Your Rights during a Foreclosure

You will find you have limited foreclosure rights, but the few provisions protecting you are very strong. Your rights during a foreclosure generally give you a chance to repair the situation in a very limited window of time.

  1. Right of written notice - Some loans require little to no notice before an asset is seized. Since a mortgage is a residence, however, you will have the right to be informed of a pending foreclosure in writing long before it occurs.

  2. Right to repurchase the property - You will have 180 days to purchase the home out of foreclosure by paying the full price of the house. This is only possible for a limited number of individuals.

  3. Right to short sale - You may attempt to quickly sell the house to have another person take over your mortgage payments. This must occur within a very narrow window of time to be successful.

  4. Right to bankruptcy protection - If you qualify for and file for a Chapter 13 bankruptcy, the foreclosure process must stop while a judge determines whether you can continue to make payments if they are reorganized. Even a Chapter 7 bankruptcy is preferable to foreclosure in most situations since you at least recover some amount of equity to pay off your debts in the process.

 



What happens with an FHA loan in foreclosure?



When you enter an FHA loan foreclosure, you will have to wait 90 days in order to begin the proceeding. After 90 days without payments, the FHA will begin the foreclosure process. Since it has insured the loan, the organization will pay the original lender the outstanding debt and foreclose with you directly. You will be presented with options to avoid foreclosure. If these options do not work for you, the FHA will foreclose on your home, report you to the credit agencies, and likely file a lawsuit to attempt to collect at least a portion of the outstanding funds. You will likely be unable to secure another FHA loan in the future.