Understanding the Foreclosure Process In Idaho: What You Need to Know
Foreclosure occurs when a homeowner is unable to make their mortgage payments on time and is unable catch up on the missed payments. Because a mortgage is a legal agreement between you and your lender, once you’ve defaulted on the loan, the lender can auction off the property to cover any outstanding debts, possibly leaving you homeless and with terrible credit.
No one ever wants to receive a notice of foreclosure and yet, in a nationwide study, nearly 1 million Americans were scared of losing their homes (U.S. Census Bureau Household Pulse Survey, fielded from July 27 to Aug. 8, 2022). Foreclosure can occur from a number of reasons, including:
- Job loss and loss of income
- Death of a spouse or partner
- Mounting debt
- credit cards
- Relocating without being able to sell the home
- Rental properties with tenants who aren’t paying
- Inherited house that was already in financial trouble
- Major life changes
- Natural disaster
Idaho House Buyer is a local company operating in ID that has built their business by buying distressed houses and properties in the area for cash, while helping homeowners like you. They promise competitive cash offers without the hassle of dealing with real estate agents, showings, traditional bank financing, repairs and more!
What is Foreclosure?
Let’s say you or your spouse recently lost your job. You still have the same bills to pay but unfortunately you don’t have the money to cover your expenses, including your mortgage payment. You miss a few payments, but you think you’ll be able to make them up. A few payments turns into a few months. What happens now? Even if you find another job the amount of debt you’ve accrued during that time might be too large for you to pay off in a reasonable amount of time. *Communication is key if you find yourself in this situation. Reach out to your lender and let them know what is happening. It’s still early enough in the process to work things out and avoid any foreclosure proceedings.* When this happens, the bank starts the process of foreclosure.
How Long Do You Have To Get Out of Your House After Foreclosure?
The steps for foreclosure in most states are multiple missed payments, public notice (typically notices in local newspapers and/or a notice taped to your front door), foreclosure, auction (once the house is sold at auction, you no longer have the right to live there), and eviction, but the amount of time for each step varies based on state. You could have anywhere from 120 days to nine months before the bank can foreclose using either a judicial or non-judicial foreclosure. During this time, your lender will reach out to you by phone, mail, and email to let you know about the process. While you may want to avoid these calls and emails, it is crucial you speak with your lender. They may have options you are unaware of. These conversations can ease the fear of what is to come.
The Different Types of Foreclosure
There are two different types of foreclosure you may experience: nonjudicial foreclosure or judicial foreclosure. This process will vary from state to state.
What Is Non-Judicial Foreclosure?
A non-judicial foreclosure is the fastest and cheapest way for a lender to foreclose on your ID property. It does not require taking you, the homeowner, to court and can be completed according to state statutes. In the case of non-judicial foreclosure, your lender repossesses your home to sell it and recover whatever debt is owed using what’s called a “power-of-sale” clause in the deed of trust. Not every state allows for this option but, if yours does, the lender will generally choose it to avoid any court costs. *Idaho is a non-judicial state.*
What Is Judicial Foreclosure?
In states that require judicial foreclosure, your lender must file a lawsuit asking the court to issue an order to allow for the sale of the home. The lender must provide you with this letter. Whether you agree or not, you must respond to the letter or the lender will automatically win the case and be allowed to put your home up for a foreclosure sale. When the house is sold, you are still required to pay the difference between what you still owe on the mortgage and the amount the house sold for.
Auctions are not like regular home sales and generally the house is not sold for market value. This means that even if your house is in great shape and worth a lot more than what is left on your mortgage, you may still find yourself owing tens of thousands (if not hundreds of thousands) of dollars for a house you no longer own! This is called a deficiency judgment. It’s a long and expensive process for lenders to take to try and recoup their debt, which is why most prefer a non-judicial foreclosure. Most lenders will look for the path of least resistance. They don’t want to spend the money taking you to court if they can avoid it.
How to Sell House Before Foreclosure in ID
Let’s break down a few ways you can sell your house before the foreclosure, depending on your time frame and situation:
Hire A Real Estate Agent
The first step most Americans think of when selling a house or property is to reach out to a local real estate agent. There’s a good chance you already have a realtor in your friend group or social circle. As with everything, there are pros and cons to this option when you are in a difficult situation such as foreclosure. Sure, a good real estate agent can list your property on the MLS and help you get it ready for open houses and daily showings, but they do all of this work so that at the end of the closing process a large chunk of your money from the sale of your house goes to them in the form of the agent’s commission. When you’re already suffering from a mountain of debt and need every penny to pay back your lender, a commission of 3% to 6% of your final sale price may be too hefty an amount to give up. *You may be able to negotiate the commission with your agent before you sign any contracts. Make sure your agent understands your unique situation early on.
Plus, there’s the additional fear of not knowing when your house will actually close. Realtors may promise a lot, but at the end of the day you’ll still need to find the right buyer and wait 30+ days for a traditional close. For some homeowners who are facing auction and eviction, even waiting one month might be too long. If a homeowner waits too long during the foreclosure to seek help, the time it takes to list on the MLS and get an offer may exceed the how long the bank is willing to wait. In this scenario, the homeowner would still lose the home and take the hit on their credit report.
If you owe more on your house than it’s worth, your realtor may require what is called a short sale. A short sale is necessary when you owe more on your house than the property is currently worth. For example: if you owe $200,000 on your house but in the current market it’s only worth $150,000, you must deal with a short sale. Though it may seem like a good option, it won’t be fast or easy.
To start off, you’ll first need to get your lender’s approval. To qualify for a short sale, you must prove financial hardship using documentation such as W-2s, medical bills, etc. For a situation such as loss of income, the lender will require that you prove that the loss of income is long-term and unlikely to turn around in your favor. If the lender approves the short sale, you will need to find a real estate agent and attorney that specialize in short sales, and they will still charge you the same amount as they would if you were selling your house with a traditional home sale.
If your foreclosure hasn’t dragged on for too long and you’ve maintained contact with your lender, it’s likely that they will approve the short sale. This allows them to avoid the time and expense of trying to foreclose on your property, while still recouping some of the loss from the missed mortgage payments. Lenders will typically help you avoid foreclosures as it is a long, arduous process for them as well. But for the regular American homeowner, the short sale will follow them for the next 5 to 7 years.
You may have sold the house and been able to pay off some of your debt, but the short sale can damage your credit the same as if you had declared bankruptcy. The credit unions include the delinquency on your mortgage(s) to your lenders and the short sale on their records, making it nearly impossible for previous homeowners to get a credit card, buy a car, or move into a new house or property for the same amount of time as a bankruptcy.
Sell Your House AS-IS to A Cash Buyer
If you’re under a strict time restraint to sell your house before a foreclosure progresses to auction and eviction, you do have options! You can try to sell your property with a real estate agent, work with your lender to complete a short sale, or – best of all – turn to a trusted and reliable cash investor to help you with your situation.
Some of the benefits of selling to a direct cash investor include:
- A quick and simple closing process.
- Avoid paying any commissions or fees.
- You won’t have to worry about marketing your house, getting photos, showings, keeping it clean and waiting for a buyer.
- No clean-up needed, only move what you want
- No repairs
- They can even hire movers for you
- Close on YOUR timeline
When you sell your home as-is to a direct cash buyer, you not only can avoid losing your home to an auction, but you also may be able to sell the property for enough money to wipe out your financial debt. Moving on with your life without the burden of a monthly mortgage payment and debt hanging over your head is one of the best gifts you can give yourself!
Can You Stop Foreclosure Once it Starts?
Pay Off Your Loan & Fees
You’ve found yourself in a difficult situation. The cost of simply living is adding to your already mounting debt while your finances remain the same. It’s time to get serious and look at ways to pay down your debt quickly. Do you have any items you can liquidate? Do you have a second or third car you aren’t using? Are you able to take on a second job? Any collectables you can sell of? Maybe you have friends or family that can gift you money or provide you with a loan until you are able to get back on track. If you are serious about paying down your debt and stopping foreclosure, you may need a financial professional to help you restructure your budget. If a financial professional is not something you can obtain, consider a budgeting app. There are many to choose from such as YNAB or Goodbudget. Find something that can help you identify areas of your budget that can be tightened down. (This solution is best used early on in the process.) Use one of these solutions or combine them all to help climb that avalanche of debt and get back to living a life free of stress.
As a last resort, bankruptcy may help you stop the foreclosure of your home but it comes with a high cost. The bankruptcy process is complex and will require a lawyer that specializes in bankruptcy law. This means, not only paying for the bankruptcy, you are also paying for a lawyer. The average cost of filing for bankruptcy can vary depending on the type of bankruptcy, the complexity, and the size of your debt. As of August 2023, filing for Chapter 7 bankruptcy in Idaho typically costs between $1,800 and $2,300. If the court approves your petition, you will be entered into a government-approved credit counseling program and the bankruptcy will be reported on your credit report for 7 years. A bankruptcy affects all areas of your life, including when you try to purchase a car, apply for a credit card or bank account, and can disqualify you from future rentals.
The Homeowner Affordability and Stability Plan (HASP)
If your debt is higher than your income, you may be eligible for the Homeowner Affordability & Stability Plan (HASP). This plan was initiated in 2009 to help homeowners during the housing crisis of 2008. HASP is a loan modification program targeted at borrowers who are at risk of foreclosure due to insufficient income. This government program was designed to help homeowners in the United States restructure their monthly payments to fit a limited budget. Apply for the program here to see if you qualify. Be sure to speak with your lender to see if you qualify for any assistance.
If you’ve fallen behind on payments due to the Covid19 pandemic, you may qualify for help through Idaho Housing and Finance here. You will need to prove loss of income due specifically to the pandemic. This program is designed to help low to moderate income households regain stability.
Sell Your House Fast to a Cash Buyer
Are you looking to sell your house but can’t afford to wait for the 30+ days it takes for a traditional close? Worried that a short sale might tank your credit too quickly? Are you eager to settle all your debts at once and get the bank off your back asap? Well, the perfect solution might just be a direct home buyer and cash investor! Partnering with a reputable investor, like Idaho House Buyer, with a strong local reputation means dealing with a reliable company ready to purchase your home as-is, with cash in hand. A cash buyer allows you to sidestep the prolonged processes of foreclosure, eviction, and auction, saving your credit in the process.
While selling to a trusted cash investor might not fetch you the full market value for your property, the advantages of a fast closing, along with no fees, mandatory inspections, and commissions, often make up for it. The best part? Since an investor can close swiftly, you may finalize the deal before the bank has a chance to auction off your property! This empowers you to sell the property at a price that benefits you, rather than settling for the mere pennies on the dollar the bank might offer just to clear it from their books.
We Buy Houses in Foreclosure & Pre-foreclosure – Get Your Offer Today!
Does the idea of finally walking away from a property without the storm cloud of foreclosure hanging over your head sound good? Don’t wait, contact a real professional at Idaho House Buyer to find out more, get any questions answered and get a quick, fair cash offer for your property today.
We understand the pressures you are facing, our goal is to help find the right solution for you. We understand each situation is unique and come in with an open mind, often, our first question is “What do you need?” We have helped homeowners get into new properties, pay off debt and even move. Our job is to make selling as simple as possible for you.
At Idaho House Buyer, we are all about swift transactions, flexibility, transparency, and a compassionate approach are the hallmarks of our service, giving homeowners a fair shake when they need it most. It’s like having a friend in the real estate business, not just a transaction. As you navigate the path to a quick property sale, consider the Idaho House Buyer advantage for a seamless and stress-free experience tailored to your circumstances. Give us a call at 208-782-4537 for a no obligation, no hassle offer.
We’ve helped homeowners in every situation. Still unsure? Hear directly from the homeowners we’ve worked with HERE!