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Facing Foreclosure? Understand What You're Up Against. (#5 in a Series)

A few weeks ago a member of my church called me with a panicked and tearful query. "How could this be happening to me? This letter says that my house will be going to auction in less than five weeks!!"

Like many other Georgians, the shrinking economy, rising cost of living and loss of employment has impacted her ability to continue meeting her monthly mortgage obligation. Now she is several months in arrears and has been denied a loan modification. Receiving the dreaded NOD (Notice of Default) was just about more than she could bear.

"Can they really just take my home and kick me out? Don't I have any rights?"

Sadly, I had to inform her that indeed "they" could, and "no" she probably didn't. Let me explain.

What exactly is Foreclosure?

Foreclosure is a legal procedure with far-reaching and long-lasting consequences. Legally speaking, foreclosure is a term meaning to shut out, to bar, to extinguish a mortgagor's (borrower's) right to possess real property. It is is the "equitable proceeding" in which a bank or other secured creditor sells or repossesses a parcel of real property due to the owner's failure to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust." Sadly, it is also a termination of all rights of the homeowner covered by a mortgage.

By this process, a lender may indeed repossess a property when the borrower defaults on payments. It is one of the most frightening, embarassing and traumatic experiences an individual or family can endure. And the effect of foreclosure on a person's credit rating and ability to become a homeowner in the future are negative and long-lasting. A foreclosure remains a blight on the borrower's future ability to get a home loan. While other negative credit items may fall off an individual's credit report after 4 - 10 years, the one question that is asked on every mortgage application is "Have you ever had a foreclosure?"

Why Georgia Foreclosure is Particularly Traumatic.

If you've followed this Facing Foreclosure blog series, you already know my feelings about the Georgia foreclosure process. It's fast and it's brutal. Unlike most other states, Georgia allows foreclosure to take place with no judicial oversight as long as a "power of sale" clause is included in the security document. It usually is.

This means that "they" are not even required to file a lawsuit. As far as I know, no other state has a shorter foreclosure process. Although most lenders will wait until a borrower is several months behind in payments before initiating a foreclosure, once the process starts in Georgia, a house can be sold on the courthouse steps in as few as 37 days. Lenders, of course, prefer this method because it involves less time and expense for them than if they were required to file a lawsuit.

But for unfortunate homeowners like my friend (now client), the Georgia foreclosure process can be devastating. Luckily we were able to get her property on the market for short sale and thereby stave off the foreclosure -- at least for the time being. Hopefully we will get an acceptable offer soon and she will be able to settle this mortgage debt with a "paid as agreed" short sale and avoid foreclosure.

Time is Truly of the Essence.

Anyone facing a simlar challenge should act quickly to find out what your options are. Time is not your friend when you're facing foreclosure in Georgia. For more information on how this might work for you or someone you know, visit www.AvoidGeorgiaForeclosure.com.

Posted by Elva Branson-Lee, e-Pro, CDPE on 08/19/2009 08:38 PM

Comments (42)

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42 Comments on Facing Foreclosure? Understand What You're Up Against. (#5 in a Series)

AUG

Sad. However, folks need to understand that if their mortgage payments are not made, they will be foreclosed upon and lose their home.

Sadly, short sale is just a way to disposing of the asset. The owner will still lose their home.

Elva - Thank you for this very informative post. Your clients are lucky to have you.

In Illinois it is a much longer process. Elva your are going to get that home sold for your client!

Linda Metallo, Re/max Impact, Lockport, Il.

Elva, so many people seem to forget that the house is just like the car or the motorcycle or anything else that you purchase via a mortgage. If you don't pay, you don't get to keep it. Good luck with the sale!

Good post and good information. It is a traumatic time for all.

Patricia Aulson/portsmouth nh

There are no easy answers to this problem and it is unfortunate that anybody must go through the stress of foreclosure....but the sooner people rip the band aid and face reality....the sooner the stress will be over and they can begin again.

I have heard time and time again about if you do go the foreclose route that from the time you stop making payments you could live in the home for years for free.

It is a benefit that can give people the time to get back on their feet.

I have heard this happen many times....

Good luck with the short sale, I hope that you have enough time to close it.

Elva, the process is very similar in Mississippi. Once the default notice comes out, it is published in the paper once a week for 4 weeks then sold on the courthouse steps. Good Luck with the short sale!

Wow - I had no idea the foreclosure process could go that quickly! Here in Phoenix, due to the high number of foreclosures, I assume, I even had one client tell me that they had not paid their mortgage in over a year, and are still living happily in the home with no notification of foreclosure. Their bank hasn't even attempted to contact them! Although I understand that case is rare, in this area, we are finding that homeowners have to fall significantly behind in their monthly payments before the bank even acknowledges the potential foreclosure, thankfully giving the Realtors more than adequate time to get the home on the market and under contract. Thanks for the insight, and good luck on your short sale!

Fortunately Oklahome is a judicial state so it can take 8 to 12 months. We have a bit more leeway to make the short sale happen. This does not stop people from burying their head in the sand and waiting for the last minute reprieve before acting.

Yes . . . sound slike it is a little more brutal in Georgia. That's why it is imperative that owners in distress open their mail!

Elva,

We definitely understand the brutality foreclosure can bring in GA. We have helped many clients that need to sell their home fast and efficiently. Call us if you need help getting the word out.Good luck with the sale. I am glad they reached out to you.

Elva... your series has such great information that everyone in today's economic realities should know, particularly those of us in Georgia. And in my community, foreclosures are not abating, but continue to rise. Thanks for your insight.

Do you have any information about the per cent of closed transactions that are some time of distressed property sale in Georgia?

Wow! 37 days from NOD to auction is quick! And I though Hawaii was fast. Here in Hawaii we have both Judicial and Non-Judicial foreclosure. Of course the Judicial process is much slower than Non-judicial. I see that almost 99% of the lenders here are using the Non-Judicial process.

Hope you can sell that home quickly.

-Mako

Here in WA State we mostly see non-judicial foreclosures. But it is a months long process. They banks don't even send Notice of Default until 90 days past due, and then they have to wait 120 days after filing the Intent to Foreclose before they can even offer it at auction.

What we are seeing here is banks working with owners of homes where they are still living and postponing many many times that auction date. Even if it is a vacant property, they are postponing.

This series on what it is like in Georgia is just a shock. And a reminder of why we need to get our real estate advice and counselling from LOCAL experts.

Hawaii too also now has nonjudicial foreclosures. The benefit to the homeowner is that the lender can only look towards the property for monetary recovery. In a judicial foreclosure they can go after the homeowner for any deficiencies.

Very different here in CA. Non-judicial for the most part. This summer the state mandated an additional 90-day delay over and above their traditional lengthy process.

Elva - never easy situations to deal with. It's so sad the number of people I've talked to this year and last about this very same issue. In all my years in RE - over 20 I've never experienced so much confusion, pain and struggle as these poor folks are.

Good luck - and I hope you can at least short sale it for them.

Excellent post. We are dealing with the same problems here in California too. I just wanted to compliment you on a well written piece. You must have done well in English in school :)

Tap

www.TeamTapper.com

It is indeed sad -- but in any state, if people do not make their payments , for whatever reason, they will end up losing their homes.

I hope you sell that home. Good Luck!

VA is a relatively quick state for foreclosure as well since we have a Deed of Trust instead of a "mortgage".

Good luck with your short sale. I hope the bank can move quickly.

I guess I can't understand how people think they are being denied their rights when they fail to fulfill their part of the mortgage contract.

Hi Elva -- Wow, 37 days is brutal and I think that law should be changed, esp. as things may get worse before they get better.

California is also a nonjudicial foreclosure state that does not require a lawsuit to be filed. Fortunately, we do get a little more time. The time period is 111 days from the filing of the NOD to the sale date. 37 days is so fast it gives almost no time to do anything.

AUG

Texas is also a non-judicial foreclosure state. It can happen very quickly in as soon as 3 months. What I find so disheartening is the number of people who are not proactive. They are so embarrased by what is happening that they don't reach out to use the resources that are availiable to them.

Thanks for all of your thoughtful comments and insights. Some of you have given me ideas for topics to add to this series.

As an update, since we put the home on the market for short sale and forestalled the foreclosure action, my client has just received a call from the lender saying they are revisiting her loan modification request under the HAMP initiative.

We are praying that this family may still get a modified monthly payment that allows them to stay in their home.

I have seen this happen once before.

Excellent post...so how do the laws need to chnage in Georgia?

This is an excellent post and a sad subject. I am an out and out capitalist who has always felt people just need to take responsibility. But these are unique times and normally responsible people are getting hit hard. What really hurts is most of these people are not "Too Big to Fail." I guess that means they are "Too Small to Succeed."

Hi Elva; thanks for your insight, experience and input. Another blog topic might be 'Don't fall in love with your house'. I agree with some of the prior comments about homeowners not realizing that default in a contract will likely result in repossession. A house is not a home if you are not in a position to keep up your end of the monetary commitment.

Wow, only 37 days. That's quick, here in California the process is fairly quick, but not that quick.

I curious, so to further compare the two states, does non-judicial foreclosure in Georgia eliminate the existing debt for the loan? (Here in CA, a non-judicial foreclosure eliminates any deficiency on purchase money loans.)

Evening Elva, Wow, 37 days is too little time to make rational plans and be able to carry them out !

Hi Elva, Great post! Great information. Yes we must pay our house payments, or we will definately be foreclosed. thanks for sharing!

www.charlottelakewyliehomes.com

AUG

It would seem that having a foreclosure go so fast does not benefit anyone in this current market. Be nice to give the family time to either start paying, or find somewhere else to live. I will be glad when this crisis on housing is over.

AUG

Great advice and compassionately written.

what comes to my mind is that old saying "there but for the grace of God, go I"....I am sure that MOST buyers at the closing table, truly believed they could and would pay the montly payment. These certainly are unusual times, many people never thought they'd lose their jobs, and did...Many people making great money (realtors included) enjoyed the peaks and spent as if they'd never end...now we are seeing the results....sadly...

AUG

Hi Elva, this is great foreclosure information to get out to homeowners. Keep up the great blogging!

Thanks, All. Yes, I agree that this is important information to get out to the public and real estate industry insiders as well. Particularly in these unprecedented times.

We can all agree that everyone who makes a debt should have the intention to pay it. But as we are seeing, the best laid plans can go awry when the unforseen happens.

AUG

37 days is so quick - glad she had the idea to talk to you so you can at least short sale the home. Also read your update that the bank might modify her loan - let's hope so!

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