Understanding the foreclosure process in North Carolina is an important part of navigating your own home foreclosure.
Before we dive in…
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, 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 know how foreclosure in North Carolina works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.
The Basic Stages of A Foreclosure
There are a few stages that are important to any foreclosure process.
Foreclosure works differently in different states around the country.
The two ways different states use to foreclose upon a property are: 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 (but not always), a lender will send out many notices that you are in arrears – 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 elapsed, 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.
Can a lender sell a property without going to court in North Carolina?
Under the laws in North Carolina, a lender cannot sell a property without involving the court.
In situations like power of sale and civil action foreclosures, the lender must first get permission from the court before selling the property. It’s important to know that in many cases, lenders are required to send a notice to borrowers who are having trouble making their mortgage payments. They have to do this at least 45 days before they even think about starting any legal actions. This notice is meant to tell borrowers about different options they might have to avoid losing their homes.
Please remember, this explanation doesn’t cover everything, especially when it comes to federal foreclosure rules. But it’s good to know that in North Carolina, there are rules in place to give people a chance to find solutions and keep their homes
What help can borrowers get if they struggle to keep up with their mortgage payments?
Now, if you or someone you know is falling behind on mortgage payments, there are helpful resources available. The first thing to do is get in touch with your mortgage company or the company that handles your mortgage (called a servicer). They might have programs to prevent foreclosure, like changing the loan terms, giving you a break from payments for a while, or setting up a special payment plan.
Another option is to contact HUD-approved housing counseling agencies. These agencies can work with your mortgage company to try and change your loan terms to make it easier for you to keep your home. You can find a list of these agencies in North Carolina on their website.
In North Carolina, there’s also the NC Foreclosure Prevention Fund, which is managed by the North Carolina Housing Finance Agency. They can provide financial help to homeowners who are going through a tough time and having trouble paying their mortgages.
But please be careful! Some companies or law firms from outside your state might offer help, but not all of them are trustworthy. To avoid scams, you can find more information about this from the North Carolina Department of Justice.”
Remember, there are people and organizations out there who want to help you keep your home during difficult times. Don’t hesitate to reach out to them if you need assistance
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.
Avoiding Foreclosure in North Carolina
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 828 Cash Buyers to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
Additionally, it’s essential to consider other alternatives before going down the foreclosure path. You may want to explore options such as loan modifications, refinancing, or seeking assistance from local housing agencies. These alternatives could potentially provide a lifeline during challenging times and help you secure your financial stability.
To find out more about selling your foreclosure property in Asheville, please click on this link.
If you need to sell a property near Asheville, we can help you.
We buy houses in Asheville North Carolina like yours from people who need to sell fast.
You can also download our free guide on ways you can STOP or avoid foreclosure.
Connect with us by calling (828) 220-6662 or through our contact page to have us walk you through the specific foreclosure process here locally in Asheville.
Disclaimer: Please note that we are not attorneys and this is not legal advise, but for education purposes only.
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Another Foreclosure Resource For Asheville North Carolina HomeOwners: