Foreclosure Attorney Serving Paducah, Kentucky
Nobody ever intends to fall behind on their home payments and face foreclosure. Such a future can be terrifying and disturbing. However, if you grasp your rights, you’ll see that this does not have to be your fate, and our experienced foreclosure attorney can assist you.Farmer & Wright, PLLC has assisted hundreds of people and families in avoiding foreclosure and, in some cases, keeping their homes by helping them with a bankruptcy filing.
We are familiar with the United States Bankruptcy Code and how to use automatic stays to stop collections and give you the time you need to establish a plan to reclaim control of your money.
Why Do You Need a Foreclosure Attorney in Kentucky?
Being on the verge of losing your home to foreclosure is a nightmare. Aside from the worry of losing your house, you’re undoubtedly getting threatening letters, emails, and phone calls from your lender.
This is not something you should deal with on your own if you want to save your home. Our knowledgeable Kentucky foreclosure attorney can assess your specific case and provide the best solutions for you. We are able to:
- Make the most of federal and state legislation to identify any safeguards you may have.
- Take care of all documentation and make sure everything is filed accurately and on schedule.
- Negotiate a loan modification with your bank to modify your mortgage payments and make them more reasonable.
- If necessary, we can file for bankruptcy on your behalf to cease collection efforts and prevent the bank from foreclosing on your house.
- Assist you in selling your house through a short sale and negotiating with your lender to get any outstanding debts waived.
What is Foreclosure?
You’ll most likely sign a mortgage (or deed of trust) and a promissory note when you take out a loan from a bank or mortgage company to buy a property. You will pledge to make payments according to the payment plan in this paper.
However, if you fail to do so, the lender may pursue legal action to sell your house to a new owner to recoup the money it lent you. This is referred to as “foreclosure.”
What is a Mortgage and How Do Mortgages Work?
Because buying a house is such a substantial investment, it’s more customary for a buyer to finance the purchase with a loan (also known as a “mortgage”) than paying cash up front. The borrower and the lender are the two key players in the transaction.
The borrower is the individual who takes out a loan and provides their property as collateral to the lender. The “mortgagor” is a term used to describe the borrower. The lender provides the loan, often known as the “mortgagee.”
There are two documents that make up a mortgage – promissory note and a mortgage (or deed of trust). A promissory note is a legal instrument that contains a borrower’s pledge to return the borrowed money and the terms of repayment, such as the interest rate.
A mortgage is a contract that provides the lender the right to foreclose on a property if the borrower defaults on their payments. In places where mortgages are not used to finance loans, the borrower forms a “deed of trust,” a distinct type of security instrument.
What Happens During a Foreclosure?
Foreclosure processes are governed by state law. In most cases, the procedure will be either judicial or non-judicial. Some states demand that the procedure be carried out in a courtroom (judicial foreclosures). The foreclosing party (the “bank”) can employ out-of-court methods in other states (non-judicial foreclosures). It may also choose to foreclose through the courts.
What is Judicial Foreclosure?
Foreclosure is the sale of a home to satisfy a secured obligation that has not been paid. Foreclosures are always judicial in some places, which means they go via the court system.
In other states, foreclosures are usually non-judicial (out of court), while judicial foreclosures are also permitted.
What Are the Steps in a Judicial Foreclosure?
Judicial foreclosures take longer than non-judicial foreclosures and can take anything from a few months to many years, depending on the state. The steps in a typical court foreclosure are outlined below.
Pre Foreclosure Loss Mitigation Review Period
If you miss just one or two payments, the mortgage servicer—the business to whom you make your payments—usually cannot start foreclosure proceedings. In most circumstances, the servicer must wait until the borrower is more than 120 days late on the loan before commencing the foreclosure process.
This is to give you enough time to apply for loss mitigation (a foreclosure option), such as a loan modification, short sale, or deed in lieu of foreclosure.
The servicer can still send you reminders that you’re behind on your payments, such as a breach letter (see below), as well as information about legal help, counseling, and other options. In most situations, federal law mandates that the servicer tell you of potential loss mitigation measures available to you.
The Lender or Current Owner of the Loan Files a Lawsuit
The lender or future owner of the loan files a lawsuit in state court to officially start the foreclosure process. You will learn about the case when you are served paperwork called a complaint and summons.
Complaint and Summons
The foreclosure complaint, sometimes known as a “petition for foreclosure,” explains why the judge should issue a foreclosure judgment. The summons will inform you of your rights and specify how many days you have to file an “answer” with the court in response to the complaint. In most cases, you’ll have 20 to 30 days.
If you wish to contest the foreclosure, you must respond within the specified time frame. Because you immediately receive a chance to go before a judge in a judicial foreclosure, it’s easier to mount defenses than in a non-judicial foreclosure.
Judgment
If you don’t reply to the lawsuit, the foreclosing party will likely obtain a default judgment, allowing the house to be sold. Because you did not react to the action, a default judgment implies you automatically lose the case.
If you submit a response, however, the foreclosing party cannot obtain a default judgment. Instead, it’ll probably file a request for summary judgment (in which the court issues judgment in favor of the foreclosing party if the critical facts of the case are undisputed). The lawsuit will go to trial if the judge grants summary judgment.
Unless you have a defense or counterclaim that justifies or excuses your late payments, or you can establish that the lender or servicer did not follow state or federal law in the foreclosure process, the court will issue a judgment of foreclosure against you.
Deficiency Judgments
The deficiency is the difference between the outstanding mortgage debt and the foreclosure sale price when a residence is sold at a foreclosure sale for less than the outstanding mortgage debt.
In many cases, the foreclosing party can obtain a personal judgment against the borrower, known as a “deficiency judgment,” as part of a judicial foreclosure or by initiating an action afterward.
The Foreclosure Sale
A foreclosure sale is scheduled when the court issues a judgment. If a third party puts the highest bid on the home during the foreclosure sale, that person or entity becomes the property’s new owner. In most circumstances, however, the high bidder will be the foreclosing party.
The foreclosing party often bids on the property using a “credit bid” at the foreclosure sale—the bank bids on the borrower’s debt in a credit bid. After the transaction, the court may need to ratify it.
When You Have to Leave After the Foreclosure?
After the foreclosure sale, you might not have to move out immediately. The homeowner may be entitled to stay in the house until the sale is confirmed by the court or until the redemption period expires, depending on state legislation.
What is Non-judicial Foreclosure?
If you don’t pay your mortgage, the bank might sell your property to cover the outstanding amount through a legal procedure known as “foreclosure.” Depending on state legislation and the circumstances, foreclosures are either judicial (via the court system) or non-judicial (outside of the court system).
The foreclosing party takes a set of state-specific procedural processes to foreclose the residence in a non-judicial foreclosure.
What Are the Basics of Non-Judicial Foreclosures?
When you get a house loan, you sign a mortgage or a deed of trust, both of which place a lien on the property. If the mortgage or deed of trust has a “power of sale” clause and state law permits it, the bank can foreclose the house without going to court.
Non-judicial foreclosures are usually completed faster than those that must go through the courts. A non-judicial foreclosure takes a few months, but a judicial foreclosure might take months or years, depending on the state.
What Are the Steps in a Non-judicial Foreclosure?
The processes in a typical non-judicial foreclosure are outlined here, while the process differs from state to state.
Loss Mitigation Review Period
According to federal legislation that took effect on January 10, 2014, the loan servicer (the organization to whom you make your payments) can’t initiate the foreclosure process until the borrower has been late on the loan for more than 120 days.
You can use this period to file for a loan modification, a short sale, or a deed in lieu of foreclosure as an alternative to foreclosure. The servicer can still send reminders that you’re behind on your payments, such as a breach letter, as well as information about legal help, counseling, and other options.
In most situations, federal law mandates that the servicer tell you of potential loss mitigation measures available to you.
Notice of Default
The trustee (the third party who administers non-judicial foreclosures in many states) often commences a non-judicial foreclosure by filing a notice of default or similar paperwork with the county recorder’s office. The borrower is usually mailed a notice of default. However, this requirement varies by jurisdiction.
Before the foreclosure sale, the borrower is usually given a chance to rectify the problem by receiving a notice of default. In many cases, if you don’t cure the default within a particular time, a foreclosure sale will be arranged, and the trustee will prepare a notice of sale.
Notice of Sale
The foreclosure sale’s date, time, and location are all listed on the notice of sale. It usually goes like this:
- recorded in the county land records
- mailed to the borrower
- published in a newspaper
- posted on the property or in a public place
The actual foreclosure procedures and notices that a borrower would get as part of a non-judicial foreclosure vary significantly from state to state. Depending on where you reside, you could get:
- a notice of default followed by a notice of sale
- a combined notice of default and sale
- a notice of sale
- notice by publication in a newspaper and posting on the property or in a public place
The Foreclosure Sale
If a third party puts the highest bid on the home during the foreclosure sale, that person or entity becomes the property’s new owner. In most circumstances, however, the high bidder will be the foreclosing party.
The foreclosing party often bids on the property using a “credit bid” at the foreclosure sale—the bank bids on the borrower’s debt in a credit bid.
In certain areas, the homeowner can stay in the house during a “redemption period.” A redemption period is a period following a foreclosure when a foreclosed homeowner has the right to redeem (repurchase) their house.
If the foreclosure is completed—or the redemption time has expired, depending on state law—the new owner can file an eviction action to evict the foreclosed homeowners if they haven’t already left.
When You Have to Leave After the Foreclosure?
After the foreclosure sale, you might not have to move out immediately. Depending on state legislation, the homeowner may be entitled to stay in the house until the redemption time finishes.
What's a Redemption Period?
In certain states, the homeowner has the right to dwell in the property during the “redemption period,” which is a period following the foreclosure when the foreclosed homeowner can redeem (repurchase) the home.
The foreclosed homeowners must depart the home after the foreclosure sale, confirmation of the sale, or the expiry of the redemption period (depending on state law), or the new owner will try to evict them.
What Are the Different Types of Foreclosure Defenses?
If you’re facing foreclosure, you’ll want to do all you can to avoid losing your home. Here are some frequent foreclosure defenses that our experienced foreclosure attorney could suggest.
The Bank Didn’t Follow State Procedures
The foreclosure procedure is intricate and time-consuming, frequently resulting in mistakes. You may be able to stop the foreclosure if the bank or other lender does not follow Kentucky foreclosure rules.
The Mortgage Servicer Made Mistakes
When administering homeowners’ accounts, mortgage agencies sometimes make blunders. Here are some of the most typical errors to avoid:
- Dual tracking, which means pursuing foreclosure at the same time a different loan modification is pending
- Sending your mortgage payments to the wrong party
- Overstating the amount of money you owe for your mortgage payments
- Imposing excessive fees for late-payments that weren’t stipulated in the mortgage contract
If you believe your mortgage servicer committed any of these or other mistakes, call our foreclosure attorney as soon as possible to help you avoid foreclosure. This is one of the most effective methods for saving your house.
You’re on Active Duty
Active-duty service personnel are given additional protections under the Servicemembers Civil Relief Act (SCRA). This precludes lenders in Kentucky from foreclosing on your house without first going through a judicial process. It enables you to defend yourself with the assistance of our experienced foreclosure attorney.
The primary safeguard is that, unless you sign a release for the lender, if you took out your mortgage before going on active service, foreclosure procedures must take place in court, even if that is not the usual.
The Foreclosing Party Lacks “Standing”
The party that owns the debt is the foreclosing party. If the lender cannot demonstrate that they possess the debt, they lack “standing.” They won’t be able to foreclose on the house after that.
This frequently happens because banks sometimes package your loan with other loans and sell them to other banks or investors. This makes it difficult to determine who owns the mortgage on your home.
The Statute of Limitations Has Passed
The statute of limitations protects homeowners from foreclosure if a significant time has passed after they ceased paying their mortgage payments. Some mortgages or missing payments, believe it or not, do sneak through the cracks.
Because the statute of limitations for foreclosures in Kentucky has recently altered, it is critical to speak with our experienced foreclosure attorney about the time constraints in your case. Lenders have 15 years to start a foreclosure under the original Kentucky Revised Statute.
Additional Foreclosure Defenses
Here are a few less-common ways to fight a foreclosure:
- Because you’re already paying on a loan modification, the foreclosure should not have been started.
- You feel the lender broke federal regulations if you have a VA, USDA, or FHA loan.
- The lender never sent you a breach of contract letter advising of a breach of your mortgage contract or deed of trust.
How Can You Stop a Foreclosure in Kentucky?
Reinstating the loan, redeeming the property before or after the sale, or filing for bankruptcy are all options for stopping a foreclosure. Of course, if you can work out a loss mitigation plan, such as a loan modification, you can avoid foreclosure.
Reinstating the Loan
Kentucky law does not give a statutory right to restore the loan before the sale unless the loan is a high-cost house loan. Before filing a complaint to foreclose on a high-cost home loan, the lender must issue the borrower a notice of default with a 30-day grace period to remedy the problem and restore the loan.
On the other hand, many mortgages provide the borrower the option to remedy the default and restart the loan after it has been accelerated. Check your loan documentation to see if you are eligible for reinstatement and, if so, when you must complete one. Alternatively, your lender may agree to allow you to restore the loan.
Redeeming the Property
Redeeming the property is one strategy to avoid foreclosure. You must pay off the loan balance before the foreclosure auction to redeem.
After the foreclosure sale, several jurisdictions give foreclosed debtors a redemption period during which they can purchase back their house. According to Kentucky law, the redemption period is six months after the sale if the home sells for less than two-thirds of the appraised value.
Filing for Bankruptcy
If you’re facing foreclosure, bankruptcy may be a viable option. If a foreclosure sale is set to take place within the next few days, filing for bankruptcy is the best strategy to halt the sale right now.
When you file for bankruptcy, something called an “automatic stay” kicks in. The stay acts as a temporary restraining order, preventing the lender from foreclosing on your house or attempting to collect its debt.
Filing for Chapter 7 bankruptcy can often postpone a foreclosure by a few months. Alternatively, filing for Chapter 13 bankruptcy may be the best option if you want to keep your house. Please speak with our knowledgeable foreclosure attorney to learn more about your alternatives.
Getting Help From Our Skilled Kentucky Foreclosure Attorney
The laws governing foreclosure are intricate. Servicers and lenders make mistakes and neglect tasks from time to time. Suppose you believe your servicer or lender failed to complete a needed step, made a mistake, or broke state or federal foreclosure regulations. In that case, you may have a defense that can cause the foreclosure to be restarted or give you the power to negotiate an alternative.
Consider speaking with one of our experienced foreclosure attorneys to learn more about your options. Our attorney can also advise you on how to avoid foreclosure.
You have choices if you are facing foreclosure in Kentucky. Farmer & Wright, PLLC’s foreclosure attorney, understands the difficulties, is familiar with your legal rights, and will assist you in determining the best course of action for your circumstance.
Your lender may have broken specific rules, may not have legal ownership of the loan or may have filed an unlawful foreclosure. There are ways we can assist you even if your lender did everything right.
Our Kentucky foreclosure attorney is dedicated to delivering personalized care and skilled counsel to each of our clients. Don’t wait any longer. Don’t hesitate to get in touch with us right away to set up an introductory consultation.
