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What is Foreclosure?
Foreclosure is a legal process that lets
a lender take real estate in order to pay a debt — most often, someone's
home. Foreclosure is regulated by state law as well as by the terms of the
contract.
What gives someone the right to foreclose?
You did — when you signed the your loan documents. You give your lender
the right to foreclose when you finance or refinance real estate, or guarantee
payment of a debt with your home equity. If you signed a "promissory note" and
a "deed of trust," the "deed of trust" gives your lender
the right to foreclose if you don’t pay.
Can I go to court to prevent a foreclosure?
Probably not. In Nevada, foreclosure usually does not involve a court hearing.
Although you may file a suit to prevent or undo a wrongful foreclosure, it’s
often expensive. You can’t stop a foreclosure by asking for more time
to pay, or prevent a foreclosure by showing up at the sale.
What can you do to delay or prevent a foreclosure?
A lot! But there are three ways to do this. One, reach an agreement with your
mortgage company. Two, file bankruptcy. Three — and this is specific
to Nevada — participate in foreclosure mediation. To get foreclosure
mediation you must submit an application within 30 days of receiving a Notice
of Default and paying a filing fee of $200.
What is the best way get my lender to agree to delay or prevent a foreclosure?
Surprise: The rule is "money talks." It helps to offer a cash payment
as well as a commitment to future payments. An explanation on how you fell
behind in the first place doesn't hurt — and neither does explaining
how you won't let it happen again. Of course, you've got to walk the talk with
financial pay stubs, tax returns and bank statements. And most of all, don't
lie — your lender won't give you a second chance. Once your lender files
a Notice of Default, it's hard to get back into their good graces.
How much time does a foreclosure take?
As little as three months and a few
days. Once the lender mails the Notice of Default, they can schedule a date
and time to sell your property at a public auction in as little as 90 days.
But if you apply for the foreclosure mediation program, the foreclosure is
delayed until the mediation is completed.
How does filing bankruptcy prevent a foreclosure sale?
Filing bankruptcy presses the "pause" button on foreclosure by automatically
giving you a court order stopping the foreclosure. This order remains in effect
until the lender either persuades the bankruptcy court to remove the order
or until your bankruptcy case is completed. Even if you file bankruptcy one
minute before the sale takes place, the bankruptcy stops the sale from being
effective.
If you want to keep your property, a Chapter 13 bankruptcy can let you and
your attorney propose pay off your past-due mortgage payments over 60 months,
with no additional interest or penalties. The Chapter 13 plan can be customized
to your unique circumstances, so each one is different. It's not a magic bullet — you
have to resume making your regular mortgage payment in addition to making catch-up
payments on your past-due balance. But Chapter 13 also allows you to eliminate
other debts that may free up money to pay for your home — other debts
like second mortgages or home equity loans.
A Chapter 7 bankruptcy isn't really designed to stop a foreclosure because
your lender will likely go to court to ask the Court to let them proceed with
a foreclosure. Unless you can pay a lump sum to bring your mortgage current,
Chapter 7 will usually only delay a foreclosure for a few months.
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