It’s certainly not something you would want to think about or plan for, but when you’re in danger of losing the roof above your head, it’s best to be armed with the facts that could save you from foreclosure or help you to go through the process with as much dignity as you can. Foreclosure laws vary from state to state in the United States, so if you’re falling behind on mortgage payments and facing the threat of losing your home in Washington State, here’s what you need to know:
• Mortgages in the state operate under the title theory, where your home is technically in the custody of a trust until you pay off your entire loan.
• Most foreclosures are of the non-judicial kind, which means that a power of sale clause is included in your loan document. If you default on your mortgage payments, your lender is well within his rights to auction your home.
• If there is no power of sale clause in your documentation, your loan provider must go to court to secure permission to be able to sell your home to the highest bidder. This is known as a judicial foreclosure and the sale must be publicly noticed.
• Your lender must send you a notice of default 30 days prior to attempting to sell your home; the document must include details of the default and the foreclosure costs and must be sent through certified or registered mail to your attorney, if one is specified in the loan document.
• You have 11 days (or more if your lender allows it) before the sale to get your loan reinstated and up to the time of the sale to pay it back in full.
• Your home must be sold within 190 days from the date of the first default (an extension of 120 days may be secured if the trustee agrees) between 9 am and 4 pm on a Friday or the following Monday if Friday is a holiday.
• The only reasons an impending sale may be delayed are when you contest the foreclosure in a court of law, ask the lender or trustee for postponements or file for bankruptcy.
• You cannot redeem your home in the event of a non-judicial foreclosure. A judicial foreclosure allows you one year in which to redeem your home, during which you can stay in residence.
• If the sale does not fetch the amount required to pay off the loan, your lender cannot ask you to pay the difference if the foreclosure is non-judicial. A judicial foreclosure allows your lender to seek a deficiency judgment unless you’ve not lived in the house for 6 months before the foreclosure ruling.
If you’re facing impending foreclosure, fight it out rather than ignore the problem. Talk to your lender before a notice of default is sent to you and see if you can buy some more time to pay off your debts. Do not get taken in by offers from mortgage fraudsters to pay off your loan. See if you can prevent the foreclosure by going through the Federal Housing Information portal and reading up on your rights.
Related Page: Foreclosure Property Search
Related Post: Short Sales, Distress Properties, Foreclosures and REOs
By-line: This article is contributed by Sarah Scrafford, who regularly writes on the topic of international home listings. She invites your questions, comments and freelancing job inquiries at her email address: sarah.scrafford25@gmail.com.
25 Comments
It’s Jan 12th. I have perfect credit rating. I’ve always paid my mtg on time (PHH Mortgage). Last Friday, I lost my job. I’ll find another one…but timing is the issue. In the interim, cash flow will be an issue. Do you have any suggestions under my current circumstances?
Much appreciated!!!
–Jeff
Hi Jeff, I am sorry to hear about your unfortunate circumstances. A few of my friends are facing the same delimena and what I tell them is to get in contact with their mortgage lender and notify them of the sistuation. Letting the lien holder know of the situation prior to their being an issue of late payments is the best policy but sometimes the lien holder won’t work with people until the home owner is in trouble; backwards in my opinion.
On the other side, lien holders maybe willing to work with you since you have good credit and have been timely with payments. Banks do not want properties back any more than home owners want to be in a foreclosure. I would start early and talk the lien holder and see what they have to so say.
Myhusband and I ran into problem and our mortgage compnay put us on a special payment plan, and said after a time period if we complied with the program we would go thru a loan modicfication program and get lower interest rate and monthly payments. We complied completely, then they said no payment for 2 months while the review and modicfication was done. We keep checking – they say it’s still in review..and yesterday we got Default papers. The mortgage company still says we are in review and shouldn’t have been served the papers- but the trustee company isn’t returning our calls- so what now – ??
Hi Mary, the email address has been fixed and I am sorry to hear about your situation. A similar thing happened to a friend of mine. The lien holder set up a repayment plan and told my friend to hold payments until the balance could be paid and the loan modification was done.
Time went by with no word from the lien holder and he called their office many times while being transferred around from person to person with no notes being made in his file. Then one day the lien holder called inquiring why no payments have been made and no phone calls where returned. It was my friend who was told to hold payments by the lien holder and it was he who made all calls to the lien holder.
By this time his frustration was through the roof with the lien holder. It seemed that the people managing his account didn’t care or do their job (I have heard other horror stories about poor service and record keeping by lien holder companies).
The story does continue from their. The lien holder then request partial back payment from my friend and when he sent the money order, $10k, the lien holder said they never got it. Now my friend has to wait through the banks time period to re-issue a money order and the lien holder is adding additional fees. So my friend is getting an attorney.
I personally feel the lien holders should held accountable for poor record keeping when there are people out there working their butts off to get through these difficult times. The best advice I have is to keep good records and if it situation is spiraling out of control I would seek legal advice.
Hello, my wife & I have fallen behind on our 2nd mortgage and we just came home to a phone call from the mortgage company saying they plan to proceed with foreclosure. We had been advised that the 1st mortgage takes precedence & that though it can be threatened, that the 2nd mortgage cannot be foreclosed upon. We’re confused, what is the truth?
Hi Terry, I am sorry to hear about your current state. The answer is “yes”. The second lien holder can start the foreclosure process.
In the event the 2nd proceeds with foreclosure the 1st will be paid in full prior to the 2nd recieving any of the proceeds; which is why some 2nds don’t start the foreclosure process as they may get nothing out of the foreclosure process and by not foreclosure there is a possibility the 2nd will be brought current.
It would be wise to consult a real estate attnorey since the 1st mortgage is in good standing as I assume you wish to remain in the home.
Hello, How do you go about legally fighting a trustee sale? All the law offices here in Western Washington seem to be booked up for at least 3 months. So I’m looking stall, till I can hire an attorney.
My mortgage company has never supplied me with copies of the signed loan documents. The appraisal, on which the loan was based I’ve been requesting for 2 and half years.
They’ve done other questionable things. . . in Dec.’08 I requested via certified letter the appraisal & a full accounting, or I’d stop paying. Well I stopped paying.
In April I file your arbitration, I may have signed an arbitration agreement, don’t know can’t get the signed documents. Last week I found “the notice” from the trustee on my door. If scent a certified letter saying I want my day in court.
They claim they can’t auction sooner then 120 days, whats the real time for removal?
Thank for your time- Tim
Hi Tim, unfortunately a real estate attorney is the best option for legally fighting a trustee sale. I have a colleague that I can refer who is a real estate attorney in Bellevue if you like. In the mean time it would be best to have as much documentation together to present to the attorney especially if there has been mishaps on behalf of the lien holder.
With regards to the auction date: 120 days is the soonest the auction can happen. More than likely it will take longer than due to the procedural process. Here is a link to more info on the foreclosure process.
http://www.barnettassociates.net/short-sales-distress-properties-foreclosures-and-reos/
Thanks for the insight Toby, if your colleague is a real go getter I’d love to talk with them.
In all honesty, and without going into great detail, I’m planning on vacating the home. I’ve got two sons with autism and I’ve gone to great effort to make this home safe for them. But finding a new home where we won’t get the boot, seems less risky. It isn’t cheap child proofing a home for my kids, so money that could have gone to the mortgage is going to the move.
Would it be safe, if not wise, to lease out the house in question for six month and put the money toward legal costs?
I wouldn’t want another family to get the sudden boot, so what happens to a renter after auction day?
At this point I don’t owe my mortgage company any favors, and I don’t want to hand over the house without a fight. I intend to drag this out as long as possible. The list of what I can prove, at this point, is shorter then the list of actual grief they’ve caused me.
Thanks once again for your time,
-Tim
Hi -
My wife and I purchased a bigger home in April 2007,and at the time, we took out a line of credit against our existing home (both homes are in the Puget Sound region) which already had a first mortgage (different lenders) . After not being able to sell our previous house, we started renting it out in Sept2007 in order to wait out the current market. Unfortuneately, we lose $600/month net ($3K/month when unrented), and have accumulated almost $40K in unclaimed losses in regards to our taxes (per our accountant).
Here is where it gets bad. The house has continued to drop in value and if we sold today, we would be $75K+ short of paying off both loans, but still $75K above what we paid for the house. Because of the looming tax implications after the three year mark, and the losses we are taking, our account has strongly recommended we turn the house back over to the bank. My research tells me that because the two loans are by different lenders and we have other assets, a short sell or Deed in Lieu of Foreclosure are unlikely.
My fear is the lender of the line of credit will try to go after the residence we purchased in 2007 and our other assests (401K, IRA, savings). The current renters lease ends at the end of December and I need the house out of our name by September 2010. If we go into foreclosure, can the second lender go after our other assets? Any advice?
Thanks in advance
Robert
Hi Tim,
Sorry for taking so long to respond. July has been a crazy month with trying to help people buy and sell their properties. I will email you privately my colleagues info to the email provided in the website.
After the day of auction in a foreclosure the renter can remain in the home for up to 20 days. The new owner cannot force out the tenant for any reason until the 20 days passes. It is a some time but not a whole lot, especially with special needs children.
Hi Robert,
Your situation is unique because most people who are faced with foreclosure and/or doing a short sale have no other assets. As noted in a previous comment, a second lien holder can start the foreclosure process (mostly they won’t due to market conditions and being in the second lien holder position). But with regards to going after personal assets to pay off existing debts I would say the second lien holder could and very likely would seek personal property in payment of a debt.
It would be best to consult a real estate attorney regarding that matter as they will know the best answer. I would advise against foreclosure at the last resort because of the long term credit implications. Have you tried to sell the property since Sept. 07?
Hi:
Due to circumstances, I have defaulted on my first mortgage but am still paying the second. I have 2 questions:
1. Do I continue to pay the property tax when it comes due in April?
2. Are the mortgagors taking longer to foreclose and how long? (oops that’s 3 questions)
Thanks.
Hi Rob, I am sorry to hear of your situation.
If you are in default with the 1st lien holder and they decide to foreclosure then the lien holder will assume the tax liability at time of foreclosure. I recommend keeping the taxes in good standing because the County can force the sale of the property due delinquent property taxes.
In Snohomish County, we have seen the foreclosure process take slightly longer but for the reasons I do not know. My best guesses are: 1) it is taking longer due to the volume of of properties the lien holders are acquiring and 2) the banks are taking longer hoping people will be come current on their payments. There could be a host of other factors involved and can vary from state to state. Are you local Rob?
My husband is laid off and we are expeting a foreclosure soon because we cannot pay the mortgage. I got a notice of what is owed for the 1st half of property taxes this year. This is usually paid in our payment which we aren’t making. Do I have to pay this even if I know I’m not going to stay in my house? Will they put me in collections or something? I have nothing for them to take and I don’t have the money to pay the taxes.
Thanks for your help.
Hi Mary, I am sorry to hear about the unfortunate circumstances. Not being an attorney I can’t advice not to pay the taxes due to foreclosure and if at all possible it is best to pay the taxes even though the taxes follow the property and not the person.
Hi,
My low incomed, elderly father and his elderly wife purchased a home 4 years ago with a (younger) friend of theirs. The original deal was that the younger friend would make the house payments while my father would take care of the utilities. Upon the death of my father and his wife, the house would then belong to solely to their young friend. Father made the downpayment, so at this point they are pretty equal as to the amount of money they both have into this house. All 3 of them are on the title of the home but Father and his wife are the only ones on the morgage. Their friend has decided he no longer wants to live there and is planning to move out soon and stop making payments. There is no way my father can make the payments. Obviously they will be forclosed on. They don’t have enough income to live elsewhere. We are in a bind and not sure what to do. Leslie
Hi there. My husband and I have not made a mortgage payment in about two and a half years. The house went to auction February 5th 2010, but is still listed in our names (I assume it did not sell at auction). I understand the bank needs to take steps to transfer the deed into their names (2 different banks for 70/30 mortgages). We’re wondering how long they have to do this. Are there laws that regulate how long they can take? If it’s x-many years do we then own the home free and clear? Honestly, we’re hoping it happens soon so we can cancel the homeowners insurace policy. The house is vacant, we moved out of state, and we did file bankruptcy, relieving us of the mortgage debt.(WA State)
Thank you kindly,
Emmi
Depending on the state’s law, in which the home resides in, the answer can vary. In Washington, if the property didn’t sell at auction then the property would revert to the primary lien holder – though ownership maybe in dispute with the 2nd lien holder for title. In either case, the property will not revert to you as owner with free and clear title. An item I do not know, which you should consult a real estate attorney, is how the foreclosure has possibly interfered with the new ownership transfer.
so what happens to a piece of property, if a judicial(sherrif’s sale) forecloses because of back taxes, or who gets the property?
Hi Kent, if a property is being foreclosed on by the State due to back property taxes then then they, the State, would have to file foreclosure on the poperty and start the foreclosure process. More than likely there is a lien holder holding the note on the property; when that is the case the lien holder would have to foreclose on the property and the lien holder would have legal title. The lien holder could either choose to clear the tax liability or give the property to the State.
Due to the bad economy I am facing partial unemployment aka unpaid furlough days every month. This has created a huge wrench in our finances and the inability to maintain our mortgage. We seen this coming when I was notified about taking unpaid furlough days starting January2010. We notified our lender right away, we also contacted the government agency and started the application Home Affordable only to receive a denial letter nearly 6mos later. We called the lender right away they sent another application which recently got fedex back to the lender. We are now waiting for an answer again hoping it won’t take another 5mos.
The fact is my unpaid furlough days per month has increased lowering our income even more to a point of not affording the entire amount of our mortgage. We received our 1st default demand letter and we are really stressing out. We want to keep our home. What can we do? Why are the banks taking so long to respond? Don’t they have timeframe guidlines from the government?
Hi Worried in Covington, I am sorry to hear about the increase in furlough days and the banks untimeliness response time. I am unaware if the banks have specific timelines to adhere to but I do know that they have to make a good faith effort to help homeowner’s who are facing trouble if they want to qualify for their own assistance. Part of the reason the banks take so long to respond is due to the back log of property flooding their desks. It is my guess, that banks will continue to have a back log long into next year and the best advice I can give is be persitant and document everything – lender emails, phone calls, and denials the banks have sent back. Hope that helps.
We are bought our home at the peek in 2005 and are 100,000 underwater. I lost my job and unemployment is running out. We are not behind yet but how do we get out. We could buy a much cheaper home and down size then go into forclouse on this one but just don’t know what to do? We need to do something before we have no options and damage our good credit. Any ideas and what is the best way to get out without having to to get 1099 or pay the difference?
Hi Kelly, I am sorry to hear about your situation. You could try a short sale in which case the lien holder may or may not issue a 1099 for the difference. Refiancing is probably out of the question as employment verification is a must. Mickie would be happy to tanswer any questions you may have and she can be reached at 425.750.9090.
What happens if I foreclose on an investment property in King County in Seattle, wa. If the property sells for less than what I owe to the bank, can the bank come after my wages or 401K. I don’t have any other assets. I am current on my payments so far. If the banks lower the interest, I may afford to make the payments ( current rate is 6.25 , if I can get less the 5 it will help ).