Foreclosure rates have increased nationally by more than 200% since 1980 and show no signs of abatement. More than 600,000 homes were foreclosed in 1989.
Older homeowners fall behind on their mortgages for many reasons: sudden decreases in income due to the loss of a spouse; poor financial management which contributes to nonpayment of utility bills, service shutoffs and liens against the property; failure to perform necessary repairs and maintenance which make the property uninhabitable; second mortgage scams which make impossible demands on the homeowner`s limited resources.
All of these contributing factors can be addressed by skilled advocates -- if homeowners turn to them in time. This issue of Consumer Concerns for Older Americans examines some of the measures that legal and non-legal advocates for the elderly can take to defend homeowners at risk of foreclosure.
How Foreclosures Work
Foreclosure procedures vary from state to state. The procedures are established by state statutes, by case law, and by local practice. In about half of the states, foreclosures are court proceedings. First the creditor files a suit in a court located near the property.
Unless the homeowner files an answer successfully contesting the foreclosure, a judgement is entered for the creditor. The home is then sold under court supervision.
Other states have "non-judicial foreclosures." Creditors foreclose by simply advertising the home for sale, using a legal notice in a newspaper.
If homeowners want to contest this type of foreclosure, they must file a lawsuit and ask the court to stop the sale. Sometimes if the homeowner wants the court to stop the foreclosure, the homeowner must file a bond to protect the creditor. Unless the homeowner initiates a court proceeding, there is no judicial involvement in such a foreclosure.
Some states allow both types of foreclosure, judicial and non-judicial. Practicality and local custom usually dictate a creditor`s choice of one type over the other.
Consumer Strategies When Foreclosure is Threatened
When a homeowner first becomes worried about meeting mortgage payments, advocates can recommend that a series of steps be taken to reduce the risk of foreclosure.
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