DISCLAIMER

Do not use this information without checking with a lawyer.

How To Proceed

Defending against foreclosure is complex and can be expensive. You must consider your options carefully, keeping in mind that you may end up responsible for additional legal and appraisal fees.

In order to defend in a foreclosure, you will need to pay close attention to court proceedings and deadlines. There are certain terms you need to know and steps you need to take. We have outlined these generally below.

Foreclosure By Sale

In a foreclosure by sale, a judge will set a sale date. On the sale date, an attorney appointed by the court, called the "committee for sale", auctions off the property to the highest bidder. The court gives the committee the power to carry out all aspects of the auction, including advertising in the newspaper and posting a sign on the property. The court issues an order permitting the committee to enter the property on the day of sale; however, the committee is instructed by the judge to enter only with the consent of the occupant. The money from the auction first goes to pay for the costs of setting up the auction, then to the lender and any other liens on the property. Then, if any money is left over, it goes to you.

If you pay the amount of the judgment plus any costs and fees incurred by the auctioneer prior to the date of sale, you can prevent the sale from occurring and protect your rights to the property. As with strict foreclosure, you can pay off the debt by either selling the property privately or by refinancing.

strict foreclosure

A judge will set a series of "law days" for each person listed as a defendant in the foreclosure. After your law day, you lose all rights to the property. Law days can be assigned as soon as 3 weeks after the date the case goes to judgment, or it may be as long as 9 months or longer. That decision is up to the judge hearing the case.

Until your law day, you may avoid foreclosure by redeeming the mortgage or debt. In other words, you have until your law day to pay off what you owe to the bank or other party bringing the case. The amount due will also include attorney's fees and court costs.  Redeeming can be done in a number of ways: you could sell the property yourself or borrow the money from another lender.

If you do not redeem the mortgage by your law day, then people assigned the other law days are given a chance to redeem the mortgage by paying off the debt. If another person listed as a defendant redeems the mortgage, that person gets legal title to the property. If no one redeems, then the person or company foreclosing gets title to the property.

What is Foreclosure?

Foreclosure involves a lawsuit in which a bank, mortgage company, or other lien holder seeks to take an owner's property to satisfy a debt. 

The bank or lender may take ownership of the property or have the property sold to pay off the debt. As a result of the foreclosure, the owner loses all the rights in the property.