Understanding the foreclosure process in Oklahoma is vital to avoiding your credit being destroyed and home taken by the bank. If you DO understand the ins and outs of the foreclosure process, you can avoid it, leverage other solutions, and possibly either save your home all together or sell it without foreclosure make some money out of the deal.
Before we dive in…
What is foreclosure exactly?
Foreclosure is the legal process that lenders or banks have to go through in order to take back a house they lent money on. Foreclosure is used when the borrower stops making payments in most cases. The agreement you sign with your bank when they give you money to buy a house has some other rules besides just missing payments that if broken can result in foreclosure also. The #1 cause for foreclosure though, is falling behind on mortgage payments.
Let’s face it….foreclosure is no fun. It sucks for you and for the bank. It isn’t the end of the world though, and you still have options.
The key to coming out ahead and finding the best solution is understanding the foreclosure process in Oklahoma. We’ve been through the process with people many times, call us if you have questions!
The Basic Stages of Foreclosure
There are a few stages that are common to any foreclosure process. Those stages depend on what state you are in because each state uses 1 of 2 ways to foreclose on homes. The two ways states use to foreclose upon a property are: judicial sale or power of sale. In Oklahoma most foreclosures are judicial but a few are through a power of sale.
Connect with us by calling 405-673-4901 or through our contact page to have us walk you through the specific foreclosure process used here in Oklahoma so you know what to do.
In Oklahoma, foreclosure typically doesn’t go to court until you have missed 3-6 months of payments. Usually (but not always), a lender or bank will mail you a few notices that your payments are late. If you are behind on payments and your bank is about to start foreclosure or hasn’t yet taken your house back, you are in pre-foreclosure. During this time, which can last 2-12 months, you can A) pay the missing payments, B) refinance the loan with your bank under special terms, C) sell the house to pay off the mortgage, D) sell the house for less than what is owed and wipe out the mortgage, AKA a short sale.
Here is how each type of foreclosure works…
Under Judicial Foreclosure:
- You get behind on payments for 1-6 months.
- You’ll get a letter from the court demanding payment immediately and informing you of what is to come if you don’t (foreclosure)
- If you fail to pay, the bank files a court case against you for foreclosure and serves you notice of default explaining this.
- You’ll have 30 days to respond to the lawsuit and either accept the foreclosure or deny it. You can still make it go away by selling the house or paying the late payments.
- If you don’t pay the missed payments or sell the house, a judgment will be entered by the courts and the bank can request the power to sell your home to recoup their money. This is usually done through an auction and sold to highest bidder.
- Once the property is sold, the sheriff comes to serve you an eviction notice and forces you to immediately vacate the property. Locks are changed, the house is secured, and everything is done.
Under Power of Sale (or Non Judicial Foreclosure):
- The bank serves you with papers demanding payment, and the courts are not required to be used – although the process MAY be subject to judicial review by the courts.
- After the established and usually short grace period has elapsed for you to repay the debt, a deed of trust is drawn up and control of your property is transferred to a trustee (the bank or their attorney).
- The trustee can then sell your property to get their money back on the house.
What Happens After A Foreclosure Auction?
After a foreclosure auction is complete, your home is sold at auction and the loan amount is paid off with the sale proceeds from the auction. Sometimes, if the bank doesn’t get enough money from the auction to pay off the loan, a deficiency judgment can be issued against the borrower. This is where understanding the foreclosure process in Oklahoma is key. Just because the bank took your house and sold it, doesn’t mean they stop there….
A deficiency judgement is where the bank sues you in court for any portion of the loan that is unpaid after your house is foreclosed on and sold by the bank. They basically come after you for the rest of the debt in any way they can when selling the house isn’t enough. Depending on the details, they can take a cut of your paycheck or get into your bank account if the courts allow it.
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 good website that shows the state by state deficiency judgement laws, because each state is different.
As you know, it’s best to just avoid a foreclosure and auction and deficient judgement all together. Instead, call up the bank to try and work with them (short sale or refinance) OR work with a real estate company like us to help you either sell the house as is, take over payments (including catching you up on payments), or to help you negotiate with the bank to sell at a price for less than what is owed and wipe the debt clean completely (no deficiency judgement).
Experienced investors like us can help you by negotiating directly with bank to work out a deal where they forgive the debt and you sell the house for less than what you owe.
If you need to sell a property fast near Oklahoma City, we can help you.
We buy houses in Oklahoma City facing foreclosure all the time. We know how it works. Don’t wrestle with understanding the foreclosure process in Oklahoma. Call us today.