11 Ways to Stop Foreclosure in North Carolina - Understanding Foreclosure Laws and Options for North Carolina Homeowners
How Can I Stop Foreclosure in North Carolina?
Here Are The 11 Ways to Stop Foreclosure in North Carolina:
Reinstatement is bringing your mortgage current by paying the total past due amount, including any late fees and penalties.
Adjusting the terms of your loan to lower monthly payments.
Temporarily reducing or pausing mortgage payments.
Agreeing to pay back missed payments over time.
Taking out a new loan with better terms to pay off the existing mortgage.
6. Short Sale:
Selling the property for less than the mortgage balance with lender approval.
Voluntarily transferring property ownership to the lender.
Quickly selling the home "as-is" to a real estate investor.
Filing for bankruptcy to potentially reorganize or discharge debts.
10. Legal Defenses:
Challenging the foreclosure in court on legal grounds.
Applying for federal or state programs designed to help homeowners avoid foreclosure in North Carolina.
11 Ways to Stop Foreclosure in North Carolina - Your Options as a Homeowner
Reinstatement is often a viable option if you've experienced a temporary financial setback that you've since overcome. It allows you to maintain ownership of your home and avoid the negative consequences of foreclosure on your credit history. However, it requires that you have the financial means to make the full payment by the deadline. If you're considering reinstatement, it's wise to also explore whether a loan modification or other long-term solution could prevent future missed mortgage payments.
2. Loan Modification
A loan modification involves changing the terms of your mortgage to make your monthly payments more affordable. This could mean extending the length of your loan, reducing the interest rate, or even forgiving a portion of the principal balance. To qualify, you'll typically need to demonstrate financial hardship and complete a trial period to prove you can make the new payments. This option can help you keep your home and avoid foreclosure.
3. Forbearance Agreement
Under a forbearance agreement, your lender agrees to temporarily reduce or suspend your mortgage payments for a specified period. This can provide relief if you're experiencing a short-term financial setback, such as job loss or medical issues. At the end of the forbearance period, you'll need to repay the missed amounts, which can be done through a repayment plan, lump sum, or sometimes an extension of the forbearance if you're still facing hardship.
4. Repayment Plan
A repayment plan is an agreement with your lender to pay back the missed mortgage payments over time. This plan adds a portion of the overdue amount to your regular mortgage payment. It's designed for homeowners who have resolved the temporary hardship that caused them to fall behind and can afford their regular payments plus a little extra to catch up.
Refinancing means taking out a new mortgage with new terms to pay off your existing mortgage. This can result in lower monthly payments if you secure a lower interest rate or a longer loan term. To refinance, you'll need to have sufficient equity in your home, a stable income, and a good credit score. This option can make your debt more manageable and help you avoid foreclosure.
6. Short Sale
In a short sale, you sell your home for less than the amount you owe on the mortgage with your lender's approval. This is often used when the home's value has fallen below the balance of the mortgage. While a short sale can negatively impact your credit score, it's typically less damaging than a foreclosure and can be a way to gracefully exit homeownership when you can't afford your mortgage payments.
7. Deed in Lieu of Foreclosure
A deed in lieu of foreclosure allows you to voluntarily transfer ownership of your property to the lender in exchange for release from your mortgage obligations. This avoids the foreclosure process and can lessen the impact on your credit compared to a foreclosure. However, you may still be responsible for any difference between the home's value and the mortgage balance, known as a deficiency balance, unless the lender agrees to forgive it.
8. Selling to an Investor
Selling your home to a real estate investor can be a quick way to sell your property without the hassle of listing it on the market. NC Fair Cash Offer buys homes for cash and can close the sale quickly. We can even take over your mortgage payments and get the loan current by paying the past due amounts in full.
This option is called buying the property "Subject To the Existing Mortgage". This option can be particularly appealing if you need to sell your home fast to avoid foreclosure and are willing to sell it "as-is" without cleaning or making repairs. CONTACT US TODAY to get the releif you need!
9. File Bankruptcy
Filing for bankruptcy might temporarily stop the foreclosure process through an automatic stay. Chapter 13 bankruptcy allows you to keep your property and pay off your debts over time, while Chapter 7 bankruptcy may discharge some of your debts but doesn't typically allow you to keep your home. Bankruptcy has long-term credit implications, so it's important to consult with a bankruptcy attorney to understand the consequences.
10. Legal Defenses
Challenging the foreclosure in court involves using legal defenses, such as proving the lender did not follow proper foreclosure procedures or questioning the loan's ownership. If successful, it could result in the foreclosure being delayed or dismissed. Legal defenses require a solid understanding of foreclosure law, so it's advisable to work with an attorney.
11. Special Government Programs
Various federal and state programs are designed to help homeowners avoid foreclosure. These include loan modification programs, direct financial assistance, and counseling services. Programs like the Home Affordable Modification Program (HAMP) and the Hardest Hit Fund (HHF) have provided aid to homeowners in the past. Availability and eligibility for these programs can change, so it's important to research current offerings and apply as soon as possible if you qualify.
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What Rights does a HOMEOWNER have During the North Carolina Foreclosure Process?
As a homeowner in North Carolina, the foreclosure process affords you specific rights under state law:
Preforeclosure Notices in North Carolina
- Preforcelosure Notices are sent to you before the bank initiates the foreclosure process with the Substitute Trustee and the Courts.
- In North Carolina, before a foreclosure can proceed, homeowners must receive a preforeclosure notice. This notice is a critical document that informs you that you are in default and outlines the steps you can take to avoid foreclosure. According to (N.C. Gen. Stat. § 45-102), at least 45 days before initiating foreclosure proceedings, the servicer must send you a notice that includes:
- The total past due amount and other charges that must be paid to bring the loan current.
Contact information for the mortgage lender, the servicer, or an authorized agent who can work with you to prevent foreclosure.
- Information about HUD-approved housing counseling agencies that can offer assistance.
This notice is not just a warning; it's an opportunity for you to take action to prevent the foreclosure process from moving forward.
Foreclosure Notices in North Carolina
- Foreclosure notices are formal documents that inform you of the lender's intent to foreclose on your property. In North Carolina, you will receive:
- A notice of default, which provides a detailed statement of the amounts due and must be sent within 30 days of the notice of hearing (N.C. Gen. Stat. § 45-21.16(c)(5a)).
A notice of hearing, which is the official start of the foreclosure process and must be served to you at least 10 days before the hearing if served personally, or 20 days before the hearing if posted on the property (N.C. Gen. Stat. § 45-21.16).
- These notices are designed to ensure you are fully informed of the foreclosure process and have the necessary information to take action.
Loss Mitigation Options
Loss mitigation refers to the various options available to you to from your lender specifically to help avoid foreclosure in North Carolina. These options may include the following:
- Loan Modification: Adjusting the terms of your loan to make the payments more affordable.
- Forbearance Agreement: Temporarily reducing or suspending mortgage payments for a short period.
- Repayment Plan: An agreement to pay back the missed payments over time along with your regular payments.
- Short Sale: Selling the property for less than the amount owed on the mortgage with the lender's approval.
- Deed in Lieu of Foreclosure: Voluntarily transferring the title of your property to the lender to satisfy the loan and avoid foreclosure.
Each of these options has specific eligibility requirements and implications, so it's important to discuss them with your lender or a housing counselor to determine the best course of action for your situation.
Reinstatement of the Defaulted Loan
- Reinstatement is your right to stop the foreclosure by paying all the past due amounts before the foreclosure sale.
- While North Carolina law does not provide a statutory right to reinstate the loan, many deeds of trust, including those used by Fannie Mae and Freddie Mac, include a reinstatement clause.
- You should check your loan documents to determine if you have this right and the deadline to exercise it.
Military and Armed Forced Protections
- If you're a service member, the Servicemembers Civil Relief Act (SCRA) offers additional protections, such as the possibility to delay foreclosure proceedings while on active duty, and in some cases, for a period after active duty ends.
- Beginning the day of foreclosure sale, North Carolina law allows for an "upset bid" period, which initially lasts for ten days. (N.C. Gen. Stat. § 45-21.20) and (N.C. Gen. Stat § 45-21.27). During this time, another buyer can place a higher bid than the sale price.
- Another bidder may place a bid during this 10 day period and "upset the bid". This will trigger a new 10 day period for any other upset bids. This process continues until no bids a have been placed since the last upset bid.
- Once the 10 day period is over, the highest bidder wins the auction.
- As the original borrower, you also have the right to redeem the property by paying the debt in full during this period.
NC Fair Cash Offer: As Seen On...
What's Involved In The North Carolina Foreclosure Process?
The Pre-Foreclosure Period
- This critical period is your chance to take action before the foreclosure starts. During this stage, you can be charged fees, but you also receive important information on how to avoid foreclosure. This period is your window to find loss mitigation or selling options and potentially obtain alternative financing.
Initiating Foreclosure in North Carolina
- Foreclosure proceedings can't commence until you're more than 120 days delinquent on your mortgage, as per federal law (12 C.F.R. § 1024.41). This period is designed to give you time to seek alternatives to foreclosure.
Judicial vs. Nonjudicial Foreclosure
- Judicial Foreclosure: This process involves the court system and begins with the lender filing a lawsuit.
- Non-Judicial Foreclosure: This is a more streamlined process that involves out-of-court procedures but may include a court hearing to ensure all legal requirements are met.
- The State of North Carolina permits both Judicial and Non-Judicial foreclosures.
The Non-Judicial Foreclosure Process Detailed
Most residential foreclosures in North Carolina are nonjudicial. The process includes:
- Preforeclosure Notices: At least 45 days before initiating foreclosure, you'll receive a notice detailing the default and how to avoid foreclosure.
- Notice of Hearing: The lender files this with the court clerk to start the foreclosure officially. You'll receive this notice at least 10 to 20 days before the hearing, depending on the service method.
- Foreclosure Hearing: A court clerk will review the case to ensure the debt is valid and that foreclosure is permissible under the deed of trust.
- Notice of Sale: Should the foreclosure proceed, a notice of sale will be posted and published, informing you of the impending sale.
Foreclosure Sales Explained
The forclosure auction is public, and the lender often starts the bidding with a credit bid. They may bid the full amount due, including costs, or potentially less.
- The sale itself is a public auction. If the lender bids less than the total debt, they may pursue a deficiency judgment against you, subject to limitations (N.C. Gen. Stat § 45-21.38 )and (N.C. Gen. Stat § 45-21.38A).
- In North Carolina, if the lender wins the auction with a bid below the total debt, they might pursue a deficiency judgment against the borrower, though this is subject to certain restrictions. Should the lender become the highest bidder, the property then becomes "Real Estate Owned" (REO).
- However, if another bidder, such as an individual or company, places the highest bid and it exceeds the debt owed, any surplus from the sale (beyond the amount needed to settle all property liens) legally belongs to you, the homeowner.
- We can help you recover the "Excess Proceeds" from a foreclosure auction by Contacing Us Today!
Deficiency Judgments in North Carolina
- In North Carolina , a deficiency judgment is a court order that holds you responsible for the difference between the sale price of the foreclosed property and the total mortgage debt you owe.
- For purchase money mortgages (loans used to buy the property), North Carolina law (N.C. Gen. Stat. § 45-21.38) generally prohibits deficiency judgments. This means if your mortgage was used to purchase your home, the lender may not be able to get a deficiency judgment against you.
- Filing for bankruptcy might discharge a deficiency judgment, depending on whether you file for Chapter 7 or Chapter 13 bankruptcy.
Resources to Stopping or Avoiding The Foreclosure Process:
U.S. Department of Housing and Urban Development (HUD)
HUD-approved housing counselors can offer advice on avoiding foreclosure.
North Carolina Foreclosure Prevention Fund
Offers assistance to North Carolina homeowners struggling with their mortgage payments.
Legal Aid of North Carolina
Provides free legal assistance to low-income individuals, including help with foreclosure in North Carolina.
Consumer Financial Protection Bureau (CFPB)
Offers information on rights and laws regarding foreclosure, as well as guides on how to communicate with lenders.
Making Home Affordable (MHA) Program
Provides a variety of programs to assist homeowners, including loan modifications and refinancing options.
North Carolina Commissioner of Banks (NCCOB)
Offers resources and information on mortgage issues and foreclosure in North Carolina.
North Carolina State Bar
Can help locate a foreclosure attorney for legal advice and representation in North Carolina.
A 24/7 hotline that offers free financial advice and assistance for North Carolina homeowners.
North Carolina General Assembly
Access to state statutes that govern foreclosure and housing in North Carolina.
Freddie Mac's "Avoiding Foreclosure" Section
Offers information on alternatives to avoiding foreclosure in North Carolina and how to seek help.
Fannie Mae's Mortgage Help Network
Provides free housing counselor assistance to North Carolina homeowners with loans owned by Fannie Mae.
National Foundation for Credit Counseling (NFCC)
Nonprofit organization offering credit counseling and foreclosure prevention advice.