Foreclosure Process in North Carolina Explained and How It Affects Selling

Photo of a foreclosure notice paper that has a brown folder with house keys on top of it

The foreclosure process in North Carolina is a long, complicated journey that can be difficult to understand. This blog post will list down and provide a step-by-step guide of the entire process, North Carolina laws regarding foreclosure, as well as discuss the effects of foreclosure on the house selling market.

As a homeowner in North Carolina, it’s important to be aware of your rights and what could happen during the foreclosure process. If you’re feeling overwhelmed or don’t know where to start, don’t worry! We’ll walk you through everything here.

What is the Foreclosure Process in North Carolina

The foreclosure process in North Carolina begins when the homeowner misses three consecutive mortgage payments. The lender will then send a notice of default to the homeowner, which is the first step in the legal process.

After the notice of default is sent usually by certified mail, the next step is for the lender to file a lawsuit against the homeowner. This lawsuit will ask the superior court to order the sale of the property in order to repay the missed mortgage payments.

During the foreclosure hearing if the court agrees with the lender’s request, it will issue a judgment against the homeowner. This judgment will allow the lender power of sale and to sell the property at auction, so they can recover any losses that were caused by the missed payments.

The foreclosure process can be lengthy and complicated, but it’s important to understand state laws as well as your rights and what could happen if you fall behind on your mortgage payments. If you’re feeling overwhelmed, don’t hesitate to reach out for help. There are many organizations and agencies available that can provide assistance during this difficult time.

Step-by-Step Guide of The NC Foreclosure Process

If you’re facing foreclosure it’s helpful to see a step-by-step guide of what’s to come and how foreclosure works. Here’s a basic overview of the foreclosure process in North Carolina:

Step 1: Payment Default

A payment default happens when a borrower has missed at least one mortgage payment, although the technical definition varies by lender. The lender will contact you via letter or phone after you miss your first debt repayment.

Mortgage payments are generally due on the first day of each month, and many lenders provide a period until the 15th to allow for late payments. The lender may then charge a late payment fee and send the missed payment notification after that.

After two missed payments, the lender is likely to contact you by phone. The lender may still be willing to work with you to make arrangements for catching up on payments, such as making just one payment rather than several until the borrower falls further behind.

The lender sends a demand letter (or notice to accelerate) once a borrower has gone three months without making a payment, indicating the amount in default and giving the borrower 30 days to bring the mortgage loan current.

In the event of a default, the borrower’s financial standing can be restored (return to good standing), modified, or the property may be repossessed or sold via foreclosure or voluntary surrender.

Step 2: Notice of Default

After the fourth month of missed payments, a notice of default (NOD) is sent. This public notification gives the borrower thirty days to make past-due payments before proceeding with the foreclosure procedure formally.

The majority of lenders will not issue a copy of notification of default until the borrower has been 90 days overdue (three missed payments). As a result, many borrowers may go behind on a month or two without facing foreclosure.

Step 3: Notice of Trustee’s Sale

In most states, the procedure for starting a foreclosure is similar. Non Judicial foreclosures can be carried out in some states without the need of going to court, simply filling out forms with the relevant court. The foreclosure process can thus move quickly in some jurisdictions. Judicial foreclosures are another option; these entail judicial approval for each stage, meaning that it takes somewhat longer.

While most North Carolina foreclosures go through what’s considered a nonjudicial process, one of the required steps is a hearing in front of a clerk of court before the sale. (Judicial foreclosures can also happen but are uncommon.)

The lender’s attorney or foreclosure trustee will schedule a sale of the property after the forms are submitted to the court or necessary authorization is obtained. The county where the property is located records a notice of trustee’s sale (also known as a notice of sale) stating the sale date, time and place for the auction, as well as the minimum opening bid for the property.

The lender must also frequently advertise the property (newspaper advertisements, banners, etc.) in the weeks before the auction, stating that it will be sold at public sale.

The time it takes for the lender to get a judgment and sell the property at an auction varies by state, but typically is no longer than 2-3 months. The borrower can still make payments arrangements or pay the amount owing, as well as any attorney fees incurred by the lender in order to begin the process up until the auction date.

Step 4: Trustee’s Sale

The property has been put up for public sale, and the highest bidder who meets all of the criteria will receive it. The lender (or firm representing the lender) will establish an opening bid based on the outstanding loan amount as well as any liens, unpaid taxes, and selling expenses.

When the highest bidder has been identified and the deal is completed, a trustee’s deed upon sale will be provided to the winning bidder. The buyer then becomes owner of the property, with immediate possession.

Step 5: Deficiency Judgment

A deficiency judgment is a legal action taken by a lender to pursue the difference between the amount of the mortgage and the proceeds of the foreclosure sale. In most cases, the lender will seek a judgment for the full amount of the mortgage plus interest, attorney fees, and any other costs associated with the foreclosure.

The availability of deficiency judgments varies by state. In some states, such as North Carolina, a deficiency judgment is not available unless the mortgage includes a due-on-sale clause. A due-on-sale clause is a provision in a mortgage that allows the lender to demand payment in full if the property is sold or transferred.

Many homeowners facing foreclosure are concerned about being pursued for a deficiency judgment. While it is certainly something to be concerned about, it’s important to remember that not all lenders will pursue this type of legal action. In fact, many lenders are willing to work with borrowers to come up with a repayment plan or forgive the debt altogether.

Step 6: Real Estate Owned (REO)

The minimum bid is the least amount of money that will be accepted for the mortgage. It also takes into account the assessed value of the property, any remaining monetary obligations on the mortgage, any other liens, and attorney costs. If the home isn’t sold during a public auction, the lender will become the owner and try to sell it through a broker or with the aid of a real estate-owned (REO) asset manager.

These are known as “bank-owned” properties, and the lender might eliminate some of the liens and other fees in order to boost its appeal.

Step 7: Eviction

Once the auction is completed and a new owner is named—whether it’s the winner or the bank if the property isn’t sold—the borrowers are sent an order to vacate if they still reside in the property. This eviction notice orders any persons who remain on site to leave immediately.

Several days may be provided to allow the occupants sufficient time to leave and remove any personal belongings. Then, typically, the local sheriff or law enforcement will visit the property and remove them and impound any remaining belongings.

How Does Foreclosure Affect House Selling in NC

Foreclosure has a number of damaging effects on the house selling market. Most obviously, when a large number of homes are being foreclosed, it drives down the prices of all homes in the area.

In addition, foreclosure proceedings create a great deal of uncertainty for buyers about the condition of a property and whether they will be able to get possession after closing. This can lead to buyers backing out of deals or negotiating much lower prices than they would have otherwise.

Finally, the fact that a property is in foreclosure can make it much harder to sell, as potential buyers may be worried about getting stuck with a property that they can’t afford or that has other problems.

The house selling process in NC is challenging enough, but if you are facing foreclosure, it is important to understand the process and how it will affect your ability to sell your home.

North Carolina Foreclosure Laws

Foreclosure is a legal process that allows a lender to repossess and sell your home if you stop making mortgage payments. In North Carolina, the foreclosure process typically takes around six months from start to finish.

If you’re facing foreclosure in North Carolina, it’s important to understand the foreclosure process and your rights.

In a North Carolina foreclosure, you’ll most likely get the right to:

  • pre-foreclosure notices
  • apply for loss mitigation
  • receive certain foreclosure notices
  • get current on the loan and stop the foreclosure sale
  • receive special protections if you’re in the military
  • pay off the loan to prevent a sale
  • redeem the property after the sale
  • file for bankruptcy, and
  • get any excess money after a foreclosure sale.

If you want to keep your home, you’ll need to take action quickly. The sooner you reach out for help, the more options you may have.

How to Avoid Foreclosure in North Carolina

A young woman sitting on the floor of her house holding a final foreclosure notice

There are many ways to avoid foreclosure in North Carolina. Some common methods include:

  • working with your lender to get a loan modification or postponement
  • refinancing your mortgage 
  • selling your home
  • giving your home back to the bank through a deed in lieu of foreclosure
  • filing for bankruptcy/ chapter 13 bankruptcy
  • short sale

If you’re struggling to make your mortgage payments, don’t wait to take action. The sooner you reach out for help, the more options you may have. You can contact a HUD-approved housing counseling agency to get free or low-cost help.

Selling your home before it goes into foreclosure is often the best way to protect your credit and finances. You may be able to sell your home through a short sale or deed in lieu of foreclosure. You can also sell your home to cash home buyers in Charlotte, which is a quick and easy way to avoid foreclosure. These options can help you avoid a formal foreclosure process and damage to your credit score.

If you’re already in the North Carolina foreclosure process, you may be able to stop it by catching up on your payments or negotiating a loan modification with your lender. You can also redeem your home after the foreclosure sale.

Ultimately, the best way to avoid foreclosure is to stay current on your mortgage payments. If you’re struggling to make ends meet, reach out for help as soon as possible. There are many resources available to help you keep your home.

Final Takeaways

If you’re facing foreclosure many times the best way to avoid it is to sell your home. Selling your home before it goes into foreclosure is often the best way to protect your credit and finances. But since time is of the  essence, working with a “we buy houses Salisbury” company is your best bet. By working with a local home buyer like Tiffany Property Investments, you’ll be able to sell your home in as-is condition, get a cash offer within 24-hours and close in as little as 7-days.

If you’re facing foreclosure and would like to avoid it, don’t hesitate to reach out to Tiffany Property Investments. We’re here to help you sell a house fast in North Carolina! Give us a call today at (561) 245-1562 or fill out our online form to get started.

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