Suppose you’re a real estate investor, a lender, or another professional who is involved in real estate transactions. In that case, you may have to deal with one of the most unpleasant parts of this industry: foreclosure. Foreclosing on properties essentially means repossessing someone’s home. It’s not something you want to do, but if the borrower is too far behind on payments or has simply abandoned the property, it may be a process you have to take in order to protect your own income and investment. As a landlord or lender, it’s essential that you understand the process and that you follow the law when evicting and foreclosing on someone. You also need to understand what foreclosure resources are available to help you and your borrowers.

What Is Foreclosure?

Foreclosing on a property is a last resort lenders, and landlords have when the borrower or tenant fails to make their loan payments. Several laws and regulations govern it, and it’s typically never the first option. Borrowers usually have to miss several payments in a row for lenders to foreclose on them.

In order to begin the eviction and foreclosure process, you may need to go to court. A judicial foreclosure is one ordered by the court after presenting your case to the judge. If it’s clear the borrowers have missed several payments and are unlikely to be able to catch up or even start making payments again, the judge is likely to grant the foreclosure. In some states, it’s possible to get a nonjudicial foreclosure. This option doesn’t require going through the courts, but it’s not available in all states. One such nonjudicial foreclosure is called a power of sale foreclosure and is included as a mortgage contract clause.

The Foreclosure Process

Foreclosures, even those that don’t go through the courts, take time. In fact, it often takes more than a year to fully complete the foreclosure process. This is because you must give borrowers a chance to become current on their payments. They also have to miss at least three months of payments before they can be considered in default. In some cases, you may have to wait as long as six months before you can begin the foreclosure process.

Once the required amount of time has passed, and the borrowers have made no move to make a payment, you have to file what is called a Notice of Default. You send this notice via certified mail to the borrower and file a copy with the recorder’s office. This notice includes how much the borrower owes in principle, interest, and late fees.

The borrower now has the chance to pay the amount listed, work with you to find a resolution, or even sell the home in a short sale in order to pay you what they owe. This pre-foreclosure period lasts for a specified time (usually outlined by local foreclosure laws). Once it’s over, you can file the Notice of Sale paperwork. This notice states your intent to sell the property and recoup whatever money you can on the loan.

The final step is to serve the borrowers with an eviction notice following the sale of the property. They now have to move out of the property. If they do not, you can contact law enforcement for assistance.

The COVID-19 Foreclosure Moratorium

In response to the COVID-19 pandemic, the US government passed the CARES Act. This act went into effect at the end of March 2020. It included an eviction and foreclosure moratorium section. This meant that landlords could no longer evict tenants or begin the foreclosure process, even if borrowers were months behind on payments. In addition to the moratorium, borrowers could also ask lenders for a mortgage forbearance, and this paused their payments or allowed them to pay less for up to 180 days.

While foreclosures were initially set to resume on August 31, 2020, the moratorium was extended several times. Currently, however, the moratorium has expired. Borrowers were able to enroll for additional forbearance for several months after this, but that period has also ended.

Foreclosure Resources

While the moratorium may be over, there are still a number of foreclosure resources out there for you and your borrowers to take advantage of. For example, the American Rescue Plan Act of 2021 made 10 billion dollars available to qualified homeowners to help them catch up on back payments.

The Consumer Financial Protection Bureau has also added additional protections for homeowners who were affected by the pandemic. It provides them with additional assistance plans and means to avoid foreclosure. There are also some specific state and local resources you and your borrowers can look into.

Forbearance Can Be a Great Option

Some lenders are hesitant to offer forbearance, seeing it as a way for borrowers who are behind to simply keep living in a property without paying for it for longer. However, forbearance can be a good tool for both of you. For borrowers, it gives them time to get their finances together. If someone lost their job during the pandemic, for example, it’s very likely they fell behind on their payments. If they have found a new job, they have a steady income, but they may not be able to catch up on their mortgage right away. A few months in forbearance can help. Typically, borrowers don’t incur any extra interest or fees while in forbearance, further helping them.

On your side, avoiding foreclosure is the best option. It takes time and money to go through the steps of a foreclosure, and you likely won’t recoup all the money you lent. You avoid taking that loss and then further trying to sell the home to a new buyer.

What to Do if You Do Foreclose

If you do have to foreclose on a property, you want to make certain you follow all relevant laws and regulations. Even if you’ve gone through a foreclosure before, it’s best to check with a local legal expert to make certain you follow any recent changes. As the pandemic continues, it’s also possible another foreclosure moratorium or other regulations will go into effect. Be sure you understand these changes and follow them.

After you have finalized the foreclosure, the borrowers may want to move out before the sale of the property. In this case, you may need to clean out the home before you sell it. An empty house typically sells for more, so it’s a good idea to hire a junk removal service to take care of any furniture, appliances, or other garbage left in the home. Make certain that the borrowers do not want it or that you’ve followed the laws regarding abandoned property before doing so.

Junk King North Houston is Here to Help with Junk Removal

Junk King offers full-service junk removal in North Houston. We work with both homeowners and commercial businesses, including landlords, banks, mortgage companies, and other lenders. Our team has years of experience in cleaning out homes. Whether the foreclosed-on property just has a few old pieces of furniture in it or has just about every room full of stuff, we can handle it.

We understand you don’t have the time to handle cleaning out these homes yourself. You likely also don’t have the manpower or the large vehicles needed to move all the furniture and appliances out. Our team will handle all of that. Just point out what you want us to take, and we will. You don’t need to move it out of the house or even to the garage. We will handle getting the items out of the home (carefully avoiding damaging anything) and into our truck.

Our No-Obligation Quote

As a full trash removal service, we’re able to take just about anything. As long as it doesn’t contain hazardous waste, Junk King can haul it away for you. We take furniture, appliances, electronics, hot tubs, and even yard waste and construction debris. Just let us know what you have, and we’ll give you a quote. Our estimates have no hidden fees—what you’re quoted is what you’ll pay. There is no obligation, either.

Often, when you call on us for a quote for trash, appliance, and furniture removal, we will bring one of our large trucks. If you agree to the quote, we will be able to take the items right then and there. Everything is done in one trip. For larger projects, including foreclosures where the tenants left a large amount of stuff, we may need to come back with an empty truck or even make a couple of trips.

Give Junk King North Houston a Call Today

Getting a property into good shape so it can be resold is vital to your business. Every day the property is empty or isn’t on the market, you lose money. Making use of our clean out services is a great way of reducing this period and getting the house sold to someone new. If you’re in need of a junk removal company, give Junk King a call today at 1-888-888-JUNK.