Life isn’t always rainbows and sunshine. You may lose your job, get a divorce, or end up with a critical illness and left unable to make ends meet.
In such scenarios, one can feel hopeless after receiving continuous notices for missed payments from their mortgage company. But struggling with mortgage payments and facing the daunting prospect of foreclosure can feel less heavy after having a complete understanding of the foreclosure process and all possible options.
Here we will be explaining the intricacies of the North Carolina foreclosure process, and exploring whether selling your North Carolina house in foreclosure is possible. The short answer is yes!
But first we’ll discuss the role of a real estate agent in navigating a potential sale, exploring alternatives like loan modification, and sharing the critical aspects of a foreclosure auction. Having helped hundreds of struggling homeowners in the same situation, we’re determined to help you find a safe & lucrative way out.
Priority Home Buyers
What Is Foreclosure North Carolina?
Foreclosure refers to a situation where a borrower defaults on their mortgage payments. Notably, missing monthly payments does not immediately trigger foreclosure in North Carolina.
That said, there are two methods for foreclosure – judicial and non-judicial.
A. Judicial Foreclosure
In a judicial foreclosure in North Carolina, the lender files a lawsuit and requests a court order for a foreclosure sale. Responding to the order is necessary to prevent the lender from winning by default.
Defending the lawsuit is also an option, and the court will decide the outcome. If the lender wins, the property goes up for auction. However, even at this stage, you can still choose to sell your house before the auction.
B. Non-judicial Foreclosure
In a nonjudicial foreclosure in North Carolina, the lender opts for a process outside the court based on state statutes. After completing the required steps, the lender can proceed with a foreclosure sale. Most mortgage lenders prefer this quicker and more cost-effective method over going through the court system.
What Happens Immediately After Foreclosure North Carolina?
After a house undergoes foreclosure, the lender proceeds to sell it to recover the losses, leading to several consequences:
1. Deficiency Balance
If the foreclosure sale doesn’t cover the full mortgage, a deficiency balance remains. The lender may sue you to collect this outstanding payment.
2. Credit Score Impact
Foreclosure can severely damage your credit report, making it difficult to secure more credit, new property, and job opportunities.
3. Home Eviction
The most challenging repercussion of a North Carolina foreclosure is losing the home, necessitating a fresh start without the equity previously built.
Foreclosure Process North Carolina
To grasp the state procedure of selling a house amid foreclosure, it is imperative to explore the North Carolina foreclosure timeline, which is as follows:
1. First Missed Payment
After a North Carolina homeowner misses a payment, the lender might offer a 15-day grace period. If the payment remains unpaid during this period, the homeowner will incur an additional late fee. In stricter cases, the lender may also report the payment delay to credit bureaus associated with the homeowner’s credit history.
Continuous missed payments will result in the homeowner being in default. Typically, lenders deem a homeowner in default if they haven’t paid the mortgage for 30 days. The subsequent actions will depend on the type of foreclosure process (judicial or non-judicial) the homeowner is engaged in.
3. Foreclosure Notice Lawsuit Or Default
In judicial foreclosures, the lender initiates a foreclosure lawsuit, necessitating an immediate response from the homeowner to avoid a default judgment in favor of the lender. After responding, the case proceeds to trial, giving the homeowner the opportunity to seek legal counsel.
On the other hand, in a non-judicial foreclosure, the North Carolina homeowner receives a Notice of Default (NOD) detailing the total amount due, encompassing the late fees, foreclosure costs, and mortgage. They have 90 days to repay the amount.
If payment isn’t feasible, the homeowner can request a new repayment arrangement from the lender.
The duration from when the homeowner receives a Notice of Default until the foreclosure auction is termed as pre-foreclosure. Within this period, the homeowner can settle the outstanding dues or negotiate with the lender for potential relief or alternative payment options to prevent foreclosure.
If the homeowner lacks sufficient funds or the lender declines the new repayment agreement, selling the property is the best way to go. In fact, selling the house during this pre-foreclosure process is strongly advised.
5. Notice Of Sale
If the homeowner doesn’t settle the outstanding amount during the North Carolina pre-foreclosure phase, the lender will release a Notice of Sale (NOS) in the local newspaper. The time from the Notice of Sale to the North Carolina foreclosure auction typically ranges from 2-3 months, often shorter.
Even during this period, the homeowner can sell the property, but doing so promptly is crucial to prevent foreclosure.
6. North Carolina Home Eviction
After the North Carolina foreclosure process, the homeowner will receive an eviction order, granting them only a few days to vacate the property along with all the occupants. If they resist, the local authorities or sheriff will intervene, requesting them to leave. In the worst-case scenario, they may even impound the homeowner’s belongings.
Remember – in the entire foreclosure process, time is of the essence!
Can You Sell A House In Foreclosure North Carolina?
Selling your home in foreclosure in North Carolina is allowed, but it comes with time constraints due to the urgency of satisfying the bank requirements. That said, a North Carolina home sale during foreclosure offers various benefits, as discussed below:
1. No Deficiency Balance
By selling during foreclosure in North Carolina, you can avoid a deficiency balance. This being the scenario in which the bank may demand payment if the sale proceeds do not cover the fees and monthly mortgage payments.
2. Quick Purchase Of New Property
The sale allows you to pursue new housing promptly, as having a foreclosure on your credit history can hinder your chances of securing a new mortgage.
3. No Foreclosure On Credit Record
If you successfully sell your North Carolina home during the foreclosure process, there will not be any foreclosure record on your credit history. Notably, such a record can impede mortgage loan approvals for seven years, creating difficulties in obtaining funds for essential expenses like medical procedures.
However, it is essential to have a unanimous agreement when selling a North Carolina home and facing foreclosure, especially if co-owners are involved.
Additionally, it is crucial to set realistic expectations when you sell your home. The primary goal is to settle the mortgage debt through the sale. If the market value is significantly lower than what you owe, you may still encounter challenges even after the sale, which is when you should consider short sales.
How Much Time Do You Have To Sell Your Home Before Losing It To Foreclosure North Carolina?
The duration of pre-foreclosure leading to foreclosure completion varies based on whether it’s a judicial or non-judicial process. Needless to say, a longer process allows you to more time to sell your house for the highest price. In North Carolina, the total foreclosure timeline takes 6-12 months.
Needless to say, we suggest you sell your home before the foreclosure auction to get the most favorable deal.
How Long Does It Take To Sell A Home In Foreclosure North Carolina?
The time frame of selling a home in foreclosure in North Carolina is similar to a traditional home sale in state. In a good market, qualified homeowners typically sell real estate within a few months or less.
However, various factors impact the selling timeline, not just the local North Carolina market conditions. Consequently, the condition of the property, your real estate agent’s advice, the quality of the neighborhood, and more play a significant role in the time frame of your home sale.
With a real estate agent, the process involves determining a fair value, setting a price, marketing, negotiating offers, and closing the deal. Interestingly, the key difference in a foreclosure sale is notifying the lender and providing proof of a valid offer to assure them that foreclosure is not being postponed.
Selling Your North Carolina House During Foreclosure: Step-by-Step
By now, we’ve established that you can avoid a North Carolina foreclosure by selling your home. So, it’s time to channel your efforts into that home sale. Selling a house in foreclosure in North Carolina is like any other North Carolina property sale, within the constraints of the selling timeline.
But to make things easier, we have provided a step-by-step guide that will help you sell your home while avoiding foreclosure.
Step 1 – Find The Worth Of Your Home
To determine the value of your property, we recommend obtaining an appraisal. However, in a short time frame, finding an appraiser can be a Herculean task. So, try using online tools or seeking assistance from a knowledgeable real estate agent with expertise in the financial aspects of home selling.
Step 2 – Set A Fair Price
Using the appraised market value, determine your asking price. Note that doing so is a little more complex than setting a price for a regular home sale.
To ensure profitability, consider covering late fees, interest, and unpaid mortgages. Also, account for selling expenses like repairs, agent commissions, closing costs, staging, etc.
Opt for a fair asking price, even if it means selling at a loss; rather than setting it too high and risking no sale at all.
Step 3 – Inform Your Mortgage Lender
We understand how difficult it may be to communicate with your lender in the middle of a foreclosure. But it’s crucial to inform them about your intention to sell the property and your ongoing efforts to find a qualified buyer.
Most lenders are supportive of homeowners selling their properties since it reduces the workload compared to going through a foreclosure auction.
There are bills in place in North Carolina to prevent foreclosure if a legitimate offer is present. This grants the homeowner an extra 30-day period to sell the house. But always check the current foreclosure laws in North Carolina to be on the safer side.
Step 4 – Sell Your North Carolina Home By Yourself Or Collaborate With A Real Estate Agent
Once you’ve informed your lender, you have the option to contact a skilled real estate agent or find a buyer independently. Considering the time-sensitive process of the sale, we recommend working with an agent or considering a cash home buyer.
However, you must note that a real estate agent’s commissions will be deducted from the sale proceeds. They may also suggest a short sale if you owe more than the market value of the property.
Also, keep in mind that selling your North Carolina property in foreclosure through a realtor could take 6-9 months. You must further be willing to organize open houses, maintain cleanliness in the house, and make necessary repairs. Of course, doing such tasks might not be feasible, depending on your time frame and financial situation.
Step 5 – Get An Offer And Negotiate If Possible
The harsh truth is that when your North Carolina property is in foreclosure, there’s limited scope for negotiation. Time is short, and the auction may yield no profit.
As such, don’t delay reaching out to cash home buyers. Obtain multiple cash offers from reputable buyers, comparing not just prices but also services like covered closing costs, as-is sales, and no additional fees. Although you must act cautiously, it is also important to be prompt while exploring your options.
Step 6 – Inform The Lender About The Home Buyers
Once you secure a cash offer, contact your lender without delay to notify them and stop foreclosure. Remember – preventing foreclosure is only possible if your property has a legitimate cash offer.
Lenders often accept a sale instead of foreclosure if the sale covers mortgage payments and late fees. This benefits both parties, as the lender recoups their money while avoiding auction complications, and homeowners can avoid losing their abode.
Step 7 – Close The Deal
After notifying the mortgage lender, proceed to finalize the deal with the buyer. This officially declares to the bank that the North Carolina home is sold and settles your debt with the lender.
If you’re fortunate enough to receive a cash offer, you may have extra funds to start afresh. This outcome is more likely to happen if you initiate the sale promptly rather than delaying it.
Challenges Of Selling Your Home In Foreclosure North Carolina
1. The Owner Is Selling Alone
If you’re not well-versed in the North Carolina real estate market, it is best to avoid selling your property by owner (FSBO). This process involves various complications, and doing it alone while facing the prospect of eviction can be overwhelming.
To sell quickly, consider collaborating with a real estate investor who offers cash for houses.
2. The Home Is Tied To A Litigation
If you intend to sell a house in foreclosure, you may face difficulties if it’s tied to litigation, like bankruptcy. The unpredictable timeline of the bankruptcy process can delay the sale.
The same applies if the property is subject to lien.
3. The Owner Has Passed Away
If you’re inheriting a foreclosed home, the circumstances can be complex, as per the probate process in your state. It may be necessary to consult a foreclosure attorney who can address the legal aspects associated with both foreclosure and probate in the state.
What Can You Do Besides Selling Your House In Foreclosure North Carolina?
If you’re struggling financially and do not want to sell your house, you have several alternatives, like refinancing, loan modifications, and short sale. Here’s all that you need to know about such procedures:
1. North Carolina Short Sale
A short sale involves selling your home for less than what you owe the lender. This is permissible when the lender acknowledges that recovering the full amount is unfeasible and the market value of the property is lower than the outstanding debt.
While a short sale does impact your credit record, it can prevent the more significant impact of foreclosure. To understand the process of a North Carolina short sale better, we recommend contacting a specialized attorney.
2. Refinancing (prior to foreclosure)
With your lender’s approval, you can opt for refinancing, wherein your current mortgage is replaced with a new loan, preventing the loss of your property. However, remember to initiate refinancing before foreclosure.
During refinancing, expect modifications to the loan structure that can lead to cost savings. The new mortgage may feature an extended term, a reduced interest rate, and even the option to cash out any existing equity in the property.
3. Paying Missed Payments
Resolving the default requires paying all outstanding amounts, including penalties, late fees, and interest, along with missed mortgage payments. So, if you can manage to gather funds, despite your financial hardship, you can avoid the hassle and restore your situation to normal.
4. Get A Deed In Lieu Of Foreclosure
By obtaining a Deed in Lieu of Foreclosure, you transfer ownership of your property to the lender, relieving yourself of the debt and safeguarding your credit score. However, you will still forfeit ownership of the property.
5. Search For Money
Consider liquidating possessions, selling items, or seeking assistance from family through gifts or loans. You can also explore new ways to save money.
Engage with your family and a financial expert to reevaluate your budget and find opportunities for savings or restructuring. This proactive approach has proven beneficial for many, preventing them from losing their homes.
6. Loan Modification
Before you sell your North Carolina house to avoid foreclosure, engage in a conversation with your lender about potential loan modification. They may offer adjustments to the interest rate, loan term, or payment deferral to facilitate repayment.
A successful loan modification can delay eviction, but it’s important to submit the modification form at least 45 days before the auction date to allow sufficient processing time.
7. Declare Bankruptcy
When all else fails, declaring bankruptcy can be your last resort. However, it has significant consequences, as it will be reflected on your credit report for up to 7 years.
As such, you must contact a North Carolina foreclosure lawyer or any other lawyer specializing in the said field. Also, be prepared to enroll in a government-approved credit counseling program.
What’s the quickest way to sell my house in foreclosure in North Carolina?
If selling your house is the most feasible option and you are facing time constraints because of the foreclosure process, the quickest way to proceed is by selling it to a real estate investor.
Also, keep in mind that once your home enters the pre-foreclosure period, it becomes visible on lists that investors regularly monitor for potential acquisitions. So, both regular home buyers and investors may already be interested in your property.
Do I still owe money to the lender after they have received the foreclosure proceedings from the auction North Carolina?
Indeed, it is possible to have a remaining balance or outstanding payments to the lender even after a foreclosure, and this is known as deficiency judgment. This occurs when the sale of the property does not generate enough funds to cover the full mortgage payments, including interest and late fees.
In North Carolina, the bank may choose to sue you to recover the deficiency. However, most lenders tend to avoid taking this legal route due to the associated costs involved in filing deficiency lawsuits.
If the bank does proceed with a lawsuit and you’re unable to pay, they can place a lien on your assets, seek wage garnishment, or even freeze your bank account. To prevent these consequences, you can discuss with the lender to explore the possibility of a repayment plan. Or, you can declare bankruptcy, which can provide certain protections.
So can you sell your house in foreclosure in North Carolina? Absolutely!
All things considered, selling your house in foreclosure in North Carolina comes with a host of challenges and considerations. While time constraints and financial pressures may make selling to an investor an attractive option, homeowners should be aware of potential deficiency judgments. This is an outcome if the sale amount falls short of the outstanding payments, like fees and interests.
As such, negotiating with the lender for a repayment agreement or considering bankruptcy can be viable strategies to avoid severe repercussions. We also recommend seeking professional guidance from a North Carolina foreclosure attorney to make well-informed decisions during this stressful process.
We at Priority Home Buyers are here to help you through a fast sale during foreclosure in North Carolina, and get you the cash in hand and ability to move on fast. We are available for a free consultation 24/7 by phone at 877-775-0988.
Our in-house North Carolina real estate experts and local foreclosure lawyers can be a terrific asset to you when weighing your options and forming a plan. We hope you are prepared after reading this guide, and hope to talk more soon :)