Foreclosure & Alternatives Law
If you are afraid that foreclosure is going to take your home away from you, do not allow such an emotional topic to keep you from focusing on all of the important laws and regulations that you must know about as you go through this process. You need to know your rights, and you need to be very aware of all of your legal options; these can help you get the best possible outcome in a tough situation. Below are some of the most important things to keep in mind.
You are going to be notified before a foreclosure will take place, giving you time to respond. However, there is a time limit, so you have to act quickly. Typically, you will be given only 20 days —- just shy of three weeks —- to respond. This 20 days starts on the day that the foreclosing party -— in many cases, this means your mortgage lender or bank —- starts the foreclosure lawsuit.
You do have time to redeem the home once a foreclosure is announced. In every state in the United States, this is something that can be done prior to the sale of the house back to the bank. In order to redeem it, though, you generally have to pay off the value of the home in full, or you at least need to immediately pay what is owed in late payments, fees and the like. While many people who are going through a foreclosure naturally do not have the cash on hand to do this, you could borrow that cash from another lender —- such as another mortgage lender.
In Vermont, there is a six-month redemption period that is offered even after the foreclosure sale. This is something that not all states allow. You and the mortgage lender can also agree on a shorter time-frame if you would like.
You may have heard rumors that high-cost mortgages sometimes get special protections under the law. While this may be true in some places, it is not true in Vermont. All mortgages and foreclosures are treated the same way, whether a home cost $10,000 or $1 million.
You may be looking for a way to stop the foreclosure from happening, and you should know that one option is to declare bankruptcy. This is not a guaranteed way to eliminate what you owe on a house, of course, but, in some cases, it can stop the process, at least for a time. This may help you to pay some of your late payments, catch back up on your mortgage, and keep your home. As noted, though, the most important thing to remember is that it does not mean that you owe nothing on the rest of your mortgage, while still retaining your home.
If you do go through the entire process and your home is repossessed, you then get another notice from the new owner -— in the vast majority of instances, the new owner is simply the bank -— that is called a writ of possession. This will be given out after the redemption period. Essentially, it is a notice asking you to leave the home, as you no longer legally own it.
Do not put off learning about all of your legal options if a foreclosure seems unavoidable. No matter the outcome, you need to know what legal steps to take and what alternatives you may have to losing your home.