Q: I just found out that the mortgage company is foreclosing on my house! What do I do?
A: Once you receive a copy of a foreclosure lawsuit, you have only 28 days (including weekends) in which to formally respond to the court. If you do not respond, a "default judgment" can be filed against you, meaning that the court assumes that you do not dispute the bank's allegations and will enter a monetary judgment against you, plus an order to have your house sold to satisfy the debt. Anytime a lawsuit is filed against you, you should consider talking to an attorney to discuss your options and responses.
Q: How long does the foreclosure process take and what are the steps involved?
A: A foreclosure from filing to sale confirmation takes at least four to six months and can take longer, depending on a number of factors, including your county's legal rules about foreclosure. There are a few steps, which we will call the early, middle and late stages.
Q: What happens in the early stage?
A: Before the case is ever filed, the lender sends a foreclosure referral package to an attorney. The attorney will review records at the courthouse in a process called a "title examination" to identify all persons who have an interest in your property, which will include individuals, their spouses for "dower" rights, partnerships, and corporate or governmental entities. Any person who has some type of ownership interest or lien against the property will be named a defendant in the suit. In addition to parties with an interest in the property, the complaint usually names any borrower or co-signer on the loan. By having all interested parties involved in the case, the court can make decisions that are binding on everyone concerned.
After the complaint is filed, the attorney will instruct the court to send you a copy of the lawsuit, usually by certified mail and/or through delivery by a sheriff's deputy. You are entitled to know about the lawsuit and you must be served with a copy of it before your lender can proceed to sell your property. Once you receive a copy, you have only 28 calendar days (including weekends) to respond formally to the court. If you do not do so, the court can enter a default judgment against you. Anytime you receive a lawsuit filed against you, including a foreclosure case, you should consider discussing your rights, options, and responses with an attorney.
Q: What happens during the middle stage?
A: After all the parties to the case have been served with a copy of the lawsuit, your lender will make a request to the court to order the sale of the property to pay the debt. This is usually through a motion for a judgment entry. In cases where you also signed a promissory note evidencing your promise to repay the money that was lent to you, the lender will ask for a money judgment to be awarded against you. Usually, the court orders that a money judgment be awarded and that the property be sold to raise money to pay the debt.
Q: What happens during the late stages of foreclosure?
A: After the court orders the property to be sold, the sheriff will appraise your property, schedule a sale, and advertise the sale to the public. The sheriff's auction is a public auction, and any adult can bid and purchase real estate at a foreclosure sale. The property must sell for at least two-thirds of the appraised value of your property. The sheriff reports the results of the sale to the court. Then the lender asks the court to validate the sale, to order a new deed to be drawn to the purchase, and to distribute the sale proceeds. This process is known as the "confirmation" of the sale. The purchaser is also entitled to possession of the property after the sale is confirmed. The purchaser will then be entitled to seek the sheriff's assistance in evicting you if you remain in the property after the sale is confirmed. In the vast majority of cases, the lender buys the property back for an amount less than what was owed, which, as discussed above, results in a "deficiency balance."
Q: What can I do to save my house before the foreclosure sale?
A: The options given in the "Before Foreclosure: What You Should Know" article provided through the Ohio State Bar Association's website (www.ohiobar.org/lawyoucanuse) explains forbearance and loan modification agrements and lists programs available to keep you in your house. These programs include the "Home Affordable Modification Program" (HAMP) and Ohio's "Restoring Stability" program funded by the U.S. government Treasury Department's "Hardest Hit Fund."
Q: Can I save my house even after the foreclosure sale?
A: Yes. You have a right under an Ohio statute to purchase your property back after the sale and before it is confirmed if you can pay in full the amount you owe in the judgment entry. This right is known as your "right of redemption." See an attorney for details about how to accomplish this.
Law You Can Use is a weekly consumer legal information column provided by the Ohio State Bar Association. This article was originally prepared by Alan J. Ullman, a Cincinnati attorney, and updated by John R. Cummins, A Cincinnati attorney with the law firm of Manley, Deas & Kochalski.