Five Ways to Save Your Home If It’s up for Sheriff’s Auction
If you have a home with a mortgage, the worst word you’ll hear (even worse than termites) is foreclosure. This process, usually triggered by a failure to make a loan payment, allows the lender to get their money back. The foreclosure process can be lengthy and complex (in Hawaii , the average foreclosure takes about 7 years ), and homeowners usually have more options than they may initially realize to fight , slow down, and end foreclosure.
If this tactic fails, the house is often put up for sale at a sheriff’s auction, where the house is sold to the highest bidder so that the lender can recoup (part of) their investment. There is usually a state-mandated process for notifying the public (and the current homeowner) that the home will be sold, which requires a certain amount of time between the announcement and the actual auction. This may take several days or weeks, depending on the laws in your area.
If you haven’t been able to stop the foreclosure and your home is up for auction, you may think it’s time to pack up your belongings and start rebuilding your life. But even if your home is scheduled to go up for auction, it’s not too late. Here are five things you can try to stop the sale and save your home.
Pay what you owe
While it’s unlikely that you have the money to pay off your existing debt to the lender (your home is foreclosed on, after all), if you suddenly receive those funds, you can usually stop foreclosure before auction day, paying off your debt, including any fees that the lender has added to the account. This is called a mortgage restoration, and while it can be more expensive and complicated as you get closer to the sheriff’s auction, it can usually at least be done until the house is officially sold.
Declare bankruptcy
Filing for Chapter 7 or Chapter 13 bankruptcy effectively stops the foreclosure process at all stages because the court will typically issue an automatic stay , which stops the process. Chapter 13 is generally considered the best choice if you are trying to keep your home (as opposed to just trying to pay off debts). This can work even if your home is already up for auction, but you will need to file and make a judgment before the auction date, and you will need to get the order to your local sheriff’s department on time. review it and remove your home from their listings.
Bankruptcy is not a magic spell: the creditor may eventually get the stay lifted, so you should take any delays as a gift and move forward with resolving the problem through a loan modification or other solution.
Sue the creditor
There are two types of foreclosure processes: judicial (where the lender sues you and gets a court order to begin the process) and non-judicial, where the terms of the mortgage allow the lender to simply proceed without bothering the courts.
If your foreclosure was non-judicial, this means that court may be an option for you , even if your home is up for auction (you probably won’t be able to sue if your foreclosure is judicial, since the courts have already made a decision) . This is only a good option if you actually have a cause of action; simply filing a claim will only slow things down for a short period of time. Unless you can prove that the lender made a serious mistake or violated local laws, it probably won’t help stop the auction.
Modify an existing loan
When you are faced with a foreclosure or sheriff’s sale situation, it is important to remember the number one rule of mortgages: the bank just wants their money and will always choose the easiest and safest way to get it. A foreclosure means they have determined that you are no longer safe. Applying for a loan modification —even late in the process, after your home has gone to auction—can stall the process. If everything goes well, you can simply resume making mortgage payments.
This may work because federal law prohibits lenders from holding a foreclosure auction if a loss mitigation application is received 37 days before the auction. The success of this strategy depends on how much time you have to prepare – for example, if you receive notice that your house will go to auction in 2 months, you will have time to apply for mitigation, which will stop the process. If you can then keep up with your payments or negotiate a change or other solution, you can cancel the auction and keep your home.
Familiarize yourself with the “right of foreclosure” laws
Finally, even if you can’t stop your home from being sold at auction, you may still have one last option: foreclosure rights . Not all states have foreclosure laws , but those that do have a post-auction period during which homeowners can pay the full amount owed plus any additional costs and regain title to their home. For example, in New Jersey, after an auction sale, there is a 10-day period during which you can file an objection to the sale (and this period can often also be extended by filing for bankruptcy). In Philadelphia, the former homeowner has nine months to buy the property, and the new owner could lose any money he invested in the property if the previous owner is successful.