Is Your House is in Foreclosure in Omaha, NE?
Understanding the foreclosure process in Omaha, NE. When your home is in foreclosure for whatever reason, you need to be educated on the laws associated with foreclosure.
First, let’s cover what foreclosure is and the basic steps of different foreclosures. Then, we will look at an option to selling your house in foreclosure in Omaha, NE to a professional homebuyer in Omaha NE. Especially if you need to sell your house fast for cash with NO real estate commissions or closing costs.
Foreclosure is a legal process that starts when the borrower stops making payments to a lender. The lender in an attempt to recover the balance of the loan will legally force the sale of the house that was used as collateral for the loan.
If the owner cannot pay off the outstanding debt owed on the house after they have stopped making payments they forfeit all rights to the property. Since the owner cannot pay off the outstanding debt, or sell the property via a short sale the house will go to a foreclosure auction. There is one other alternative before a property needs to go to a foreclosure auction. That would be selling to a professional homebuyer, we will discuss in later in this article. If the house would go to a foreclosure sale and not sell the lending institution where the loan was delinquent would take possession of the property.
To help you understand foreclosure, it helps to keep in mind that the word “homeowner” in this case is actually a misnomer. “Borrower” is a more appropriate term. That’s what a mortgage, or deed of trust, is: a loan agreement for the purchase price of the home, minus the down payment. This document puts a lien on the purchased property, making the loan a “secured loan.”
When a lender loans you money without any collateral (credit card debt, for instance), it can take you to court for failure to pay, but it can be very hard to collect money from you. Lenders often sell this sort of debt to outside collection agencies for pennies on the dollar and write off the loss. This is considered an “unsecured loan.”
A secured loan is different because, although the lender may take a loss on the loan if you default, it will recover a larger portion of the debt by seizing and selling your property.
The foreclosure process can take several months if not years, and it does long-term damage to a person’s credit report. It is important to note that foreclosure laws vary by state, and they affect the order or duration of the foreclosure steps. It is also important to note that the federal Fair Debt Collection Practices Act affects foreclosure proceedings by stipulating the methods lenders can use to go after bad debts.
Foreclosure is no fun. Just know it’s not the end of the world. Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments. Knowing how foreclosure works in the Omaha, NE market will arm you with the knowledge to make sure you navigate it well and come out on the other side as well as possible.
So what happens in a foreclosure? The specifics can vary according to state law.
Basics of A Foreclosure
There are a few stages that are important to any foreclosure process. There are several stages during which the homeowner has an opportunity to bring the loan current and avoid foreclosure.
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.
Connect with us by calling 402-939-6557 or at www.harterinvestments.com and have us walk you through the specific foreclosure process here locally in Omaha, NE.
In both scenarios, the foreclosure process will usually not go to court until 3-6 months after the first payment is delinquent. In most instances (but not always), a lender will send out multiple notices that you are behind in our obligation – overdue or behind in your payment.
When a mortgage lacks the power of sale clause it starts the Judicial foreclosure process. Power of sale is a clause that is written into a mortgage authorizing the mortgagee to sell the property in the event of default in order to repay the mortgage debt. An event of default is a predefined circumstance that allows a lender to demand full repayment of an outstanding balance before it is due. An event of default enables the lender to seize all collateral, in most instances the property and sell it to recover the outstanding balance of the loan.
- 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.
Power of Sale (or Non-Judicial Foreclosure)
Non-judicial foreclosures happen when a mortgage agreement has a “power of sale” clause that gives the lender the right to foreclose on a property by itself. Without that clause, the lender has to take the borrower to court in order to foreclose. Many states require judicial foreclosures.
- 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 for 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.
After A Foreclosure Auction
After a foreclosure is complete, the loan amount is paid off with the sale proceeds. Some homeowners refuse to vacate the property. Under the law, the homeowner doesn’t technically have to vacate on the date of the foreclosure auction. After the auction is completed and the house is sold the homeowner may still refuse to leave the premises, the new owner can initiate eviction proceedings on the day of closing. However, it can take several weeks to several months to complete the eviction. If the bank forecloses and retains the property as an REO, it can carry out eviction proceedings much more quickly.
Ultimately, the foreclosed homeowner is removed from the property, along with all personal assets, which are either moved to storage or placed on the curb in front of the house by a local sheriff’s department.
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.
Trust Deeds or Mortgage Liens in Nebraska
Nebraska primarily operates as a title theory state in which the property title remains in trust until payment occurs in full for the outstanding mortgage. The primary statute under which foreclosures are undertaken is called the Nebraska Trust Deeds Act. Under this theory foreclosure is a non-judicial remedy. The document that secures the title is called a deed of trust. Nebraska law also permits mortgages to serve as liens upon real property and for judicial foreclosures to occur through the courts. The power of sale provisions in trust deeds is a more effective to move the foreclosure along and because there is no right to redemption, this is the primary vehicle used to foreclose.
If at all possible, it’s best to avoid a foreclosure auction. Instead, call up the bank you have your mortgage with asking them what alternatives are available for you to work with them to avoid foreclosure,
Another alternative is to work with a reputable real estate firm like us at Harter Investments to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure. We will work with you and the bank to negotiate the best solution for you to avoid foreclosure even if your house is worth less than you owe. And possibly avoid ruining your credit.
If you need to sell a property In Omaha or Lincoln, NE and the surrounding area, we can help you. You can reach us at www.harterinvestments.com or 402-939-6556. We are able to buy houses fast in Omaha, NE making all CASH OFFERS and closing within 7 days. There are NO commissions, NO closings costs. We can help you.