The foreclosure crisis has impacted many people. The timeline for a foreclosure can vary greatly from case to case. If your bank files a foreclosure action against you, it may not be in your best interest to ignore the foreclosure even if you do not wish to keep the home. Foreclosure is the legal process by which a bank, lender, mortgage company, mortgage servicer, or mortgage investor files a complaint with in the Court of Common Pleas in the county where the property is located. The bank will seek to take possession of a property or have it sold at a sheriff sale or auction.
A foreclosure cannot be filed against a homeowner until the owner has “defaulted” on the mortgage. The most common type of default is when the homeowner fails to pay the monthly payment on time. If a payment is not made in a timely manner, a foreclosure can be filed the day after the missed payment. There is technically no required waiting period. However, most banks will not file the foreclosure complaint until the homeowner is 90 days or more delinquent on the payments. Most banks will also send final default demand letter to the homeowner 30 days prior to filing for foreclosure and offer the homeowner a final opportunity to pay the past due amounts. The bank will also seek to collect late charges or penalties, and additional fees or interest.
Once the foreclosure complaint is filed, a copy is sent to every person or company who may have an interest in the property. These parties are offered the opportunity to assert any rights or interest they may have in the property. Those parties are named as defendants and often include the person who signed the mortgage and the deed holder, the spouse, the County Treasurer or other tax authority, judgment creditors, or the like. Many different legal defenses to a foreclosure may exist and should be thoroughly analyzed by an attorney. If a legal defense to a foreclosure does not exist, there may be a local, state and/or federal program available to help a homeowner keep a home. These programs can assist homeowners with loan modifications, grants or other strategies. Many counties in Ohio, including Franklin County, also have a foreclosure mediation program. The foreclosure litigation may be temporarily put on hold or “stayed” while a mediator assists the bank and homeowner explore the possibility of a loan modification.
A party must file a timely response to a foreclosure action to preserve one’s legal rights and to assert one’s legal defenses. If a party fails to timely respond to the complaint, the bank can file a Motion for Default Judgment. A default judgment can accelerate the foreclosure process tremendously. If judgment is entered, the bank may request that the property to be sold at a sheriff’s sale. The property will be appraised and then the county sheriff will auction the property to the highest bidder. The starting or minimum bid must typically be 2/3 of the appraised value. Once the sale is confirmed and if you have not exercised your right of redemption or moved out, the buyer will request a writ for possession of the property and anyone living in the house may be removed by a sheriff’s deputy.
Here in Ohio, when residents enter into contracts for consumer goods or services as a result of a door-to-door solicitation, certain protections apply. For example, the resident must be given 3 business days to cancel that transaction, without penalty. Similarly, the contract a consumer signs must have certain notices and attachments to comply with the law. If you’re a consumer who is having trouble with this type of transaction or a small business that wants to comply with the law, our firm has experience dealing with these issues.