Foreclosure & Alternatives Law
Foreclosure Laws in Ohio
Ohio homeowners that are struggling to keep their mortgage loan current could face foreclosure. A mortgage that is two or more payments in arrears can be foreclosed upon by the mortgage lender. However, just because the process might have started, there are steps a homeowner who wants to keep his or her home can take to stop or at least delay the process.
Ohio's Foreclosure Process
Once a mortgage lender has decided to foreclose, a homeowner will receive a demand letter. The document states that the homeowner is behind in the mortgage and that unless the past due amount is paid, the lender will begin formal foreclosure proceedings. If the homeowner does pay the past due amount, the loan is considered back in good standing. However, if the homeowner cannot pay the balance, then the foreclosure process starts.
If the lender chooses to proceed with the foreclosure, the lender starts a judicial foreclosure procedure. The lender will file a complaint in the county court where the house is located, demanding the house be returned to the lender. This is called a lis pendens. When a court date is set, the homeowner will be served with the documents. At this point, the homeowner has several options:
- The owner can do nothing and let the foreclosure proceed.
- The owner can file an answer to the lis pendens and request a judge hear the case and decide.
- The owner can file for bankruptcy protection.
- The owner can pay off the mortgage with funds secured from another source.
If the homeowner chooses to do nothing, when the court date arrives, the lender is generally awarded a summary judgment, also referred to as a final notice of foreclosure. The lender can then arrange for a sheriff's sale of the property. On the designated day, the home is auctioned off — usually on the steps of the county court offices — to the highest bidder. At this point, the homeowner no longer owns the home and must vacate the property if he or she hasn't already done so.
How Filing for Bankruptcy Affects the Foreclosure Process
From the point that the lender goes to court to the sheriff's sale is roughly 150 to 180 days depending on the court docket, and whether or not the homeowner wants a judge to decide the case. During that time, a homeowner can opt to file for bankruptcy and delay the process further. If the homeowner wants more time to find another place to live and wants the mortgage debt to be erased, then filing for a Chapter 7 bankruptcy is an option. If the homeowner wants to attempt to save his or her home, then Chapter 13 bankruptcy could help. Chapter 7 filings require a person to sell off the majority his or her assets to pay creditors, and in exchange all debts are erased, including any deficiency judgments the lender might have gotten against you if the home sold for less than was owed on it. In the case of a Chapter 13, a homeowner prepares a repayment plan for debts and after three to five years of payments, all other debts are forgiven. With a Chapter 13, a homeowner can pay off the past due balance of the mortgage over the three to five years, and as long as the homeowner remains current on the loan payments, the mortgage will be considered current. Whichever option the homeowner chooses, a bankruptcy filing suspends the foreclosure proceedings.
Anyone who is facing the possibility of losing a home should consider speaking to an experienced legal professional. This person can help a homeowner examine options to determine the best course of action for one's personal situation.