Foreclosures don’t happen all at once. From the first missed mortgage payment to the final transfer of ownership, a number of legal proceedings take place that can be viewed either as repeated blows to the struggling homeowner or as opportunities to alter the course of the foreclosure process.
Ordinary and Executory Foreclosures
In Louisiana, there are two types of court foreclosure processes: ordinary and executory.
Ordinary foreclosures move through the court system like lawsuits and usually take about nine months.
Executory foreclosures depend on the language in the mortgage papers first signed by the prospective homeowners. State law does not require the lender to send the borrower any notice before beginning the executory foreclosure process, although the individual mortgage language may require notice. Executory foreclosures usually take about six months.
Trouble Making Mortgage Payments
In most states, a homeowner must fall 90 days behind on mortgage payments before the lender can legally initiate the foreclosure process, said Tara Nicholle-Nelson of HGTV.com.
This 90-day period is the time when New Orleans homeowners have the most options for reworking their finances, calling the lender to work out a compromise, or putting their home on the market for a fast sale. Homeowners who expect to catch up on their payments due to obtaining work after a period of unemployment have the best chance of success in negotiating with their lenders.
Officially Put on Notice
After a 90-day period of missing mortgage payments, the lender or its representative records a public notice of default and sends a copy of that notice to the homeowner. Depending on the state, the notice is referred to as a Notice of Default (NOD) or a Lis Pendens; Louisiana requires that the sheriff deliver this written notice to the homeowner.
This pre-foreclosure reinstatement period provides more time for homeowners to put the brakes on the foreclosure train, but the clock is ticking. In Louisiana, however, reinstatement is not available unless permitted by the mortgage terms.
In Louisiana in April 2017, there were about 800 homes in some phase of the foreclosure process. Of those, 33.4 percent were at the pre-foreclosure stage, according to RealtyTrac.
Selling at Auction
If the default remains three months after the issued NOD, the lender or its representative (the foreclosure trustee) sets a date for the home auction sale, either on the steps of the county courthouse or in the trustee’s office. The lender notifies the public of the auction through a Notice of Trustee’s Sale.
Up until the moment of the sale, homeowners in many states can stop the foreclosure process by coming up with the outstanding cash. If no one shows up at the auction with enough funds to purchase the property, the lender may agree to retake the property, through a document called a deed in lieu of foreclosure, or may itself repurchase the property.
21.9 percent of the Louisiana homes in the foreclosure process in April 2017 was at the auction stage.
After a New Orleans Foreclosure
Properties claimed by the lender are called bank-owned properties, or REO (Real Estate Owned). Lenders may choose to sell these properties on the open market or through an REO liquidation auction.
In Louisiana, if the property is sold at auction for less than the amount owed on the mortgage, the lender can go to court to seek a deficiency judgment that requires the borrower to repay the difference between the sale price and the amount of the original loan. This is one of the many damaging effects of a New Orleans foreclosure.
Of the Louisiana homes in the foreclosure process in April 2017, 44.7 percent were bank-owned.
Our state law allows foreclosures to be carried out faster than in many other states. Big Easy Buyers offers solutions for New Orleans homeowners at risk of foreclosure who want to sell their houses homes fast and move on with their lives.
Contact Big Easy Buyers at (504) 513-7878 or by filling out our quick contact form to set up an appointment at your property — and get a cash offer on the spot.