Are you behind on your mortgage payments?
Have you received letters from the bank notifying you of default?
Are you facing foreclosure in Georgia?
This blog is going to walk you through the Georgia foreclosure process so you know what you expect, learn how you can possibly stop it, or simply learn how to navigate it.
So let’s get started.
Here’s what we’ll cover:
- The Georgia Foreclosure Overview
- Need-to-Know Georgia Foreclosure Laws
- How the Georgia Foreclosure Process Works
- The Georgia Foreclosure Timeline (Each Step In The Process)
- Your Costs When Facing Foreclosure
- How You Can Stop Foreclosure in Georgia
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The Georgia Foreclosure Overview
So, perhaps you’re wondering what triggers a foreclosure in Georgia?
Georgia is a Non-Judicial Foreclosure State
A non-judicial foreclosure means the lender does not have to file a lawsuit with the court system to foreclose on the property.
Instead, the foreclosing party (in most cases, the lender) will follow a set of state-specific steps to foreclose the home.
We’ll walk through the process so you can see what types of notices you’ll receive, whether the foreclosing party can get a deficiency judgment after a nonjudicial foreclosure, and which states typically use a nonjudicial foreclosure process.
Basics of Nonjudicial Foreclosures
When you take out a home loan, you sign either a mortgage or deed of trust, which creates a lien on the property. If the mortgage or deed of trust contains what’s called a “power of sale” provision, and state law allows it, the bank can foreclose the home nonjudicially.
When you took out your home loan, you probably signed a mortgage or a deed of trust. This creates a lien on the property.
If the mortgage or deed of trust contains a “power of sale” provision, and state law allows it, the bank can foreclose the home nonjudicially.
Nonjudicial foreclosures generally proceed a lot faster than ones that have to go through the court system.
Nonjudicial foreclosures usually only take a few months, meanwhile, a judicial foreclosure can take almost a year.
Steps in a Nonjudicial Foreclosure
Below are the steps in a typical nonjudicial foreclosure.
1. Loss Mitigation Review Period
In most cases, the loan servicer (the company that you make your payments to) can’t start the foreclosure process until you’re more than 120 days delinquent on the loan.
If you know that getting up to date on payments isn’t an option, some people take this time to apply for alternatives to foreclosure– like a loan modification, short sale, or deed in lieu of foreclosure.
However, even before your 120 days delinquent mark, the servicer can still send you notices informing you that you’re late.
These might come in forms of a breach letter.
These notices will also probably include information about legal aid, counseling, or other resources. This might seem helpful, but in most cases, federal law requires them to inform you about various loss mitigation options that are possibly available to you.
What’s a Breach Letter?
Most mortgages and deeds of trust have a provision that requires the foreclosing party to send you a notice, commonly called a breach letter.
This lets you know that you are in default on the loan. They have to do this before they can accelerate the loan and proceed with foreclosure.
The acceleration clause in the mortgage allows the foreclosing party to demand that you pay back the entire balance of the loan if you default on payments.
In most cases, you’ll get 30 days to cure the default. If you don’t cure the default, the foreclosure will go ahead.
2. Notice of Default
A nonjudicial foreclosure usually starts when the trustee (the 3rd party that administers nonjudicial foreclosures in many states) records a notice of default or similar document at the county recorder’s office.
The notice of default is also mailed to the borrower although this requirement can vary.
The notice of default generally gives the borrower a chance to cure the default before the foreclosure sale can be held.
If you fail to cure the default in whatever amount of time they give you, it usually leads to a foreclosure sale.
3. Notice of Sale
The notice of sale gives the date, time, and location of the foreclosure sale.
It typically is:
- recorded in the county land records
- mailed to the borrower
- published in a newspaper, and
- posted on the property or in a public place.
Differences from state to state. Again, the actual foreclosure procedures will vary by state. For example, the types of notices and what they’re called can vary drastically:
- a notice of default followed by a notice of sale
- a combined notice of default and sale
- notice of sale, or
- notice by publication in a newspaper and posting on the property or in a public place.
4. The Foreclosure Sale
If your home has to “go to auction,” as some people call it, there’s a chance a third party will make a bid on it. And if they’re the highest bid, that person will become the new owner.
But in most scenarios, the foreclosing party will be the highest bidder. This is because the foreclosing party typically bids on the property using a “credit bid.”
A credit bid means that the bank bids the debt that you actually owe.
After the foreclosure is completed, the new owner can initiate an eviction action to remove you from the home if you haven’t already left.
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Need-to-Know Georgia Foreclosure Laws
Foreclosures in Georgia are usually nonjudicial, which means the bank can foreclose without filing a lawsuit in court or going in front of a judge.
Once officially started, a Georgia foreclosure can proceed rather quickly. However, most homeowners have a build-in, federal cushion: a 120-day pre-foreclosure period.
But once this period expires, all the foreclosing party has to do is publish notice about the sale in a newspaper and send you a copy before selling the home to a new owner about a month later.
In this article, you’ll learn more about nonjudicial foreclosure procedures in Georgia, including your rights during and after the process.
When Foreclosure May Begin Under Federal Law
Under federal law, in most cases, a loan servicer must wait until the borrower is more than 120 days’ delinquent before officially starting a foreclosure.
This preforeclosure period is an excellent time to submit an application to your servicer asking for an alternative to foreclosure. You might be able to stay in your home by working out a repayment plan or a loan modification, for example, or give it up without going through a foreclosure in a short sale or deed in lieu of foreclosure.
Federal law also provides other protections to homeowners facing foreclosure, like protection against dual tracking.
Notice of a Nonjudicial Foreclosure in Georgia
In Georgia, the bank provides the following types of notice during the foreclosure process.
Notice of Intent to Foreclose
No later than 30 days before the sale date, the bank will (and must) mail you a notice of its intent to foreclose.
It will include:
- a copy of the foreclosure advertisement published in the official county newspaper (see “Notice of Sale” below), and
- the name, address, and telephone number of the individual or entity that has full authority to negotiate, amend, and modify all terms of the mortgage.
Ten-Day Letter About Attorneys’ Fees
The bank also usually sends a notice informing you that you have ten days after receiving the notice to pay the loan’s principal and interest to avoid liability for attorneys’ fees.
The 10-day notice is often included with the 30-day notice of intent to foreclose.
Look out for Legal Changes
In this article, you’ll find a summary of foreclosure laws in Georgia along with citations to the statutes so you can read the laws yourself.
However, keep in mind that statutes can change. We do our best to keep these up to date, but double-checking them is always a good idea.
How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting a lawyer if you’re facing a foreclosure.
Notice of Sale
The bank must advertise the foreclosure sale in a newspaper for four weeks before the scheduled sale date.
This is to ensure you’ve been “put on notice” of the sale.
Reinstating the Loan Before the Foreclosure Sale
When you’re able to get caught up on your loan payments (including principal, interest, and other fees/costs) and stop foreclosure in Georgia, this is called “reinstating.”
Georgia doesn’t have a law that gives you this right, but most security deeds provide you with this benefit.
You’ll want to check the paperwork you signed when you took out the loan to find out if you’re able to take advantage of “reinstatement.”
And if so, what are the deadlines or requirements.
No Right of Redemption After the Sale
In some states, foreclosed borrowers can redeem (repurchase) the home within a certain amount of time after a foreclosure sale.
In Georgia, though, state law doesn’t provide borrowers with a post-sale right of redemption.
Deficiency Judgment Law in Georgia
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the foreclosing bank to seek a personal judgment, which is called a “deficiency judgment,” against the borrower for this amount.
In Georgia, a foreclosing bank can seek a personal judgment, otherwise known as a deficiency judgment, against you for this amount.
Under Georgia foreclosure law, the bank can get a deficiency judgment by filing a separate lawsuit after the foreclosure—but only if the bank reports the sale to a court within 30 days, and the court confirms it.
Notice to Leave After the Foreclosure Sale
If you don’t move out after a Georgia foreclosure sale, the purchaser must first make a demand for possession before they can begin eviction proceedings.
How the Georgia Foreclosure Process Works.
If you’re struggling to make mortgage payments or have already missed a few, you might be wondering what the process of foreclosure is like.
The process can be very long and drawn out, but exact steps vary from state to state.
For instance, some states require a court hearing. Georgia, on the other hand, does not!
But regardless of having a hearing, there is still a chance you’re in danger of losing your house.
Stages of Foreclosure in Georgia
The exact foreclosure process is different in each state, but generally, you can expect it to look something like this:
- Default on the mortgage
- Bank gives you a notice of default
- Notice of sale and sale of property
Not all borrowers will go through each of these steps, some actually require a hearing before the court.
A foreclosure filing and trial are only necessary for states where a judicial hearing is required.
That’s not Georgia.
Default and Notice of Default
The first thing that happens in the foreclosure process is that you enter into default or delinquent.
“Default” essentially means you’re late on your mortgage payments.
The law says that a lender must reach out to you once you’re 36 days behind on mortgage payments.
And by 45 days, the lender must provide written notice of the default. This has to include details about any loss mitigation or repayment options you may be able to use.
Finally, you have to be at least 120 days behind on your mortgage for the lender to start the foreclosure process legally.
Notice of Foreclosure Sale
In nonjudicial foreclosure states, there is no trial.
Lenders simply issue a “notice of intent to foreclose,” alerting you that the foreclosure process has started. They will also have to advertise the sale—typically this will be in the local newspaper for at least a few weeks prior to the scheduled sale date.
The actual selling of the property is done via auction. Some investors gather for these auctions on a regular basis.
However, in many cases, banks and lenders are forced to purchase the properties back due to a lack of buyer interest.
Georgia Foreclosure Timeline (Each Step in the Process)
When you miss your first payment, the Georgia foreclosure timeline begins.
Georgia is among a few states with the shortest foreclosure timeline.
The average foreclosure process from the issuance of the Notice of Default can take as little as 60 days in Georgia. However, the average timeline for a Georgia foreclosure is closer to four months! That’s quite a difference.
The reason our timeline is so short is that the foreclosure process in Georgia often does not require a court order, which eliminates the case backlog that exists in other states.
According to Georgia law, lenders are allowed to follow one of two foreclosure processes: judicial foreclosure and non-judicial foreclosure.
The terms of the loan agreement determine which foreclosure process the lender will take.
What’s the difference?
- Judicial foreclosure ― In this process, the lender must file a lawsuit against the homeowner to obtain a court order. Once the court issues the order, the property is sold at auction. Now, how quickly that happens all depends on the court’s caseload. The judicial process can take up to a year or longer to complete. This might give you enough time to seek new financing, locate a buyer, or find other solutions. The judicial process is only used if the loan agreement does not contain a power of sale clause.
- Non-judicial or deed of trust foreclosure ― A lender may initiate foreclosure without going to court if there is a power of sale clause in the loan agreement. The power of sale clause is a pre-authorization from you to sell the property in the event you default on the loan. And once the lender sells the home at auction, the proceeds of the sale will cover the balance owed (hopefully!). The clause usually sets forth the procedures for public notice and sale that the lender must follow. If the loan documents are silent concerning the procedural requirements, then the lender must follow Georgia state laws.
Georgia requirements for deed of trust foreclosure procedures
Lenders in Georgia are required to send notice of their intent to foreclose on you no later than 30 days before the proposed foreclosure date.
Now, this notice must be delivered by certified mail, return receipt requested. It’s their way of making sure you’ve received it.
But that’s not all! The mortgage lender must also advertise the notice in the county newspaper once per week for four consecutive weeks before the foreclosure sale.
A copy of this publication must be included in the notice of intent to sell.
Foreclosure auctions are held on the first Tuesday of the month at the courthouse. Usually, there’s a handful of people there ready to bid on houses however the bank will probably be the one to purchase your home.
Now, if the sale does not cover the amount remaining on the promissory note, the lender may sue you for the difference.
Keep in mind that if your lender fails to follow the Georgia foreclosure timeline, you may have grounds to challenge the foreclosure.
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Your Costs of Foreclosure In Georgia
When you default on your mortgage and enter foreclosure, costs related to this situation begin to add up quickly.
And once you’ve missed several mortgage payments in a row, a lender’s foreclosure efforts normally lead to additional fees and expenses. They really don’t hesitate to beat you while you’re already down!
In the days leading up to a foreclosure sale, homeowners who want to reinstate their mortgages usually face an enormous bill. The costs incurred by the lender to foreclose defaulting borrowers typically add up to tens of thousands of dollars.
Mortgage Loan Default
Lenders usually consider someone as in default after two to three consecutive missed payments.
The Federal Trade Commission notes that defaulting on mortgages can become very expensive for homeowners hoping to reinstate such loans. If you’re about to begin foreclosure proceedings, you will probably incur many costs.
The lender will add various fees to the loans as the foreclosure process moves forward.
In fact, the credit rating agency Standard & Poor’s states that typical lender foreclosure costs equal about 26% of mortgage loan amounts.
Fees and Costs
Lenders usually charge late fees on every missed mortgage payment right up until your home’s foreclosure sale.
And depending on the size of the mortgage loan, those accumulated late fees for missed payments can add hundreds of dollars to your mortgage bill.
And that’s not all they’ll charge! As your property moves toward foreclosure, lenders may add charges for default-related services.
Those might include lenders’ attorney fees, property title searches, and costs for serving homeowners with foreclosure notices.
Property Related Costs
During the foreclosure process, lenders incur certain costs related to the property’s upkeep.
If you abandon your property prior to foreclosure, lenders usually pay for property appraisals and maintenance services such as lawn care.
They will also generally pay taxes and insurance on defaulting homeowners’ properties because unpaid property taxes lead to foreclosure by local governments, with lenders losing the foreclosed homes entirely.
This way, you are at least safe from Georgia property tax liens.
Average Total Cost
According to the Joint Economic Committee of Congress, the average foreclosure costs $77,935 while preventing a foreclosure runs $3,300.
As of 2008, it cost lenders an average of $50,000 to foreclose a defaulting homeowner’s property.
Data shows that financial struggles are one of the most common reasons for divorces in Georgia. Depending on how well you and your spouse pull through as a team, this a divorce could be a ripple effect cost after your Georgia foreclosure.
What the Banks Will Charge You to Evict You During Foreclosure
The late fee will be 5% of the overdue payment. But Georgia foreclosure laws can limit the number of late charges a bank can impose.
For example, let’s assume your monthly payment is $1000, you’re 2 months late, and you’re getting charged 5% in late fees.
$1,000 * 5% = $50
You are being charged $50 extra bucks in late fees from the bank.
$1,000 + $50 = $1,050
This $1,050 is how much you owe for missing your payment. Now, in month two, this amount compound.
Now, we are looking at the second month. We have already missed month one and have had the late fee added. Now, we are missing the mortgage payment on month number two.
$1,050 (Month 1 + Late Fee) + $1,000 = $2,050
Now, the banks will so kindly add a 5% late fee to this number too.
$2,050 * 1.05% = $2,152.50
And the late fees continue to compound. In month three, you will owe $3,310.
Late fees can quickly stack up, adding hundreds of dollars on to the amount you owe the owner of the loan.
So, if Georgia places a maximum amount on the late fees that a bank can charge, that will keep the compound interest from stacking up against you.
If the late fees are capped at $300, and by month three, you’re paying $310 in late fees, then in month three, you’ll only owe $300 in late fees and the banks cannot charge you any more late fees.
How You Can Stop Foreclosure In Georgia
Homeowners who are hoping to avoid foreclosure in Georgia often dread dealing with the facts that got them to the place of being in foreclosure.
Dealing with those facts can be depressing. Especially when you think back to the day you bought that home. Losing it was probably the furthest thing on your mind.
Few homeowners actually plan to go into foreclosure and will try to ignore that reality for as long as possible.
Ways to Stop a Foreclosure
The best way to stop a Georgia foreclosure is to prevent the filing of a Notice of Default.
Lenders don’t want to foreclose (didn’t you see how much it costs them?) but they will file a Notice of Default to protect their interests, if necessary.
Now if you know you are unlikely to meet your mortgage obligation, the first thing you should do is call your lender.
Don’t put it off, be embarrassed or ignore letters from your lender because those responses will make the situation worse, not better.
Depending on your particular situation and hardship circumstances, there are some loan modification options your lender might propose the following:
- Time to make up your payments: Lenders might agree to wait before taking any legal action against you. Instead, they’ll let you work out a repayment plan that is affordable for you. This is called forbearance. For instance, if you lose your job and are on unemployment in Georgia, they may consider letting you catch up when you get a new job. (If you are struggling to make payments, consider signing up for Food Stamps in Georgia. This will give you some financial help.)
- Forgiving a payment: If you can agree on a way that you will be current after missing a payment or two (without the means to pay it back), the lender might give you a break and waive your obligation. This is called debt forgiveness, but it rarely happens. So don’t depend on this.
- Spread out the missed payments over a longer-term: For example, if your payment is, say, $1,200 a month, the lender might let you add $100 a month to each payment for a year until you are caught up. This is called a repayment plan.
- Changing the terms of your loan: If your mortgage is an adjustable loan, the lender might freeze the interest rate before it increases or changes the interest rate to a more manageable rate for you. A lender might also extend the amortization period. This is called a note modification.
- Adding the back payments to your loan balance: If you have sufficient equity and meet the lender’s lending guidelines, the lender might increase your loan balance to include the back payments and re-amortized the loan. This is called a refinance.
- Offering a separate loan: Certain government loans contain provisions that let borrowers who meet specific criteria apply for another loan, which will pay back the missed payments. This is called a partial claim.
Options After a Notice of Default
When the lender files a Notice of Default, your options are limited.
That’s why it’s better for you to call your lender before you start falling behind on your payments. Once foreclosure proceedings have started, it’s very rare that your lender will want to work on a repayment plan with you.
Once foreclosure has started, your options to get out will look like this:
- Sell your home: Interview real estate agents to get an opinion of market value and average DOM to sell your home. You might be tempted to hire a discount broker, but many sellers feel they need the exposure and marketing that full-service brokers offer. Compare both to determine which best meets your needs and time frame.
- Consider a short sale: If your home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale affects credit but it’s not as bad as a foreclosure. You or your agent will need to negotiate with your lender to find out if the lender will cooperate on a short sale. This is called a pre-foreclosure redeemed.
- Sign a deed in lieu of foreclosure: This is called deeding the home back to the lender. The homeowner gives the lender a properly prepared and notarized deed, and the lender forgives the mortgage, effectively canceling the foreclosure action. Lenders tell me that deeds in lieu of foreclosure affect credit the same as a foreclosure.3
- Short-term rental: The lender might also work an arrangement where a homeowner can remain in the home until finding a place to move into. Owners in default should negotiate the right to retain occupancy, arguing that if the lender followed through on the foreclosure, an owner would still enjoy the right of possession during that procedure
- Consider bankruptcy: A legal action such a bankruptcy can stop all foreclosure action. Call a lawyer who specializes in filing for bankruptcy and ask for a thorough explanation of all your options, costs and the time frame involved. It won’t permanently stop a foreclosure action but it can postpone it.
If none of these options work, consider selling your house to an Atlanta House Buyer. They can offer cash and buy your house in weeks.
If you owe more than the house is worth, then an investor can buy the house by taking over your mortgage payments. This relieves you of your mortgage obligation and allows you to stop the foreclosure so that you can move on with your life.
To see how an investor can help you, fill out the form below and we will be in contact with you. Even if we can’t buy your house, we will help guide you through your options.