How to Sell Your Home Pre-foreclosure
No one wants to think about foreclosure when they’re buying their home. But life is full of unexpected challenges, and no one should have to deal with long-term repercussions over something that’s completely out of their control.
Unfortunately, far too many Americans are facing foreclosure in the wake of the pandemic. If you’re one of them, it can feel like you’re running out of options fast. But here at Bill Buys Houses, we’re helping Minnesota homeowners take back control of their lives when they’re facing foreclosure.
In this post, we’re talking about selling your home pre-foreclosure and how we can help. Give us a call to learn how we buy houses and connect with a cash home buyer today.
During the height of the pandemic, there was a federal moratorium on mortgage payments. But once that moratorium ended, homeowners across the country found themselves struggling to get caught up.
Unfortunately, homeowners who fall too far behind on their mortgage payments are at risk of losing their homes to foreclosure. One of the most common mistakes these homeowners make is to avoid the problem hoping it will somehow resolve itself.
But if there’s one thing all cash home buyers know, it’s that ignoring the problem will only make it worse. That’s why one of the most important things you can do when you fall behind on your payments is to be proactive in making a plan. If possible, you may be able to make arrangements to get caught up on payments. If you’re unable to do so, the next best option is to sell your home before your credit takes a hit that can stick with you for years to come.
Types of Foreclosures
Once a homeowner has defaulted on a loan after falling behind on a certain number of payments, the mortgage lender will refer the loan to their trustee or attorney. In most states, there are two main types of foreclosure:
● Judicial Disclosure
Just as the name implies, a judicial disclosure is a disclosure that goes through the court system. With a judicial disclosure, an attorney will file a lawsuit to begin the foreclosure proceedings. The homeowner will be sent a copy of the petition or complaining, which begins the foreclosure proceedings. Typically, the homeowner will have around 30 days to respond to this complaint.
Once this occurs, the homeowner may choose to file an answer in court. If they do not choose to do so or if the foreclosure moves ahead anyway, a judgment of foreclosure will be granted in favor of the mortgage lender and a sale date will be set.
These types of foreclosures typically involve a public auction where the foreclosing party and the public will be given the opportunity to bid on the home or property. The winner of this auction will take ownership of the home.
● Non-judicial Disclosure
Although all states permit judicial disclosures, some states also allow nonjudicial foreclosures. Minnesota is a non-judicial disclosure state, which means mortgage lenders do not have to use the court system to foreclose. In fact, most foreclosures in Minnesota are non-judicial foreclosures.
Sometimes referred to as “power of sale” foreclosures, non-judicial foreclosures can be completed outside of the court system. In these foreclosures, a trustee or attorney completes the foreclosure process on behalf of the lender.
In a non-judicial foreclosure, the borrower is sent a notice of default along with the time permitted to reinstate the mortgage. This is sent before the official foreclosure proceedings begin. In Minnesota, lenders are required to give borrowers 30 days to correct the default.
In addition to sending the notice of default, Minnesota also requires lenders to provide information about foreclosure prevention counseling services and send this information to an approved foreclosure prevention agency. This law only applies to dwellings that function as the owner’s primary place of residency and only of the residency is a one-to four-family unit.
Rescuing a Home
In Minnesota, as in many other states, homeowners are given the opportunity to rescue their home right up until that home is sold at auction. If possible, your best option is to renegotiate your loan and work with a foreclosure counseling agency.
Foreclosures take six months or 12 months in Minnesota, at which time they are sold at a foreclosure sale auction. You will likely hear a foreclosure sale referred to as a “sheriff’s sale” in Minnesota.
The sheriff’s sale normally takes place six weeks after the notice of foreclosure is issued. At that point, you may file a form known as a Foreclosure Sale Postponement Affidavit for up to 15 days before the scheduled sheriff’s sale date.
Once the home has sold at auction, you will have the option to pay the full price of the home including penalties, back payments, and any additional costs. Most homeowners find this prohibitive and do not see buying back the home after auction as a viable option.
Selling a Home Before Foreclosure
If you’ve exhausted all of your other options, it’s best to do anything you can to avoid foreclosure as the consequences can be significant and lasting.
These are just a few of the consequences you may face after going through a foreclosure:
● Losing your home equity
● Difficulty getting future housing
● Serious long-term credit damage
● Inability to get a Fannie Mae mortgage for seven years
One way to save yourself from many of these consequences is to sell your home to a cash home buyer. At Bill Buys Houses, our cash home buyers can give you an offer fast and complete most sales within a week.
Whether you’re selling your home as is or trying to avoid the fallout from foreclosure, we’ve got your back. To get your offer, contact us on the web or give us a call today at 651-270-9191. You’ll be glad you did.