Understanding foreclosures in NC and the process is an important part of navigating your own home foreclosure.
Before we dive in…
Understanding the Foreclosure Process in NC
What is foreclosure anyway?
A foreclosure is the legal process that lenders use to take back a property that is securing a loan because the borrower has stopped making payments.
Foreclosure is definitely not a fun experience, but please know that it’s not the end of the world.
When you know how foreclosures in NC work…this knowledge will allow you to navigate through it well and come out on the other side in the best position possible.
The Basic Stages of A Foreclosure Process
There are a few stages that are important to any foreclosure process.
The foreclosure process varies among different states around the country.
The two methods that different states use to foreclose upon a property are: judicial sale or power of sale.
Connect with us by calling 919-346-0699 for a Free Consultation or through our contact page to have us walk you through the specific foreclosure process here in Raleigh or anywhere in NC.
In either scenario, foreclosure typically doesn’t reach the court system until 3-6 months of missed payments. Usually (but not always), a lender will send out a series of notices that your mortgage is in default – overdue or behind in your payment.
Under Judicial Foreclosure:
- Your mortgage lender must file 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 (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required although the process may be subject to judicial review.
- After the established waiting period has passed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell 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 loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets 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, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Narrow Path Investments, LLC to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
If you need to sell a property in NC, we can help you.
We buy houses in NC like yours from people who need to sell fast.
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Another Foreclosure Resource For NC HomeOwners: