Understanding the foreclosure process in KY is an important part of navigating your own home that’s in foreclosure.
Before we dive in…
Understanding the Foreclosure Process in KY
What is a foreclosure anyway?
Foreclosure is the legal process that lenders use to take back the property from a person that has the property and that secured the loan through them as a lender, and generally this happens after the borrower has stopped making payments on said property.
Foreclosure is no fun. But just so you know, if you find yourself in this position, that it’s not the end of the world. You have options if you move fast.
When you know how foreclosure in KY works… it will arm you with the knowledge to make sure you navigate it well and come out on the other end as good of shape as possible.
Here Are Some Basic Stages of A Foreclosure
There are a few stages that are good to know and that are important to any foreclosure process.
Foreclosure works differently in different states around the country.
There are two ways different states use to foreclose upon a property and they are: judicial sale or power of sale.
By connecting with us via (270) 551-2171 or through our contact page you can have us walk you through the specific foreclosure processes and laws here locally in Paducah and Surrounding Areas.
In either scenario, foreclosure typically doesn’t go to the court until there is 3-6 months of missed payments. Usually (but not always), a lender will send out many, many notices reminding you that you are in arrears – overdue or behind in your payments. Because it is in the bank’s best interest to work with you as much as possible in order for them to get their money and not have to go through this hassle.
Under Judicial Foreclosure:
- Your mortgage lender must file suit with the court system.
- You’ll then get a letter from the court demanding restitution of what you’re in arrears in.
- Assuming the loan is valid, you’ll have 30 days to bring payment to the court to avoid foreclosure (and sometimes even that can be extended).
- If you don’t pay during this payment period, a judgment will be entered, and the lender can then request the sale of your property – which comes usually through an auction.
- And once the property is sold, the sheriff will then serve an eviction notice and will force you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender gives you documents asking for payment, and going to court is not necessary, though the procedure might still get examined by a judge.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is then transferred to a trustee.
- And the trustee can then sell your property to the lender at a public auction (although notice must be given).
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at the auction isn’t enough to pay off the loan and satisfy the lender, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you through the courts, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state’s laws are different.
Generally, it’s better for you if you can, in any way, avoid a foreclosure auction. Instead, call up the bank, or work with a good reputable real estate firm like us at Clayton Buys Houses that will help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
If you need to sell a property near Paducah and Surrounding Areas, we can help you, but only if you call or contact us.
We buy houses in Paducah and Surrounding Areas KY like yours from people who need to sell fast no matter the circumstance or condition of the house.
Give us a call anytime (270) 551-2171 or
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Another Foreclosure Resource For Paducah and Surrounding Areas KY HomeOwners: