“Understanding the foreclosure process in Florida is an important part of navigating your own home foreclosure. It Critical you understand how foreclosure works in Florida.”
Before we dive in…
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments.
Foreclosure is no fun. But just know that it’s not the end of the world.
When you know how foreclosure in Florida works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.
The Basic Stages of A Foreclosure
There’s a few stages that are important to any foreclosure process.
Foreclosure works differently in different states around the country. In Florida, the primary method of mortgage foreclosure is judicial. Because of this, it could take six (6) months or more from the time a property owner receives a notice of default until the property is sold at a public foreclosure auction sale. Accordingly, don’t wait until the property becomes Real Estate Owned (REO) after the auction because the property will cost more than it would in preforeclosure.
The two ways different states use to foreclose upon a property are: judicial sale or power of sale.
Connect with us by calling (407) 410-3240 or through our contact page to have us walk you through the specific foreclosure process here locally in Orlando.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment.
Understanding the Foreclosure Process in Florida:
Your mortgage lender must file suit in the court system.Under Judicial Foreclosure:
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
- As you search foreclosure.com, please always remember one important item: It is absolutely critical that you learn as much as you can about the foreclosure laws that govern the state in which the property is located. There are many nuances and complicated steps that you must understand before making a bid at a public foreclosure auction sale.
Under Power of Sale (or Non Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property for the lender at a public auction (notice must be given).
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgement is where the bank gets a judgement against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgement laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, call up the bank, or work with a reputable real estate firm like us at Hank Buys Homes to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe. Case in point, several states – including Florida – allow a homeowner/borrower to reclaim his or her property through right of redemption. And, overlooking a detail like this could cause a major problem. That’s the reason most prospective homebuyers in the foreclosure industry prefer to purchase a property during the pre foreclosure period.
If you need to sell a property near Orlando, we can help you.
We buy houses in Orlando Florida like yours from people who need to sell fast.
Now that your Understanding the Foreclosure Process in Florida
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Other Foreclosure Resources For Orlando Florida HomeOwners: