Understanding the foreclosure process in Florida is an important part of navigating your own home foreclosure.
Before we dive in…
Understanding the Foreclosure Process in Florida
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 and we know it can be a scary process for most homeowners to go through. But just know that it’s not the end of the world and you may have some options to avoid foreclosure and perhaps even walk away with some money or at a minimum not have for face a foreclosure and the auctioning of your home.
When you know how foreclosure in Florida works… it arms you with the knowledge to make sure you navigate it and come out the other end as in a strong as position as possible.
The Basic Stages of A Foreclosure
There are a few stages that are important to any foreclosure process.
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. Florida is a Judicial Sale state.
Connect with us by calling (239) 572-9690 or through our contact page to have us walk you through the specific foreclosure process here locally in Southwest.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment. Many banks are willing to try to work with you to reach a solution as bank really don’t want to own your home and all the regular costs associated with it.
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.
- While this all sounds scary and it can be you do have options.
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, your HOA, or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction. This can lower the amount the bank may receive after the sale and result in you still owing even more money to the bank at the end of the day.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction doesn’t satisfy the full amount of the mortgage owed, deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for whatever the shortfall is between what the property sold for and what is still owed to the bank.
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.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction if you can. Instead, attempt to work out a deal with the bank, or work with a reputable real estate firm like us at We Buy Homes in SWFL to help you negotiate the amount currently owed to the bank and hopefully you can avoid having to carry out a foreclosure.
Experienced investors like We Buy Homes in Southwest Florida can help you many times by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe. This can help eliminate the stress and concerns many people have when facing foreclosure.
If you need to sell a property near Southwest, we can help you.
We buy houses in Southwest Florida like yours from people who need to sell fast.
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Another Foreclosure Resource For Southwest Florida HomeOwners: