A common complaint of many homeowners that deal with foreclosure but whose properties have a large amount of equity is that their property is auctioned for far less than its fair market value at the county auction. In many cases, there is no one else bidding on the property besides the original lender, and the bank only bids enough to pay off the balance owed on the mortgage or deed of trust. For borrowers in this situation, though, there may be an alternative solution.
Courts in the past have ruled that, because foreclosure is such a harsh remedy to a default of a contract, the use of the court and forfeiture of property should be a last resort. Especially in cases where there may be enough equity to pay off the loan in full as well as give the owners back some amount of money, selling on the open market may present a more equitable solution.
Thus, borrowers may be able to have their foreclosure enjoined for a reasonable length of time in which to list and sell their home. If there is enough equity to pay off the mortgage and receive some sort of gain on the sale, foreclosure should not be used unless there are no potential buyers. As well, open market sales present no risk to the lenders, who will be paid in full if the sale goes through.
The main issue holding this solution back is often the homeowners themselves, who are unable to use the courts with the same skill as the lender's attorneys. They may not know how to file motions to enjoin the sale, or not even respond to any of the legal paperwork the mortgage company sends them. When the borrowers do not respond to the foreclosure, then there is little the courts can do to help them.
Lenders also have a duty to the homeowners to obtain the highest price possible for a property even at a sheriff sale. Allowing the owners to list the house for sale on the open market can be an effective way to show that the bank has made efforts to retain their equity and avoid foreclosure. The lender must meet its fiduciary duty to the homeowners to get the highest price for a property, even if state laws allow a faster process.
Despite this duty, some lenders may be unwilling to stop foreclosure for long enough to sell the house. In these cases, homeowners may be able to file bankruptcy in order to take advantage of the automatic stay and then list the house on the open market. Filing Chapter 13 may allow the borrowers to move forward with an orderly sale in order to liquidate the property and avoid a sheriff sale.
To be able to sell the home, utilize the equity, and avoid a foreclosure auction, homeowners may wish to speak with an attorney about obtaining an injunction against the foreclosure auction. Especially if there is a reasonable chance of retaining some equity, courts may understand that there is almost no risk to the lender of permitting the borrowers to go forward with selling on the open market.
To learn more about how foreclosure works, visit Nick's website, which provides advice to homeowners attempting to save their homes. Foreclosure loan, deed in lieu, mortgage modification, and bankruptcy assistance can be found, as well as information on preventing a foreclosure before the sheriff sale. You can read more about how to
save your home while there is still time and find the site on the web at the following: http://www.foreclosurefish.com/
