Foreclosure process

Georgia has a non-judicial foreclosure process. This allows a mortgage holder to foreclose much more quickly and simply than in many other states. The mortgage holder must run a notice in the official legal organ (newspaper) for the county where the property is located. The notice is run for four (4) consecutive weeks. On the first Tuesday of the following month, the property is sold at a foreclosure sale on the steps of the county courthouse.

In the large majority of cases, the property is purchased at the foreclosure sale by the mortgage holder. Of course, in some cases the property is purchased by another individual or investor. Once the foreclosure deed is prepared and recorded, the buyer will typically contact the persons residing in the property and demand possession. If the residents refuse, the buyer can initiate a dispossessory process in court to have the residents and their personal property removed.

The dispossessory process can also be very quick. In many cases an order is entered within a month after the action is filed. The order allows the new owner to remove the current residents and their belongings, and directs the Sheriff’s office to assist in the removal if necessary.

Most mortgage lenders want to take possession of foreclosed property without conflict or delay. In many cases the lender will offer to pay the residents some amount to cover moving expenses. If your property has already been foreclosed, it may be in your interest to contact the lender and discuss this.

ONCE THE FORECLOSURE PROCESS HAS STARTED, CAN IT BE STOPPED?

I. VOLUNTARY ACTION. Of course the lender can voluntarily stop the foreclosure process if it chooses to do so. In some cases, the lender will suspend the process if it is satisfied that the property owner can promptly cure the default, if a sale of the property is pending, or if it is considering a mortgage modification. HOWEVER, it can be dangerous to assume a lender is stopping the process without getting verification in writing. Some lenders will make false assurances that the process is being stopped, but continue running the newspaper notice and moving toward the foreclosure sale. ONCE THE SALE HAS TAKEN PLACE, IT MAY BE TOO LATE!! Unless you are certain the process has been halted, it is very important to continue looking at all your options.

II. SUPERIOR COURT INJUNCTION. If you believe that the loan is not in default, or that there are other legal grounds that would prevent the foreclosure from proceeding, you can petition the Superior Court to injoin the foreclosure. This can be difficult and expensive, however. We strongly recommend that you have an experienced attorney review the matter and assist with any such petition. In most cases, this type of action will not solve the problem.

III. CHAPTER 13 BANKRUPTCY. Over 10 million American homeowners are “underwater”, meaning they owe more on their mortgage loans than their house is worth. While bankruptcy will not solve every mortgage problem, in many cases foreclosures can be stopped and mortgages reinstated through the use of a Chapter 13 plan. Chapter 13 allows an individual or couple with regular income to deal with their debts by making regular payments to a Chapter 13 Trustee over a period of 3 to 5 years. The plan can cure an arrearage on a home mortgage over a 60 month term, and deal with other short-term debts such as credit cards, car loans, and medical bills. This can free up funds so that future mortgage payments can be made in a timely manner. In addition, in many jurisdictions a Chapter 13 plan can “strip off” a second or third mortgage on property, if the property value is less than the amount owed on the first mortgage. Once the lien is stripped off, the 2nd mortgage can often be paid little or nothing through the plan, and the remaining balance completely discharged at the conclusion of the plan. Another huge advantage of Chapter 13 is that the homeowner’s attorney fees can be included in the plan, so that the case can be filed without a big upfront expense.

IV. CHAPTER 7 BANKRUPTCY. The filing of a Chapter 7 bankruptcy (commonly called “straight bankruptcy”) will stop a pending foreclosure proceeding in most cases. HOWEVER, Chapter 7 will NOT reinstate the mortgage or cure any default. In most Chapter 7 cases, the lender will ask the court to release the property so that the foreclosure can be recommenced. So, Chapter 7 is not a permanent solution. In some cases, though, Chapter 7 may stop the process long enough to allow the owner to cure any arrearages and reinstate the loan. If there is significant equity in the property (i.e. the property can be sold for more than what is owed), Chapter 7 can sometimes be used to allow for an orderly sale of the property. This can allow the homeowner to realize some of the equity rather than lose it through a foreclosure. In most cases, the homeowner can stay in the property while it is being marketed.

Whether Court action makes sense, and if so what type of action should be filed, is a complicated question. If you a considering taking such a step, DON’T DELAY. Meet with a competent and experienced attorney to discuss your options as early as possible. If you wait until the eve of a foreclosure sale, it may be impossible to get a case filed in time to stop the foreclosure.