Foreclosure in North Carolina: What are your options?

Facing the possibility of your home being foreclosed can be an extremely difficult and overwhelming situation which is why having a real estate agent guide you through the process can be extremely beneficial. In this guide we will define foreclosure, North Carolina’s legal framework, options when facing foreclosure and the vital ally who will make all the difference during this process– your real estate agent.

What is a Foreclosure?

As defined by the North Carolina Judicial Branch, foreclosure is “a method of enforcing payment of a debt secured by a mortgage, deed of trust, or lien on real property by selling the real property and applying the proceeds of the sale to satisfy the debt. As a result of the foreclosure, the property owner loses all rights in the property.” (NCcourts.gov). Essentially, foreclosure occurs when a lender is attempting to recover the remaining balance of an unpaid loan from a borrower who has not kept up with payments. The asset then becomes collateral for the lender as they force the sale in order to recover the unpaid loan. Before reaching this stage, you will be in what is considered the “preforeclosure” stage, this is the time frame were you’ve fallen behind in payments but before the official foreclosure process begins; this is when you receive the preforeclosure notice or “breach letter”. Official foreclosure typically can’t begin until the past due payment is over 120 days late but this is subject to some exceptions and various factors such as the lender’s specific policies. 

What are my options when facing foreclosure in North Carolina?

• Reaching out to your mortgage company to inquire about programs to avoid foreclosure; these plans can include loan modification, forbearance, or a repayment plan.
• The North Carolina Housing Finance Agency provides financial assistance to some homeowners who are having temporary difficulty paying their mortgages through the NC Foreclosure Prevention Fund
• Preforeclosure sale
• Short sale- Occurs when the price the seller has been given from the bank for the home is less than is currently owed on the mortgage. The bank typically requires a real estate agent to represent the seller in this situation.

Why do I need a real estate agent during foreclosure?

When you’re in a difficult situation such as foreclosure, it can be difficult to think strategically and make the best informed decisions especially when you don’t have extensive knowledge on the topic. Hiring a real estate agent can make the process smoother and help you achieve the best outcome possible. Your real estate agent is someone who is going to be in your corner and advocate for you; here are several ways an agent can help you during this process:

1. Explaining the process: Hiring an agent is not only beneficial because they have years of experience and have worked with other people who have been in your position before but because they can help you understand the process you’re going through and lay out your options.
2. Explore your options: Your agent will help you understand the different options available to you and which might be the best fit for your particular situation. Some options include loan modification, refinancing and preforeclosure sale.
3. Communicating with the lender: Selling your home may not be the best option for you which is why your agent can reach out to your lender to try to stop or slow down the foreclosure process.
4. Selling during the preforeclosure phase: While this process is very similar to selling a normal house, the timeline differs as you have less time to complete the sale and most of the money will go towards paying off the loan; an agent will not only help you with this process buy also work towards getting the best offer possible. Attorneys for the bank are typically already involved at this stage as well.
   • Assisting with sale by:
     1. Marketing your home
     2. Showing your home
     3. Connecting you with buyers
     4. Understanding the worth of the property to get the most money out of it
     5. Negotiating offers
     6. Display professionalism and trustworthiness to potential buyers
     7. Dealing with paperwork
     8. Communicating with the lender and their attorneys to keep the sale smooth and avoid an actual foreclosure.

Reach out to us at Wendy Mitchel Residential if you have any questions or would like help in hiring a real estate agent. 919-749-0536