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Selling a Home in Pre-Foreclosure in Raleigh, NC

When you hit some bumps in life, it can be devastating. After the hard work and wonderful feeling of buying your home in Raleigh, to find your home in pre-foreclosure is a hard place to be. The good news is that pre-foreclosure is not a dire situation and there’s still time to make a change. There’s a straight line to a positive outcome if you take proactive steps.

Getting market price for distressed properties from real estate investors upon reaching pre foreclosure with a lending institution isn’t out of the question.

What is a pre-foreclosure letter

When you miss several mortgage payments, you home can fall into pre-foreclosure. You’ll know that this has happened because your mortgage lender will send you a letter in the mail notifying you that you’ve entered into pre-foreclosure. In all likelihood, you had an idea that this was happening well before the official notice comes in the mail. 

Though this is definitely a serious situation, it’s not the point of no return. Not by a long shot. You have lots of options when that letter comes in the mail before you lose your house. If this is your situation, step back and take a deep breath before you get emotionally involved. It’s a scary situation, but this notice is still early in the process. Above all, don’t panic!

A property owner who is behind because of unpaid taxes won’t be formally foreclosed on for a while. Making backdated payments or working out monthly installments can prevent a home from getting to the sheriff’s sale or public auction. The foreclosure process begins with delinquent payments, but being served with a letter is not the end of the process.

Just the first step in North Carolina

Pre-foreclosure is the first phase of the long and complex legal process that sometimes ends in a piece of property being taken back by the bank. Whether a family is ultimately evicted from their home in Raleigh depends on a lot of things happening in the interim. 

For homeowners in Raleigh who are behind on mortgage payments, the first step in the foreclosure process happens when the mortgage holder files a notice of default with the Wake County Clerk of Court. 

There are set amount of delinquent payments that a homeowner can fall behind with before they get a notice of default. This is set out in the terms of the mortgage. If you’re a Raleigh homeowner who’s in a tough spot, it’s important for you to look over your mortgage paperwork and find out what the terms of the home loan are. 

Judicial foreclosure in Raleigh, NC

brick house with trees in Raleigh, North Carolina

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Before a mortgage holder can move out of the pre-foreclosure stage of the process, they have to go in front of a judge to get approval. The Wake County judicial system doesn’t move swiftly, so that leaves homeowners in Raleigh some time to pull the loan out of default before the house goes into foreclosure

There are four kids of foreclosure in North Carolina:

– Power of sale foreclosure

– Foreclosure by civil action

Tax foreclosure

– Homeowners association/condo owner’s association foreclosure

All four of these kinds of foreclosure in Raleigh, NC are handled in the court system. The last two involve a homeowner being behind on either taxes or fees associated with their home. The first two are done by a mortgage company or bank lender. The North Carolina General Statues make provisions for all four of these foreclosure processes in North Carolina. 

What is a short sale?

Short sale sign in Raleigh, NC

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In all four foreclosure situations in North Carolina, the homeowner has the power to negotiate a  short sale of the home or to go through with a traditional real estate sale or an all cash sale.

A short sale is when the home is sold for less than the amount owed on the mortgage. Though this is a preferable outcome to a full on foreclosure, a short sale often means that the homeowner will still ower money to the bank. Sometimes the difference in the price of the sale and the amount still due on the mortgage is forgiven by the bank, but not always. 

Often, a short sale situation involves a homeowner selling to an investor or a home buying company. In any case, the mortgage lender has to approve the sale of the home under these terms. Homeowners in Raleigh, NC facing foreclosure will need to contact their lender to negotiate these terms. 

In many cases, the mortgage holder will agree to a short sale if the homeowner agrees to a default judgement. This pulls the house out of foreclosure, but the homeowner will still have to make payments on the amount due to the lender. 

Pros and cons of a short sale

The benefit of a short sale is that it keeps foreclosure off of the credit rating of the homeowner. There’s no massive hit to the credit rating either, though there is still a detrimental mark placed in the credit file. A foreclosure stays on a person’s credit report for seven years. 

 It can take up to a year for the whole short sale process to go through, and it takes a lot of paperwork. 

 Fair, all cash offers for houses in foreclosure can also be part short sales. Pre foreclosure means that the mortgage loan is behind, but there’s still lots of time before the final foreclosure sale. The lending institution might still be able to work with a home owner to create a plan for affordable payments for people in financial distress. Short sales are not the preference for most lenders. They’d prefer backdated payments for a home in default status.

Banks don’t like foreclosure

One wonderful piece of news for Raleigh homeowners facing foreclosure is that banks don’t want to repossess your house. When a loan goes underwater and the bank has to sell the property, they lose money. The best outcome for the homeowner and the bank is to come to an agreement to keep you in your house. 

You can work with the bank to arrange a short sale. This allows you to get out with your home equity and them to avoid the costs of foreclosure. Whatever they can do to prevent you losing your house, within reason, a mortgage lender will do. 

Pre foreclosed properties are a top priority for banks. There are also government programs that can help pull a pre-foreclosure property out of the negative.

Options for homeowners in pre-foreclosure

front door of a pre-foreclosed home in Raleigh, NC

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Lenders are generally willing to work with you and negotiate to keep your house out of foreclosure. 

Though the notice of default means that the wheels are turning towards a foreclosure, there’s still plenty of time to get back on track with your home loan. You might be able to catch up payments in a lump sum or to grade them out over time. There’s even the option to potentially refinance your Raleigh house in foreclosure. For that, you might need to get a cosigner or agree to a higher interest rate. 

If you’ve gone into default because of some life circumstance like a divorce, a job loss, or the death of a family member, you should talk to the mortgage company. Life circumstances happen to everyone, and these are usually temporary situations. You can negotiate a loan modification, make backdated mortgage payments, or arrange for a short sale of your house. 

During the COVID-19 pandemic, there were lots of provisions put in place to help homeowners stay out of foreclosure. For government-backed mortgages, evictions and foreclosure proceedings were halted. Though the crisis is past now, there are still government agencies that can help homeowners stay out of foreclosure. 

Is it too late to sell your home in Raleigh?

Selling a pre-foreclosure home in Raleigh is possible if you step into action. All the way up to the final foreclosure auction of the home, it’s possible to strike a last minute real estate sale of the property in Raleigh. 

Mortgage borrowers can connect with prospective buyers to get market value for their home. Short sales are sometimes the only options if you’ve missed payments on your home. Real estate-owned properties are a common, if unfortunate reality in Raleigh, NC.

To avoid foreclosure, either work with a real estate agent or reach out to a home buying company. As soon as you’re behind in monthly payments, it affects your credit history. The outstanding loan balance might seem like a huge hurdle to overcome, but paying down the mortgage balance with a quick, all cash sale can save your pre foreclosure property.

Keep in mind that once the lending bank reaches out to the county recorder’s office, that’s only the beginning. As a property owner, you have a lot of leeway to save your credit score. A foreclosed property isn’t out of the hands of the owner because a default notice is sent out.

Cash home buyers can help Raleigh homeowners in foreclosure to pull out of even the worst situation. 

Understanding the Detroit Foreclosure Process

Individuals facing foreclosure are in a tough situation, no matter how they got to this place. Particularly in the last few years, there’s been a lot of financial strain on working families. While the Detroit foreclosure process is never an easy one to face, it’s important to know what to expect in order to get to the best outcome possible. 

Over the last several decades, Detroit has seen a steady decline in the auto industry. This reality makes the city much more vulnerable to economic decline. Automobile manufacturers, which were the primary employer in the Detroit metropolitan area, have largely moved their production to other parts of the world. This left a massive hole in the job market all over the country, and it hit Michigan very hard. Families lose their homes as a result. Non-auto industry businesses have found themselves unable to cover operating costs.

To address the problems in Detroit, MI, the state government of Michigan and the federal government have both put in supports in recent years to help families who are facing hardship. Though these are not a guarantee that cities in Michigan will be able to totally recover, it is a step in the right direction.

No matter the reason that a homeowner in Detroit is facing potential foreclosure, the answer is to learn what the process looks like and to find out if there is assistance available to prevent foreclosure.

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Wayne County ranks high in foreclosure

Michigan ranks right in the middle of the United States as far as foreclosure rates. The Detroit area is most impacted by people losing their homes. Roughly one in every ten thousand homes was foreclosed on in Wayne County during the last year. That equates to about four hundred and fifty homes across the state of Michigan. 

The economic realities of Detroit and the surrounding areas are a major driver in these rates. As jobs have left the city, there’s been an increase in the number of people who struggled to pay their mortgage or their property taxes. 

The tax foreclosure process is overseen by the Wayne County Treasurer’s Offices. This office is located in Detroit, MI. Neighboring cities within the area are also under the guidance of the Wayne County Treasurer with regard to property tax foreclosure.

Help for foreclosure in Detroit

There was a moratorium on foreclosure across the nation during the pandemic that expired in 2021. The good news is that Wayne County implemented a series of new supports to help people in this difficult situation. County officials have been working with owners in the past two years to increase the number of neighborhood houses that are exempt from tax foreclosure. At the very least the city gives them more information on property tax foreclosure and how to prevent it.

People facing tax foreclosure now have options to spread out their payments over a longer period of time with this new system. This only applies to those who are behind within a reasonable amount of time, around three years. Though this Wayne County program is primarily beneficial to landlords and by extension their rental tenants, it’s nonetheless a potential place for assistance. The current program is an extension of one targeted towards individual homeowners called the Distressed Owner Occupant Extension (DOOE). This is important news for Detroit businesses and families who are delinquent on their tax bills.

Detroit properties are able to negotiate with the Wayne County Treasurer’s Office to bring tax bills from prior years up to date and prevent tax foreclosure. Payment plan options from the Wayne County Treasurer in Detroit, MI don’t lower the price of past due taxes. They do make it easier for owners to retain their property.

Tax foreclosure rates in the Detroit area are particularly high. Penalties are heaped onto homeowners if they get behind on their property taxes. It’s an insidious problem, and it’s critically important that you contact the Wayne County treasurer’s office if you’re behind. Wayne County also has a myriad of financial literacy programs and other places to find support in financially challenging times. 

Basics of the Detroit foreclosure process

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There are four basic steps that a homeowner goes through during the Detroit foreclosure process. 

1. Missed payments & a breach letter

2. Notice of foreclosure

3. Foreclosure sale

4. Deficiency judgment

That sounds simple enough when it’s put into bullet points, but this process takes many months to complete. There are also lots of possibilities for changes along the way, as these things rarely go in a straight line. That’s because families facing hardship are working hard to keep their homes. 

Michigan is a nonjudicial foreclosure state. In most of these proceedings, the courts are not involved. Instead, legislation has put into place state statutes that lay out what rights a mortgage holder and a homeowner have and how the Detroit foreclosure process proceeds. In some circumstances, judicial foreclosures do still happen in Michigan, but these are the exception and not the rule. 

The average foreclosure takes many months to complete. Though there is always a risk of a homeowner losing their property, we must keep in mind that foreclosed homes and vacant lots are not good for the city of Detroit. Everyone has a vested interest in keeping homeowners on their property for the good of the neighborhood.

Federal and state laws protect homeowners and specify what a lender can and cannot do. It’s not good for any party involved for a home to go through the foreclosure process. Everyone loses money when a home sells at auction.  

How many missed payments lead to foreclosure?

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A mortgage must be behind 120 days before a lender can send a breach letter and initiate the Detroit foreclosure process. That’s unless there are extenuating circumstances. For example, if you sell the property to a third party and don’t pay off the mortgage immediately, the lender can call the loan due and start proceedings. This is highly unusual.

A single missed payment doesn’t constitute a breach of the promissory note. Most mortgage lenders give borrowers a fifteen-day grace period with which to catch up on their payments. That happens before they even charge a late fee. Borrowers can check their lender’s website, their billing statement, or their promissory note for the precise grace period that’s in their loan. 

After the third missed payment, the lender will send a breach letter to the borrower. This notifies them that they’re far behind in payments. The loan will be called due unless they do something. 

Michigan foreclosure auctions

A public auction allows the bank to sell the home if there is no payment on it in four months. The bank reposesses the home and puts it on the auction block.

Foreclosure auctions in Detroit are a matter of public opinion, and anyone can bid on the property. Though most people think that the auction is the point of no return, it’s actually not the end of the line. There is a six-month redemption period in Michigan that allows the homeowner to continue to pursue their rights to the property. 

Know that this six-month timeline can be shortened. This is why homeowners should stay vigilant. The homeowner cannot negotiate to get their property back after this step is completed. When a new owner takes control of the property, the homeowner is evicted and physically removed if they haven’t already left.

Up until the final sale of the home to a third party, the homeowner can negotiate new terms and an extension or loan modification to allow for more time. Even the act of submitting the paperwork slows down the Detroit foreclosure process. That’s even if it’s not immediately approved or not approved at all. For homeowners who are unsure of what options they have, it’s a good idea to reach out to a housing counselor for support. 

The lender must inform the homeowner of the date of the foreclosure auction or sheriff’s sale. In fact, the lender must keep the owner notified of all of the steps along the way. 

Takeaways for Detroit homeowners

Foreclosed home in Detroit, MI
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The biggest takeaway for homeowners in Detroit is that there are options available. The road to being evicted from your home is a very long one. You could prevent foreclosure if you qualify for a modification. Being open-minded and flexible is the difference between your family being evicted or keeping your home. You might also be able to pay off the delinquent amount and remain in your home.

There are ways to pull a home out of foreclosure all along the way. Check out options like a short sale to a cash buyer, mortgage modification, or government assistance programs before walking away from a house. As stated previously, the government and the mortgage lender are both interested in bringing the loan current and keeping a homeowner on their property. 

How to Sell a House During Foreclosure

Think it’s too late to sell a house once it’s in foreclosure? Think again. 

A house is the biggest purchase that most people will ever make, and it’s a process that generally takes years of saving and building credit to make happen. Though people tend to think that getting a foreclosure notice means you’re out of luck, the great news is that it’s not the end!

To know how to sell a house during foreclosure, you first should have a grounded understanding of what the whole thing looks like. There is a definitive point at which you can no longer sell your property in foreclosure, but up until then it’s possible to work with a we buy houses company, a cash buyer, or even a traditional real estate agent. Pulling the your home back from the brink gets you back some of the equity you put into it. When you’re in financial trouble, it’s always a good idea to get legal advice for how to deal with a mortgage company.

Types of foreclosure

There are two different types of foreclosure – non-judicial and judicial. These are exactly what they sound like. A court proceeding oversees judicial foreclosure. The lender or other foreclosing party files a lawsuit that starts the gears turning.  In non-judicial foreclosure, the lender follows a proscribed series of steps that are built into the laws of that particular state. 

Some states have both options, and some states only have judicial foreclosure. Generally, one state has one kind or the other that is more common. 

Depending on the state you’re in, you could also be subject to a deficiency judgment. This means that you’ll have to pay the balance of the mortgage after the lender sells the home. For instance, if your home sells at auction for $70,000 but you still owe $100,000 on the loan, then the lender can come after you personally for $30,000.  

Federal laws surrounding foreclosure

Did you know that there is no deadline set in stone for the time between a missed payment and foreclosure proceedings? All fifty states have slightly different processing times. Federal guidelines mandate how long you have to bring mortgage payments up to date before you are in danger of having a piece of real estate foreclosed on. 

United States federal laws protect homeowners from being foreclosed on too quickly. For most homeowners, there is a minimum of 120 days between the first missing house payment and the lender being able to initiate a foreclosure proceeding. That’s roughly four months, and any mortgage payment that you make during those months extends that timeline.

Financial hardship is a common problem that affects many homeowners, who find themselves either having to declare bankruptcy, come up with a plan to pay the balance remaining, or go through the short sale process. Unfortunately, a foreclosed home is not going to go for market value. 

Steps in the foreclosure process

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There are many steps in foreclosure, and it only starts with that official notice that the mortgage lender has moved to start proceedings. Here are five steps in the foreclosure process.

1. Default

The homeowner misses mortgage payments for three months. This is the first step in the pre-foreclosure process and it’s the first red flag for someone facing foreclosure.

2. Notice of default

After 90 days of missed mortgage payments, the lender sends a notice of default to the homeowner. This actually a public notice that gives the homeowner thirty days to catch up the loan.

3. Notice of trustee’s sale

This is where things take a turn towards finality. The lender, in conjunction with their attorney or a trustee, schedules a sale of the property. This sale doesn’t usually happen for two or even three months. 

4. Trustee’s sale

The property sells in this auction. The highest bidder who can meet the requirements of the foreclosure sale will get the property. Note that, depending on the state, offers from competing buyers push the final date of the trustee’s sale out for months before the final sale. 

5. Eviction

When the sale is complete, the homeowner now faces eviction from the home. An eviction notice mandates that the individual leave the property immediately. At the time of the final eviction, a law enforcement officer will often go to the home to ensure that the former homeowner removes all of their belongings and exits the property.

If bids on the property do not reach the minimum amount owed on the mortgage, the property becomes “bank owned” or “real estate owned”, which means that the lender takes possession of the property.

Date of sale is the end of the line

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A homeowner can make an arrangement with the lender to pull the house out of foreclosure all the way up until the final sale date. This means that they can find some way to get the money together to pay off the past due mortgage amount and keep the house, or they can sell the house to another party. 

If a homeowner gets a new job or has some other new stream of income, the lender can work with them to extend the deadline for foreclosure through loan modification to repay the remaining mortgage debt. Keep in mind that it’s in the best interest of the lender to keep the homeowner in the house. Foreclosure generally represents a loss of money and time for the bank. There is no guarantee they will get the full amount of the mortgage on a piece of real estate in a foreclosure proceeding.

Pre-foreclosure specifics 

Cash buyers can pay off the mortgage amount all the way up to the auction date.  Potential buyers are willing to pay cash for foreclosed real estate, which can help to mitigate the negative impact on the credit score of a homeowner facing foreclosure.

Pre-foreclosure goes all the way up to the moment that the mortgage lender actually transfers the deed out of the name of the homeowner who can no longer afford to pay the remaining balance or even just catch up on delinquent payments. Sale proceeds from selling a piece of real estate to a bank or third party will go to pay legal fees and foreclosure costs as well as going directly towards the remaining balance owed to the mortgage lender.

Sharing financial information or writing a hardship letter can make it easier for a mortgage to stay in preforeclosure and prevent an unwanted change in ownership. Even if the homeowner is not able to maintain ownership of the home, in most cases they can at least get a market value for the property.

What is a short sale?

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A short sale is when a homeowner sells the home that they own and the money goes directly to the bank. This kind of sale doesn’t always cover the total amount of the mortgage, and the homeowner can be expected to cover the balance if it doesn’t. A deficiency judgment can be awarded to the lender if the short sale doesn’t cover the amount of the remaining loan on the property. 

Working with a real estate agent or an attorney can help you to navigate a short sale, and it’s possible to save money when you avoid foreclosure with this method. 

Once a person decides to go for a short sale to avoid foreclosure, then they have to find a buyer for the home. A real estate agent can help to find a potential buyer, or we buy houses companies can let you know what options they offer for getting a short sale on a home. Getting a cash offer for the price of the mortgage is a great way to avoid foreclosure. 

Remember, with a short sale to pull the homeowner out of foreclosure, only expect to get back the money owed on the home. 

Work with your lender to avoid foreclosure

Just as a homeowner worked closely with their lender to get the original loan on the home, so too must they work closely with their lender to pull the home out of foreclosure through a short sale. Be careful about giving too much personal information to the lender, however, as this can be used against the homeowner in the case of a default.

Reach out to your home lender to find out what options you have to sell your home during foreclosure. They have much more latitude than most people realize to alleviate foreclosure. A great short sale can be a much better solution for a lender than sending the property to auction! 

The bottom line here is that if a lender agrees to stop foreclosure because of a solution to sell the house fast, as is, and at a fair market price, then both the homeowner and the mortgage lender come out on top. The foreclosure process can be intimidating, but it doesn’t have to end badly.