Foreclosure is the legal process by which the lender in a mortgage arrangement takes possession of the property (normally a house) that secured the loan. This is done when the Knoxville, Iowa debtor has repeatedly failed to make their payments. When a house is foreclosed, it is normally sold at auction shortly thereafter. This is because banks normally 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 some states, original mortgages are "non-recourse loans," meaning that the lender can 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 Knoxville, Iowa lawyer to see if this state is one of them. However, it is almost always the case that this protection does not apply to loans which have been refinanced.

How Can I Avoid Foreclosure in Iowa?

Most importantly, you must not ignore 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 straightforward with them. One should remember that banks typically don't want to take your house in Knoxville. They issued your mortgage expecting to earn a profit on the interest. Taking possession of, and selling, your house is a last resort for them. Therefore, if you are straightforward with them about your financial situation, they are likely to make reasonable accommodations to prevent you from defaulting.

If you can't work anything out with your lender, or have become completely 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 might be forgiven. There is also the option of a "short refinance," which forgives a considerable portion of your mortgage debt, and refinances the rest.

How Can A Knoxville, Iowa Attorney Help?

If you are facing foreclosure, a good Knoxville, Iowa real estate attorney can help. While keeping your home might not always be possible, a lawyer can increase your odds of success, and help you minimize the negative impact if you do end up losing your home.