Understanding the foreclosure process in North Carolina is an important part of navigating your own home foreclosure.
Before we dive in…
Understanding the Foreclosure Process in North Carolina
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
Understanding the foreclosure process involves several crucial stages.
Foreclosure procedures vary across states nationwide.
States typically utilize either a judicial sale or power of sale method to foreclose on a property.
Contact us at (336) 707-5223 or visit our contact page to receive personalized guidance on the local foreclosure process in Greensboro, North Carolina.
In most cases, foreclosure proceedings only enter the court system after 3-6 months of missed payments. Typically, lenders issue multiple notices for payment delinquency before initiating legal action.
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.
What Happens After A Foreclosure Auction?
Following the resolution of a foreclosure, the remaining loan balance is settled using the proceeds from the property sale.
If the property auction does not cover the outstanding loan amount, a deficiency judgment may be issued against the borrower.
A deficiency judgment entails the lender obtaining a legal ruling to collect the unpaid debt from the borrower post-foreclosure sale.
Laws on deficiency judgments vary by state; some states limit the amount to the property’s fair value at the sale date, while others make the borrower responsible for the full loan balance.
For in-depth insights into deficiency judgment regulations by state, consult this valuable resource detailing specific state laws.
Generally, it is advisable to avoid foreclosure auctions. Instead, contact the lender or partner with a reputable real estate agency like AIP House Buyers for assistance in negotiating discounts on the owed amount to prevent foreclosure proceedings.
Experienced investors can aid in negotiating with lenders to reduce the amount owed in a sale – or even eliminate it, particularly if the property’s value is lower than the outstanding balance.
If you need to sell a property near Greensboro, we can help you.
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Another Foreclosure Resource For Greensboro North Carolina HomeOwners: