Can You Stop Foreclosure in North Carolina?

Foreclosure is one of the most stressful — and potentially devastating — situations a North Carolina homeowner can face. Not only do you stand to lose your home if your house is foreclosed upon, but your credit score and ability to secure another mortgage in the future can be affected as well. However, if you are behind on mortgage payments, there are still a few options that may be available to you to delay or stop foreclosure.

How Does Foreclosure Work in North Carolina?

A foreclosure proceeding can be initiated by a lender when a homeowner defaults on their mortgage payments. Once the foreclosure process is complete, the lender can take back the home and sell it at auction. The house is sold to the highest bidder, who can proceed to take possession immediately.

Notably, there are many legal requirements a lender must adhere to before commencing foreclosure proceedings. Generally, a lender cannot begin a foreclosure until you are behind on your mortgage payments by 120 days or more. The period prior to the actual foreclosure is known as “preforeclosure.” While the servicer is permitted to charge late fees for missed payments during this time, they must also send you a breach letter and inform you regarding how you can avoid foreclosure.

Under federal law, a mortgage servicer is obligated to contact you by telephone — or attempt to make contact with you — to discuss options that might be available to you to prevent foreclosure. Critically, they must do so no more than 36 days after you have missed your first payment and again after each subsequent missed payment. The servicer must also send you a notice no more than 45 days after you missed a payment advising you of your loss mitigation options and appoint someone to work with you to prevent foreclosure.

Options to Prevent Foreclosure

Most foreclosures on residential homes in North Carolina use the nonjudicial process, meaning they are done out of court. However, one court appearance is usually necessary. The lender will serve a “notice of hearing” by certified mail either 10 or 20 days before the date of the hearing, depending on whether you were served personally or the notice was posted on your property.

Before the foreclosure proceeds, you may be able to stop the process by:

• Getting current on your loan — The best way to stop foreclosure is before the proceeding is commenced. Although a foreclosure cannot begin until you’re over 120 days past due on your mortgage payments, it’s essential to make every effort to become current on your loan after the first missed payment to avoid the process entirely.
• Redeeming the property — If you can pay off the total amount of the loan before the foreclosure sale, you may be able to redeem your property. In addition, North Carolina law provides a ten-day window following the foreclosure sale in which a higher bidder can come in and buy the home. If an “upset bid” is made, it starts the clock running on another ten-day period in which you can redeem the property by making full payment.
• Applying for loss mitigation — It’s best to discuss with the lender what loss mitigation options might be available to you. Depending on your situation, you may be able to enter into a deed in lieu, a forbearance agreement, or another type of arrangement.
• Obtaining a loan modification — One of the first things you should consider if you’re facing foreclosure is applying for a loan modification. This can allow you to keep your home while continuing to repay your loan at a rate you are able to afford.
• Selling the house in a short sale — A short sale can be a strategic way of avoiding foreclosure. In a short sale, you sell the home for much less than the debt balance, and the lender releases the lien on the property in exchange for the sale proceeds.
• Proceeding to litigation — In some cases, you may be able to argue that the lender engaged in improper lending practices or the foreclosure was commenced wrongfully. By proceeding to litigation, you can also obtain an injunction which would prevent the foreclosure sale from moving forward until the conclusion of the lawsuit.
• Filing for bankruptcy — When you file for a Chapter 7 or Chapter 13 bankruptcy, an automatic stay is put in place that prevents the lender from moving forward with foreclosing on your home. They also cannot attempt to collect any debts while the stay is in effect.

It’s also vital to review your promissory note and deed of trust. In addition to the protections available to you under both North Carolina and federal law, these documents may offer various contractual rights.

Additionally, if you are in the military and took out a mortgage before you were on active duty, you may be eligible for relief from foreclosure under the Servicemembers Civil Relief Act. Lenders are prohibited from foreclosing on homes of military members while they are on active duty and for one year after, so it may be possible to stop foreclosure in this situation if done right.

Contact an Experienced North Carolina Foreclosure Attorney

Facing foreclosure can be overwhelming. But having a skillful attorney on your side to guide you through the legal process and discuss your options with you can make all the difference in the outcome of your case. At The Twiford Law Firm, we are committed to protecting your rights at all stages of foreclosure and will work with you to find a strategic solution.

With offices located in Moyock and Elizabeth City, The Twiford Law Firm provides capable counsel and reliable representation for foreclosure matters throughout Northeastern North Carolina and the Outer Banks. Contact us today to schedule a consultation to learn how we can help.