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My House is in Foreclosure, Now What?

by Adam Mack

I work with people on a constant basis who are dealing with having their house in foreclosure.  If you are going through this, then you know first hand that it is an intimidating process which probably feels like the cards are stacked against you.  And rightfully so.  The mortgage lenders spend tremendous amounts of money on attorney fees in the development of their mortgage contracts to make sure that if you default on your payments it is easy to foreclose on (take back) your house.

So what is foreclosure?

Without getting too technical, foreclosure is the legal process of taking possession/ownership of the property that was securing your mortgage (i.e. your house).  They need to do this so they can clear up the deed so they can resell the property to another buyer.

What is the Process?

The process of foreclosing on a property starts with a warning letter from the bank stating that you are in default and that they intend to foreclose on the house if you do not get current.  They will usually send several of these letters and make several phone calls before taking action.  The letters and phone calls can go on for a number of months, although the bank could move much more quickly if it chose to.  However, the bank is usually interested in giving you a chance to catch up, because it is almost always financially better for the bank to keep you in the house if you can get current.  But do not misunderstand what I am saying, they WILL expect you to get 100% current or they will eventually foreclose.

Once the preliminary efforts to get you current have been unsuccessful, the bank will eventually file a petition with the court to foreclose on your house.  They will serve you with a summons to appear at the hearing, and once you are served that summons, the clock is ticking.  You only have 21 days to file a written answer to the petition with the court.  It is important to note that my use of the word “answer” is in reference to a very specific legal document that addresses very specific issues.  You should not assume you know what should be included in the answer and haphazardly file it with the court.  This is a document that should be prepared by a licensed attorney who is experienced in Kansas foreclosure law.

If you file an answer, then you will begin litigating the case.  Eventually the court will determine if the bank has met the burden of proof necessary to foreclose on your house, and if it has, then the court will grant an order of foreclosure in favor of the bank.  If you do nothing (i.e. do not file an answer), you will have the same result, but the process will move much more quickly because the bank will get a “default” judgement.

What are My Alternatives?

If you are in a situation that you know you will lose your house due to circumstances out side of your control, the bank will sometimes agree to try various loss mitigation strategies (i.e. deed in lieu of foreclosure, short sale, etc).  They might even allow you to modify your home if you qualify for a government sponsored or private modification program such as HARP or HAMP.

However, if other alternatives are not feasible or beneficial, you can always try to force a debt restructuring on the bank using a chapter 13 bankruptcy.  It is not the best choice for every situation, but it sometimes is the only plausible way to save your home.  A successful chapter 13 case forces the bank to accept a feasible plan that is drafted consistently with the bankruptcy code which will allow the homeowner to remain in his or her home while getting caught up over a span of three to five years.

When is Too Late to Save My Home?

In Kansas, after the foreclosure is complete, there will be a sheriff’s sale scheduled where the county sheriff will auction off the house.  After the sale is complete at that auction, in almost every situation, it is too late to recover your home.

The Most Important Part

The nature of blog posts are that such that a lot of generalities are assumed about the information provided.  Your situation is very unique and fact specific, you should consult with a Kansas bankruptcy attorney before moving forward with any legal action or strategy.