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- Basic questions about foreclosure:
- What is foreclosure?
Foreclosure is the legal process your lender must follow to end your ownership rights to your home if you have failed to make your mortgage payments. Mortgage lenders usually consider a mortgage to be in default if payments have not been made in three months. When a loan is in default, the lender can begin the mortgage foreclosure proceedings in accordance to the state laws where the property is located.
- What are some of the causes of foreclosure?
There are numerous reasons why homeowners default on their loan. Most causes are related to financial hardships, often due to reasons beyond their control. The most common causes are job loss, medical expenses due to injury or illness, divorce, death of spouse or expenses exceed income.
- What occurs during the foreclosure process?
In Indiana, the mortgage company initiates a foreclosure by filing a lawsuit in court. The borrower is served with a copy of the complaint and summons by a sheriff. The borrower then has approximately 20 days to file an answer with the court. If the homeowner does not file an answer, the court will assume the homeowner does not dispute the mortgage company’s claims and will most likely enter default judgment against the homeowner. If the homeowner files an answer refuting the mortgage company’s claims, the court may take further action before ruling and issuing an order or judgment.
- How can I avoid foreclosure?
The first step in foreclosure prevention is to take control of your financial situation by understanding your income and your expenses. You will greatly reduce your anxiety when you understand where your money comes from and where you are spending it. Developing a budget is the simplest way to begin to understand your financial situation. Budgeting will help you plan for meeting your expenses as well as begin to build assets.
- What steps do I take if I foresee mortgage problems?
Evaluate your situation. Include family members in the process. Set money aside for your mortgage payment. Get in touch with your lender/servicer. Always give truthful and accurate financial information. Never agree to any plan that you can't afford.
- How should I deal with collection notices?
OPEN YOUR MAIL! Immediately communicate your hardship to your lender. Call a housing counselor.
- What does a housing counselor do?
Housing counselors act as an advocate on your behalf. They communicate with your lenders and servicers, with you, to find options that might save your house from foreclosure.
- Do I pay for this help?
No. HUD approved, non-profit housing counseling agencies offer free help. Be aware of scams and agencies that try to charge you for their services.
- What are some of my options?
A temporary forbearance, a loan modification, a short sale or deed in lieu of foreclosure are options that can be explained to you by a housing counselor.
- Is there cash help available?
Some non-profit organizations have limited resources available for homeowners who clearly demonstrate the ability to make future payments. Most solutions do not involve outside funding.
- Is there a way to get my home back after foreclosure?
Those options vary by state. At this point, consult an attorney.
- More specific questions about foreclosure in Indiana:
- How are mortgage liens treated in Indiana?
Indiana is known as a lien theory state where the property acts as security for the underlying loan. The document that places the lien on the property is called a mortgage. There is no power of sale provision in the Indiana Code.
- How are Indiana mortgages foreclosed?
In Indiana, the lenders go to court in what is known as a judicial proceeding where the court must issue a final judgment of foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon. A lender must usually wait three (3) months to execute on a complaint for foreclosure. The period is longer for certain mortgages based on when they were executed.
Before property may be sold at a foreclosure sale, the sheriff must advertise the sale by publication once per week for three (3) consecutive weeks in a newspaper of general circulation. The first publication must be made at least thirty (30) days before the date of the sale. At the time of the first publication, the borrower must be personally served in accordance with the Indiana Rules of Trial Procedure governing personal service. The sheriff’s sale must occur between 10am and 4 pm on any day of the week except Sunday. A lender may take immediate possession of abandoned property.
- What are the legal instruments that establish a Indiana mortgage?
The documents are known as the mortgage, note, and in a commercial transaction, a security. Sometimes the mortgage document is combined with the security. A mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.
- How long does it take to foreclose a property in Indiana?
Depending on the court schedule, it usually takes approximately 150-200 days to carry out an uncontested foreclosure depending on the age of the mortgage document. This process may be delayed if the borrower contests the action, seeks delays and adjournments of hearings, or files for bankruptcy.
- Is there a right of redemption in Indiana?
No, Indiana doesn't have a post sale statutory, which allows a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. There is a pre-sale right to redemption after the issuance of a judgment.
- Are deficiency judgments permitted in Indiana?
Yes, a deficiency may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage secures. This means that the borrower still owes the lender for the difference between what the property sold for at auction and the amount of the original loan.
- What statutes govern Indiana foreclosures?
The laws that govern Indiana foreclosures are found in Indiana Code, Article 29 (Mortgages), Chapter 7 (Foreclosure, Redemption, Sale, Right to Retain Possession). To view these statutes on the Web, you can visit: http://www.in.gov/legislative/ic/code/title32/ar29/ch7.html
- If you want to know how foreclosure can affect your taxes, this information from the IRS can provide some insight.
- IRS Tax Information (29KB .pdf - Get Adobe Reader)