Are you trying to avoid foreclosing on your home?
We Buy Houses in Kentucky, owned by husband and wife team Daniel and Catherine Close, can help. We will make your life easier and help you get rid of your problem property.
So, let’s start with the basics.
What is foreclosure, anyway?
Foreclosure refers to the legal process that lenders use to take back property, generally after the borrower stops making payments.
Foreclosure is no fun. But just know that it’s not the end of the world.
When you understand how foreclosure in Kentucky works, it arms you with the knowledge to make sure you get the best possible outcome.
The Basic Stages of a Foreclosure
Foreclosure works differently in different states around the country.
States foreclose upon a property in two ways: judicial sale or power of sale.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually, a lender will send out many notices that you are in arrears. This means that you are overdue or behind in your payments.
Under Judicial Foreclosure:
- Your mortgage lender must file a suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure.
- If you don’t pay during the payment period, the court enters a judgement. The lender can request the sale of your property — usually through an auction.
- Once the property sells, the sheriff serves an eviction notice and you must immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and you are not required to go to court. However, the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up. A trustee is transferred control of your property.
- The trustee then sells your property to the lender at a public auction. (Notice must be given.)
- Anyone who has an interest in the property must be notified during either type of foreclosure. For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After a Foreclosure Auction?
After a foreclosure is complete, the sale proceeds pay off the loan amount.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment is issued against the borrower.
A deficiency judgment involves the bank getting a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale. On the other hand, other states allow the full loan amount to be assessed against the borrower.
How Can You Avoid Foreclosure?
Generally, it’s best to avoid a foreclosure auction. Instead, call up your bank. Better yet, work with a reputable real estate firm like We Buy Houses in Kentucky. We’ll help you negotiate discounts off the amount owed on your home, so that you can avoid foreclosure.
In addition, our company offers cash for houses in Louisville, Kentucky and surrounding areas, including: Bardstown, Fern Creek, Highview, Jeffersontown, La Grange, Lyndon, Mount Washington, Newburg, Okolona, Shelbyville, Shepherdsville, Shively, St. Matthews, Taylorsville and Valley Station. We also offer as-is home sales in Southern Indiana, including these areas: Clarksville, Jeffersonville and New Albany.
Connect with We Buy Houses in Kentucky through our contact page. We’ll walk you through the specific foreclosure process here locally in Louisville and how you can avoid it.