Foreclosure is the legal process by which the lender in a mortgage arrangement takes possession of the property (usually a house) that secured the loan. This is done when the Cedar Rapids, Iowa debtor has repeatedly failed to make their payments. When a house is foreclosed, it is usually sold at auction shortly thereafter. This is because banks usually want to get rid of the property as soon as possible, even if it means losing some money, and an auction is an easy way to do this.
In all states in the U.S., including Iowa, there is an option to go through foreclosure via judicial sale, in which a court oversees the sale, and makes sure that the proceeds first go to the lender, and then to any other entities that might have a lien or other interest in the property (in order of priority), and, finally, to the borrower, if anything is left. In many states, original mortgages (as opposed to refinanced loans) are "non-recourse" loans, meaning that the most the lender can collect is whatever the foreclosed property sells for. The bank cannot go after the borrower for the balance, if the sale nets less than the amount due. You should consult a lawyer in Cedar Rapids, Iowa to learn the details of the law here. You should also know that this rarely applies to loans which have been refinanced.
How Can I Avoid Foreclosure in Iowa?
First of all, you shouldn't ignore the problem. You should stay in contact with your bank, and be honest with them. Ignoring the issue will not make it go away. It is crucial to remember that banks don't really want to own homes in Cedar Rapids. In issuing a mortgage, they expect to make a profit through interest on the loan, and they'd prefer to continue collecting from you. Therefore, they're likely to make reasonable accommodations to your financial situation if it will enable you to keep paying them in the long run.
If you believe that foreclosure is imminent, there are some other options. For example, you might be able to engage in a "short sale," which sometimes allows you to sell your house for whatever amount you can get, give the proceeds to the lender, and walk away free of your mortgage debt, even if the sale netted less than the balance of the mortgage. A "short refinance" might also be an option in some cases. This allows you to have some portion of the debt forgiven, while refinancing the rest.
How Can A Cedar Rapids, Iowa Attorney Help?
If you are faced with the possibility of foreclosure in Cedar Rapids, Iowa, an attorney might be able to help. At the very least, he or she can advise you of your legal options.