosure. Read on for the top 10 things to know about the foreclosure process in your state.

  1. Foreclosure laws differ on a state-by-state basis: In some states, the bank or lender must engage in a different process to obtain the foreclosure. Furthermore, in some jurisdictions, the foreclosure is the end of your obligation while in others the bank can sue you for any money they don't recover with the sale of the home (this is called a deficiency judgment).
  2. The actual foreclosure process may be different: There are two major types of foreclosure process: a judicial foreclosure and a non-judicial foreclosure. A judicial foreclosure means that the bank or lender has to go to court and get a judgment of foreclosure before they can take your house. A non-judicial foreclosure exists in certain states which allow lender's to put a "power of sale" clause in the mortgage contract. A "power of sale" clause is a note in the mortgage contract giving the lender permission to sell if necessary to collect unpaid mortgage debt.
  3. In some states, foreclosure takes less time: Certain states have a longer foreclosure process than others. The time limit for foreclosure can range from anywhere to a month after you fall behind on your payments to as long as six months or more. A lot will depend on whether the state recognizes non-judicial foreclosures and how much of a backlog there is in the court system where you live.
  4. There are state-specific agencies that may be able to help You may be able to find an agency in your local area through the referral links on the website of the Department of Housing and Urban Development (HUD)
  5. A local foreclosure attorney can provide you with assistance: A foreclosure attorney can help you contest the steps of the foreclosure process, delaying your foreclosure. He can also help you negotiate with your lender, and explain the legal ramifications of foreclosure to you.
  6. Your local department of housing and urban development may be able to help: HUD has established programs for homeowners and can also provide you with links to others who can help. For example, HUD may be able to refer you to a foreclosure avoidance counselor in your area or may be able to assist you through programs such as HOPE NOW. More information about programs and assistance is available on their website.
  7. Lenders may be willing to negotiate more in high-foreclosure areas: Lenders generally don't want to get stuck with a foreclosure property they cannot sell. They would much rather work out a deal with the buyer or have the buyer find a buyer and arrange a short sale. This is especially true in which there are many foreclosure properties sitting on the market, since the bank may already have several foreclosures it is trying to sell.
  8. The laws on short sales may differ from place to place: A short sale occurs when the home owner finds a buyer who is willing to buy the house, albeit for less than the home owner owes. The bank agrees to take the buyer's payment as full satisfaction on the debt to avoid foreclosure. The specific laws related to the legality and process of short sales, as well as the tax implications to the home owner, differ from location to location.
  9. Some states have a right of redemption: This means you may be legally entitled to stop the foreclosure process at any time by making good on your back mortgage payments.
  10. In some states, the foreclosure process may not be the end of your obligations: In states that allow a deficiency judgment, you may find yourself owing the bank the money they didn't get back. If this happens, a judge can garnish your wages or place a lien on any property you own until the debt is paid.

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