Foreclosure: What you don’t know can hurt you
By Louise Bolger
sun staff writer
Back in June we talked about the foreclosure market and the advantages and disadvantages of buying one of these properties. Since then, there has been quite a bit more chatter about the increasing number of foreclosures both nationwide and here in Manatee County.
According to the Manatee County Circuit Court, the number of foreclosures recorded on a monthly bases have increased steadily from 199 in the month of January to 218 in the month of July. In addition, RealtyTrac, Inc. has reported a 58 percent increase the first six months of this year compared to last year nationwide. The states with the highest number of homes receiving foreclosure notices were California Texas, Ohio and, you guessed it, Florida.
Not all states are created equal when it comes to how they process property owners who are delinquent on their mortgages. Some are definitely more ruthless than others. For example, a foreclosure in New York State takes approximately 12 to 19 months and is, in fact, the state with the longest average time frame. On the other hand, in Alabama a late paying homeowner can lose his property in as little as 30 days after a delinquency notice is published. In Vermont and Nebraska, it’s 180 days; New Hampshire, Mississippi, Michigan, 60 days.
In Florida, a foreclosure begins when a lender files a court action and records a notice of a pending lawsuit. The lender notifies the borrower and other affected parties by mail, public notice or in person. If the borrower does not respond to the court action within a specified amount of time, the county clerk can find the burrower in default. If the court rules against the borrower, the ruling will include the total amount owed and the foreclosure sale date. The borrower can stop the foreclosure up until the date of the sale by paying the total amount owed to the lender.
The sale date is typically 20 to 35 days after the court ruling, but may vary. The clerk of court issues a notice of sale containing the location, date and time. The notice is published once a week for two weeks. The clerk oversees the sale, which occurs at the county courthouse in the morning. The winning bidder must provide a 5 percent deposit and pay the remaining balance by the end of the day or a new sale is scheduled a minimum of 20 days later. Within 10 days of the sale, assuming there are no disputes, the clerk transfers ownership to the winning bidder. This process in the state of Florida can take as long as 180 days.
As I pointed out in June, most foreclosures are bought back by the bank or lending institution that holds the mortgage. This is because the outstanding debt plus fees and taxes generally exceed the market value of the property. And if you are unfortunate enough to be foreclosed on, don’t think you’re off the hook just because you lost your house. If the auction sale brings less than the amount owed to the lender, they may still go after the borrower for the balance. This is called a deficiency judgment, and although lenders may be within their rights to bring this judgment, practically it doesn’t usually happen.
With foreclosures spiking around the nation, homeowners should learn the foreclosure laws in their states. www.Foreclosures.com will let you click on any state for a brief outline of its foreclosure laws and typical number of days, as well as listings of upcoming foreclosure sales. What you don’t know can hurt you. Stay informed and stop the chatter.