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One of the most intense things that can happen to an individual in their lifetime is to lose their home to foreclosure. It’s a huge burden that follows a person for years, even though it takes only about a year to get to the point of no return. To prevent foreclosure in Charlotte, NC, you first have to educate yourself on what your options are.
Understand the impact
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Foreclosure has a devastating impact on your credit. North Carolina homeowners who get caught in foreclosure proceedings won’t be able to secure another mortgage, or potentially get things like a car loan or a new line of credit.
A foreclosure follows on your credit for seven years. This can cause financial difficulties if you try to work with a local company or a national company to buy goods or get a loan. Any homeowner in the Tarheel State who has potential foreclosures in the future needs to be aware of the long-term impact of foreclosure in NC.
What’s important to realize here is that, in North Carolina, the missed payments leading up to the foreclosure have the biggest impact on credit scores. The foreclosure itself won’t have as big of an effect on the ability to get loans in the future – it’s all of those missed payments.
The foreclosure process in North Carolina
When there are enough missed payments on a home loan, the house goes into default. That’s the point when a mortgage company can initiate foreclosures on a property.
Mortgages are loans that are secured with real property – a home for most people in Charlotte, North Carolina. If that homeowner doesn’t make their payments on time and in good faith, the lender can repossess the property and sell it at auction under North Carolina foreclosure law.
At auction, the Charlotte home is sold to the highest bidder. That bidder then takes possession of the home immediately, and the person or people living there have to vacate through the eviction process.
That’s a wide overview of what foreclosure in North Carolina looks like, and for most folks, that’s enough for you to know. However, if you don’t have the resources to pay for the cost of the mortgage payments, you’ll want to know how you can avoid foreclosure.
North Carolina legal requirements of lender
Under the North Carolina General Statutes, which are the laws that govern the state, a lender can’t start the foreclosure process until a homeowner is behind roughly four months – 120 days – on their payments.
Once you miss a payment in the Old North State, you’re immediately thrown into pre foreclosure in North Carolina. this doesn’t materially mean anything. It just indicates that you’re struggling to make payments and are in danger of heading into foreclosure.
During this time, North Carolina law permits the lender to charge late fees for those missed payments. They’ll generally send a breach letter to give you information about how to avoid foreclosure.
Keep in mind that no company wants to foreclose on those loans. If a borrower fails to make their mortgage payments, then there are no benefits for the mortgage lender. They are saddled with the cost of reselling the home and potentially having to make repairs if it doesn’t sell at auction.
Direct contact from the lender
Federal law requires a mortgage holder to at least attempt to contact you by phone as well as in writing. They have to reach out to you to let you know where you stand and also to let you know what options you have to catch up a mortgage in Charlotte, NC.
Consumers are offered some protection under North Carolina law and federal law.
Understand your promissory note and deed of trust
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There is so much paperwork that goes into a mortgage, and much of it stuff that Charlotte homeowners don’t even read initially. All of the legal terminologies can be frustrating and overwhelming.
One of the first things that you should do if you are in danger of foreclosure is to go and look at your promissory note and your deed of trust. These are the legal, binding documents that will lay out exactly what has to happen before your house can sell at a foreclosure auction.
You have protections under North Carolina law and under federal law. Consider enlisting legal services to help you understand what is in these documents to offer you those protections. These services are often free through home advocate organizations in North Carolina.
You have contractual rights to protection in America. Don’t ever think that a large mortgage company has a single special privilege over you.
How long does it take to foreclose on a house in North Carolina?
With foreclosures in North Carolina, the lender must contact you by phone no more than thirty-six days after you’ve missed that first payment. They must then contact or attempt to contact you again after each missed payment following that first one.
No more than forty-five days after your first missed payment, the lender is legally obligated to contact you via a notice from their department of loss mitigation to give you options. You’ll also get an individual mortgage counselor assigned to you to help you prevent foreclosure.
Under Governor Roy Cooper in North Carolina, mortgage companies have to contact you via multiple modalities to help you get back on track.
The foreclosure hearing
The vast majority of foreclosures on residential homes in Charlotte and across North Carolina are nonjudicial. Though there are judicial foreclosures in North Carolina, they are the exception, not the rule.
Though the process is called nonjudicial foreclosure, there is generally one court appearance that owners are sometimes required to make. This is the actual foreclosure hearing itself. It’s the final step in the process.
A lender must let the homeowner know about this by serving them with a “notice of hearing”, which comes by certified mail ten to twenty days prior to the date of the hearing. This notice can also be served in person or by being posted on the door of the home.
The foreclosure hearing is the point of no return in the foreclosure process. After this most programs can no longer assist owners to prevent foreclosure.
How can I stop foreclosure in NC?
Prior to the foreclosure proceedings, there are many ways to stop the process from going forward and to prevent losing the house, being evicted, or falling into homelessness.
1 – Get current on the home loan after the first missed payment
This one might be obvious, but it’s the best way to prevent foreclosure. That’s partly because fees will accumulate on the loan with each missed payment. Those fees will make it harder to afford to catch up.
This might mean taking a hustle job with a local LLC, reaching out to nonprofits for financial support to catch up on other bills and free up cash, or working with programs on financial literacy.
Bills can feel relentless for families. Sometimes it’s like trying to fill a bucket with a hole in it. There are programs across America, not just in North Carolina, that can help you to catch up on your mortgage or figure out ways to do so. (Hint – there are some ways to do so further on this list!)
2 – Redeem the property
This is a last-minute hail mary to save families from homelessness due to foreclosure in Charlotte.
Redeeming a property is when the homeowner is able to pay off the total amount of the foreclosure before the sale of the property. North Carolina law gives Charlotte homeowners facing foreclosure a ten-day window after the auction to pay off the loan.
3 – Work with an investor on an upset bid
Even if you can’t redeem the loan prior to that ten-day window, there might be another chance to save the loan from foreclosure. An “upset bid” is when someone comes in on that ten-day window and offers a higher bid on the house.
It requires a hefty amount of funding, but that ten-day window resets every time there’s an upset bid on the property. This can go on and on, dragging a Charlotte foreclosure out for weeks after the foreclosure auction.
In Charlotte, North Carolina, an upset bidding war is most likely to happen between two investors who want to buy the property because of location or some other benefits they see. However, a homeowner can agree to sell to a real estate investor, then rent out the home after. This requires a contract and is tricky, but it can allow families to stay in their homes despite the foreclosure.
4 – Apply for loss mitigation
Lenders are mandated by the federal government to offer loss mitigation after one or two missed mortgage payments. Those facing financial difficulties should absolutely look into assistance like this when trying to pay down missed payments.
Foreclosure prevention is important in America. Services to help homeowners with foreclosure prevention through loss mitigation can provide assistance in Charlotte and across North Carolina.
These programs provide foreclosure prevention assistance for free. No one should ever pay to keep their home out of foreclosure in NC, not to anyone except the lender. Depending on the situation you’re in, there are options to make a payment arrangement with or without the help of outside agencies.
Always remember that mortgage services do not want to have to sell the house. They would much rather collect the debt and keep homeowners in their homes. This saves them cash and prevents additional costs.
5 – Apply for a deed in lieu
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It’s a hard thing to think about for struggling families in Charlotte, but it could be better to give the house over to the mortgage company rather than to let the clock run out and have the lender take possession through foreclosure.
A deed in lieu is when the homeowner and their spouse agree to give the property over to the bank, rather than allowing the home to foreclose. It’s worth it to reach out to agencies for free advice before making the decision to go this route. There could be a North Carolina program that will provide benefits to prevent this outcome.
With a deed in lieu, the bank takes possession of the single-family home in Mecklenburg County before the back payments throw the mortgage into foreclosure. Homeowners don’t keep the home in this case, but for many homeowners, it’s a better option.
Once the house is turned over to the bank, homeowners can get a fresh start in a different home in Charlotte, NC without taking the credit hit.
6 – Apply for a forbearance
A forbearance is when the mortgage company agrees to fold the past due payments into the loan at the end, effectively catching up on missed payments on the Mecklenburg county home. This is one of those services that people don’t think of enough when they miss payments.
There is a limited amount of time that forbearance can apply to on any given loan on a single-family home or any kind of home in North Carolina. However, families in Charlotte can catch up on every missed payment this way and start from scratch.
If a family is getting assistance through government programs like NC Health Check or free and reduced lunch for families with kids, that can qualify them for forbearance through foreclosure prevention programs in North Carolina.
A forbearance often has strict income requirements in NC. Individuals must sign an attestation that they have a hardship with their income that is preventing them from making a payment. Programs like Medicaid and food stamps almost automatically fill the requirement for forbearance related to hardship.
7- Obtain a loan modification
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As early as possible after a missed payment or even in advance if you know that you’ll be missing a payment, get on the phone with the mortgage company.
You want to ask for a loan modification. This is the best way to allow you to keep your home while fulfilling your legal requirements to the lender.
A loan modification might lower the amount you pay for a while. This will give you a chance to look at programs related to assistance, talk with investors, or find a new business if you’ve lost your income in Charlotte.
This kind of assistance is free in NC, and Charlotte homeowners have a wealth of resources to work within a loan modification program.
8 – Look at government programs
There is so much assistance out there for families facing financial difficulties in Charlotte, NC. Particularly after the onset of the COVID 19 pandemic, the government created benefits and more than one program to help homeowners access assistance.
The American Rescue Plan provided multiple entrees into services for families during the coronavirus pandemic. These services covered everything from hardship forbearances to deferments. Mortgage payments worked with legal experts to create things that worked within the American Rescue Plan.
If your income meets the requirements, you’ll be able to get assistance in the wake of COVID 19. Though many of those COVID 19 relief programs are no longer available, they are a great example of how government programs can help provide resources through agencies.
The infrastructure for many of the services are still in place, allowing homeowners to access some of the program support that agencies started providing during the coronavirus pandemic. These are always free, and each program has its own ways to access debt relief.
9 – Work with a housing counselor
NC is home to a great network of housing counselor services. In Charlotte, homeowners can visit offices in cities across Mecklenburg County to get sliding scale services. Often, these are free for Charlotte residents.
If you are struggling with medical bills, you’ll be able to access a program that can help you find agencies to help keep your single family home. When you can’t afford the cash to save your house or feed your family, it’s important to the city of Charlotte to help you avoid homelessness.
Support programs, new ones, and old ones are a great way to figure out how to save cash and maximize your income. It’s possible to work with these agencies free of cost in Charlotte.
Foreclosure prevention is important for the community in NC, not just for homeowners and mortgage companies in Charlotte. That’s why foreclosure prevention services with a housing counselor are often free of charge in NC.
10 – Pursue a short sale
A strategic way to avoid foreclosure and get it all over fast is to pursue a short sale.
In this method of foreclosure prevention in NC, a homeowner works with an investor to sell the home for much less than the balance of the debt. This must be done in conjunction with the lender, who will agree to take less cash than is due on the home.
In this instance, the homeowner does not get to stay in the house. However, they are able to prevent a major hit on their credit or the credit of their spouse if they are a comaker on the loan.
A short sale is a completely legal process. An investor might have a related LLC or they might be an individual working as a real estate investor on the side. In any case, an experienced investor in Charlotte, NC will know exactly what the legal requirements are for a short sale. They’ll also be able to walk you through any related bumps that you might encounter along the way.
Other options for foreclosure prevention
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Not mentioned in our list of tips is anything to do with Chapter 13 or Chapter 7 bankruptcy. Both of those options automatically put a stay on foreclosure proceedings, however, they have a completely different set of legal and financial ramifications.
If you are in the military or are a combat veteran, you might have other free resources at your disposal. North Carolina is home to many retired and active-duty military servicemembers.
Foreclosure relief for military personnel is available under the federal Servicemembers Civil Relief Act. If you are on active duty or have been on active duty within the last year, no mortgage company can foreclose on your home during that time. This gives you a great deal of grace to figure out your financial situation if you’re struggling in North Carolina.
Don’t give up in the face of foreclosure!
Hands down, the simplest way to deal with foreclosure in North Carolina is to ignore the problem. Eventually, this is one that will go away. However, it will go away when your home is in the hands of a lender.
Not only will you have to find another place to live, but you’ll also have a massive hit on your credit that will prevent your financial autonomy in the future.
Taking action to prevent foreclosure can make all the difference. Look at all the options, and safeguard your future against foreclosure!