April 19


How to Sell Your House to Prevent Foreclosure

By Mike Nelson

April 19, 2022

Is your Bay Area house being threatened with foreclosure? If so, don't worry! There are several options you can take before the foreclosure is final that may just help you save your property. You may wonder, "How can I sell my house fast to avoid foreclosure?" Below are descriptions of what a foreclosure is, how you can sell your house fast to prevent it, what steps you can take, and where you can go are you sell your house.


What Is a Foreclosure? 

Foreclosure is a legal process in which a lender aempts to regain possession of a property or the balance of a loan for a property from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as collateral for the loan. For mortgages, it is the acon of taking possession of a mortgaged property when the mortgagor cannot keep up with their mortgage payments for any reason. Foreclosures are a situaon that no one wants to find themselves in, but luckily there are ways you can prevent a foreclosure from happening to you.

How Can You Contest a Foreclosure? 

One way that you can prevent foreclosure is by contesting the foreclosure legally. In the United States, there are two forms of foreclosure: judicial and nonjudicial. In a judicial foreclosure, the lender must sue the borrower in a state court. If the last judgment from the court is in the lender's favor, then an officer of the court places the property into an auction. Many states have this kind of foreclosure to protect any equity that the debtor may have for the property. 

Contest a Judicial Foreclosure

To contest a judicial foreclosure, there are five steps you can follow. First, respond to any court summons made by the lender because the bank or mortgage company and the court want to know you've received the notice of their auctions. Then, contest the lawsuit before being given the summons. Failing to respond to the summons makes it almost certain that the foreclosure goes through. Second, file an answer to the foreclosure complaint stating your reasons for contesting the foreclosure. In the U.S., instead of you proving your innocence, the lender must prove you've defaulted on your loan. 

Third, submit statements under oath and any any other supporting evidence you have that the lender is in the wrong. Proof of unfair lending process or crediting payments to the wrong account are both reasons you can contest a foreclosure. Fourth step is  the hearing. The court schedules to argue your side of the foreclosure argument. If the judge determines there's not enough evidence to support either argument, then the court schedules an evidentiary hearing. The fifth and final step , testify at the  evidentiary hearing. Both you and the foreclosure agent can present witnesses to the foreclosure and cross-examine them for evidence of your side. 

 Contest a Nonjudicial Foreclosure

To contest a nonjudicial foreclosure, there are four steps that you can follow. First, you may sue the lender or the mortgage company and ask the court to stop the foreclosure unless you can explain to the judge why you're contesting the foreclosure. Unlike a judicial foreclosure, you're responsible for proving that the foreclosure is unlawful. Second, file a temporary restraining order to delay the lawsuit. In nonjudicial foreclosure states, the foreclosure process is usually quick, unless you take the lender to court. In California, lenders typically use nonjudicial foreclosures because they are faster and less expensive than judicial foreclosures. Third, at the preliminary hearing, you can submit all your paperwork for the judge to review. The judge will either dismiss your lawsuit or issue a preliminary injunction. Finally, you may prove your case by filing documents that have evidence of the lender failing to comply with state laws or the terms stated in your contract with them. You can also submit affidavits, or testimony from witnesses, to further prove that the lender isn't following lawful or contractual obligations. To learn whether your state is a judicial or nonjudicial foreclosure state, you can check out this foreclosure chart

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How Can You Sell Your House Fast To Prevent Foreclosure? 

You can use a process called a short sale to sell your house fast and prevent foreclosure. A short sale, or pre-foreclosure sale, is when you sell your home for less than the balance you have le on your mortgage. If your lender or mortgagor agrees to the short sale, you can sell your home and pay off a portion of your mortgage with the money that you earn from the sale. 

Typically, this also means that you can get a deficiency waiver, which relieves you of the responsibility for the rest of the mortgage on the home. This will ulmately end the payments that you have to make for the mortgage loan. 

There are several reasons you may apply for a short sale. These include not being eligible for refinancing or changing the terms of your mortgage, facing long-term hardship, or being behind on your mortgage payments. Other reasons you may apply for a short sale include owing more than the home is worth, not being able to sell your house fast for an amount that covers the rest of your mortgage, or not affording your home any longer and needing to leave it. 

What Are the Benefits of a Short Sale?

There are several benefits to a short sale of your home before foreclosure sets in. First, it can eliminate any debt that you owe for your mortgage. Second, it allows you to avoid any negave effects you may experience from foreclosure, including damage to your credit, evicon, and further money owed aer the foreclosure sale. Third, using a short sale can help you remain eligible for relocaon assistance, which can help you find a new home where you can live. Fourth, it can help you repair any damage to your credit that occurs because of the foreclosure process. 

The final benefit of a short sale is that you can become eligible for a Fannie Mae mortgage to purchase a home much quicker than if the foreclosure goes through. The waing period aer a short sale may be as lile as two years before you can get the mortgage, but if your lender forces you through a foreclosure, you could wait to access a Fannie Mae mortgage for as much as seven years.

How Does a Short Sale Work? 

The first step toward completing a short sale is to determine if you qualify for this process. This usually means that the total value of the property is less than the remaining balance on your mortgage. One of the quickest and fastest ways to do this is to contact a cash for property company that will pay straight cash for your home.  They will work together with you to determine the selling price of your home and submit you an offer.  

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Take Action 

If you're experiencing foreclosure from your lender, the best thing you can do is take action quickly. This can help you avoid the negative effects of foreclosure, and ensure that you receive fair treatment from your mortgagor and any courts you may experience. Finally, taking action to sell your house fast can help you prepare for any challenges that arise during the foreclosure and short sale processes, allowing you to stay ahead of the challenges and solve them before they happen. 

At Coveway Properties, we have prepared a team of licensed professionals who can buy your Bay Area home fast and for cash. Contact us on our website to learn about the best options for selling your home. You can also access resources about many topics related to real estate, selling your home fast, and important information that can help you sell your house fast for cash. You can also find cash home buyers who may be interested in your property.

"What a relief to have found Coveway Properties! My husband and I have been struggling with what to do with this home for years. Every time we had a game plan to fix up the home to sell it, one of us was getting sick or recovering from surgery.  Mike was so understanding and worked with us remotely to get the home sold. We are so grateful for his help!"