Foreclosure is the legal procedure by which the lender in a mortgage arrangement takes possession of the property (typically a house) that secured the loan. This is done when the Johnston, Iowa debtor has repeatedly failed to make their payments. When a house is foreclosed, it is typically sold at auction shortly thereafter. This is because banks typically want to get rid of the property as soon as possible, even if it means losing some money, and an auction is an simple 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 supervises the sale, and makes sure that the proceeds first go to the lender, and then to any other entities that may have a lien or other interest in the property (in order of priority), and, finally, to the borrower, if anything is left. In some states, original mortgages are "non-recourse loans," meaning that the lender may only recover ownership of the house in the event of default. If the house is now worth less than the balance of the mortgage, the lender has to take the loss. You should speak with a Johnston, Iowa attorney to see if this state is one of them. However, it is almost always the case that this protection does not apply to loans that have been refinanced.
How Can I Avoid Foreclosure in Iowa?
Most importantly, you must not dismiss the problem. Doing so will not make it go away, and will probably make it worse. You should stay in close contact with your bank, and be forthright with them. It is necessary to remember that banks don't really want to own homes in Johnston. 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 allow you to keep paying them in the long run.
If you can't work anything out with your lender, or have become totally unable to make any mortgage payments, a "short sale" might be a good option. This allows you to sell your house for whatever price it can get, and hand the proceeds over to the lender. If the sale price is less than the balance of the loan, the rest of the debt may be forgiven. There is also the option of a "short refinance," which forgives a substantial portion of your mortgage debt, and refinances the rest.
How Can A Johnston, Iowa Attorney Help?
If you are facing foreclosure, a good Johnston, Iowa real estate lawyer can help. While keeping your home might not always be possible, an attorney can increase your odds of success, and help you minimize the negative impact if you do end up losing your home.