November 1, 2014

Home Foreclosed? Here’s What Happens Next

official notice of mortgage foreclosureGeorgia foreclosure law allows lenders to start and complete the mortgage foreclosure process in as little as 37 days.  This means that just over a month from the start date of the foreclosure, you may lose all title interest in your home.

With very limited exception, lenders in Georgia do not have to go to court to foreclose on your home.  Georgia law permits non-judicial foreclosure, which means that if you go into default, the mortgage company or bank needs only to send you a written notice of intent to foreclosure, then advertise the pending sale for four (4) weeks in the legal newspaper for the county where the property is located.

By contrast, other states like Florida, Illinois and Ohio use a judicial foreclosure procedure where the lender must file a lawsuit against you, win a judgment allowing for a foreclosure then conduct the sale.  In these other states, a title transfer might not happen for 8 months to a year.

Foreclosure sales in Georgia are conducted on the courthouse steps of the county where the property is located.  These sales occur only on the first Tuesday of each calendar month and consist of live auctions conducted by mortgage company lawyers.

In many cases, the foreclosing back “buys” the property at the courthouse steps sale.  Any buyer would have to pay off any first mortgage so an investor would not be interested in a property where there is no equity.  Since property values have fallen in Georgia over the past few years many sales result in the bank or mortgage company taking title back.

So, let’s assume that today is Wednesday and your house was sold on the courthouse steps yesterday (foreclosure Tuesday).  What happens?

Usually, nothing happens, at least right away.  Under Georgia law, you have lost your title interest in your property and now you are considered a tenant at sufferance.  As long as you do not abandon the property, the new owner cannot use self help to take possession of the property.

If the new owner was to forcibly change the locks, or worse, dispose of your property, you might have a claim for damages against the new owner.

Usually, the new owner will contact you within a few days of the foreclosure sale to request that you move.  Some owners will offer “cash for keys” – usually a few hundred dollars to move and avoid an eviction.

Other owners will file an eviction, which is a type of lawsuit that seeks a court order terminating any leasehold rights.  I spoke to Lisa Burriss, an Atlanta area lawyer who handles eviction matters for landlords and she advises me that when an eviction complaint is filed, you have 7 days to answer it, and if an order is entered, you have a minimum 7 additional days before the judge will enter a writ of possession, which means that an actual eviction could occur.

Lisa stressed to me that the amount of time you have before you are at risk of having your possessions removed and put on the street can vary greatly depending on the county.  In some counties, the actual eviction hearing may not be scheduled for several months and another few months could pass before the sheriff or marshall will appear at your house to supervise a private eviction company’s entry into your home.  In other counties the process could take 6 or 8 weeks.

The bottom line:  if you do nothing, eventually your possessions will be physically removed from your residence and put on the street.  Lisa’s web site at GeorgiaEviction.com offers detailed information about the eviction process and procedure.

I have seen a few cases where a homeowner answers the eviction proceeding by asserting a counterclaim that arises from a wrongful foreclosure claim.  A foreclosure may be wrongful if the lender did not give you proper notice, or if the lender did not properly credit you with payments.  Wrongful foreclosure actions can take months or even years to work their way through the court system – in this type of situation, the lender will most likely ask the court to require you to pay a monthly sum into the court registry as rent.

My good friend and real estate expert Marc Oppenheimer recently testified as an expert witness in a case where a foreclosed homeowner is challenging the foreclosure but has not been paying rent.  The judge in the eviction proceeding accepted Marc’s testimony about what constitute reasonable rent for this particular home and the now former owner was ordered to pay monthly “rent” into the court registry while the wrongful foreclosure action proceeds in Superior Court.

Bankruptcy can stop the eviction proceeding – sometimes permanently and sometimes temporarily – we’ll discuss that in a future post.

Often, foreclosed homeowners can strike deals with foreclosing lenders whereby the homeowner has time to leave, cash to cover expenses and certainty as to what will happen.  If you are facing foreclosure, please call my office to discuss your options and the steps you can take to make the best of a bad situation.

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Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.
About Jonathan

Jonathan Ginsberg represents honest, hardworking men and women in the Atlanta area who need personal bankruptcy protection. In practice for over 25 years, Jonathan teaches bankruptcy law and practice at legal continuing education seminars and he is a founding member of the Bankruptcy Law Network. Jonathan lives with his wife and children in Atlanta.

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