For some homeowners in Oklahoma City, one of the biggest challenges brought about by the pandemic has been managing expenses, including mortgage payments. Missing these payments involves the risk of foreclosure.
But, what exactly is a foreclosure and how does it work in Oklahoma City, other cities, and other states? Keep reading to learn about what foreclosure is and what actions you can take to prevent it.
What Does Foreclosure Mean?
Foreclosure occurs when you, as a borrower, fail to settle your mortgage payments and the lender takes back the property. It also happens after homeowners fail to pay homeowners association fees or property taxes.
A Oklahoma City home in closure refers to a property undergoing the foreclosure process. Meanwhile, a foreclosed home or real estate owned (REO) property is a property that has undergone the foreclosure process and is now possessed by the bank or lender.
When foreclosure happens in Oklahoma City, the lender can sell your house to receive back the money that they lost. Given that a mortgage is a secured loan, your lender has the authority to seize or sell your home, which serves as the collateral.
Reasons for foreclosure include losing a job, incurring excessive debts, and encountering a medical emergency, among others.
How Does Foreclosure Work?
To understand how foreclosure works in Oklahoma City and other areas, you need to know the difference between judicial foreclosure and non-judicial foreclosure. Judicial foreclosure involves filing a lawsuit. In this process, the borrower usually has one to three months in between each event.
With non-judicial foreclosure, your lender can foreclose the property without filing a lawsuit. The process involves written notices based on the “power of sale” clause in the agreement that you signed.
Stages of Foreclosure
Whether you’re in Oklahoma City or anywhere else in the US, the foreclosure process generally follows these stages:
1. Failure to Pay
Foreclosure always starts with missed payments. This gives your lender the right to take legal actions to collect the funds.
2. Issue of Public Notice
If you missed your payments for three to six months, your lender submits a public notice or files a lawsuit. This public notice is their way to inform you that they’re taking legal action if the debt is not settled.
In this stage, you’re often given 30 to 90 days to seek different options to avoid foreclosure and eviction. For instance, you can settle the outstanding balance or sell the house with a short sale.
When you decide on a short sale, the sale price is low and the proceeds go to your lender. However, you cannot carry out the sale without the lender’s approval. If you fail to pay the default in this stage, foreclosure continues.
If you fail to prevent foreclosure, prepare for an auction that will be set by the lender or its representative (trustee). This auction will be open to the public and the highest bidder gets the foreclosed home.
If the home was sold at an auction, you need to move out of the house and look for a new place to live. In Oklahoma City, Oklahoma, the purchaser can possess the property 20 days after the sale. In case no one buys the home, which is a common scenario, the lender takes ownership of the home.
How Can You Prevent Foreclosure in Oklahoma City?
Foreclosure is a difficult process for both you and the lender. It’s time-consuming and expensive, even for lenders. Thankfully, you can prevent foreclosure by performing these steps:
Communicate With the Borrower
If you’re experiencing financial difficulties, you can inform your lender to find out your options before you miss your payments. Some lenders may offer to modify your loan to make it more doable, considering your current expenses.
Look for Alternatives
You can also seek different options, like foreclosure mediation, home loan modification programs, and government mortgage relief programs.
In Oklahoma City, two different non-profit agencies, which are the Urban League of Metropolitan Oklahoma City and Solid Ground, provide a foreclosure prevention program. Other HUD-certified agencies can also help homeowners in the Oklahoma City Oklahoma region through free counseling, loans, and other modes of assistance.
Consider Filing for Bankruptcy
You may also file for bankruptcy to put the foreclosure on hold. However, as the issues are complex, you should consult a local attorney to know what needs to be done considering your situation.
Avoiding the Complex Foreclosure Process
Knowing what foreclosure means, how it works, and how you can prevent it can save you from the long, tedious process of foreclosure. If you want to learn more about foreclosure or need foreclosure help before it’s too late, check out our Stop Foreclosure in Oklahoma City page.
Premier OKC Home Buyers can help you stop foreclosure before it’s too late.