Homeowners facing foreclosure often receive the lawsuit paperwork in the mail and take either of two actions which will not help them escape the situation. Some frantically beginning calling the lender or servicing company, trying to work out a solution so that they can keep the home. Others will simply put the paperwork aside, not even opening the envelope and just hope for the best.
While calling the bank to begin negotiating for a loan modification, repayment plan, or other solution to foreclosure is a good idea, it should not be done at the expense of answering the lawsuit. The bank will have no problem opening discussions with the borrowers, all the while while proceeding with the legal action and having the house sold. If the negotiations fail, the homeowners can be swiftly evicted.
This can occur because, if the borrowers do not answer the lawsuit or mount any kind of legal defense, the bank will obtain a default jurisdiction. At that point, the bank can request that the home be auctioned off by the county at a sheriff sale. Although the bank can also cancel any sheriff sale, it will be very difficult for the homeowners to reopen the case and beginning defending the home after the judiciary has been entered.
Thus, it the homeowners do not provide an answer to the foreclosure lawsuit, the bank will file a motion for default judgment against them. The judge will usually grant this, since the borrowers' failure to file an answer is treated as if they do not disagree with anything the bank has claimed in the complaint. While it is usually a case of the borrowers not being aware of how the court system really works, the judge will usually feel that the owners have been given their day in court and passed on the chance.
Homeowners are also worried about having to pay something to file an answer to a lawsuit. In almost all cases, they will not have to pay anything to the lender during the lawsuit, even if there is a justification for foreclosure. The home will be scheduled for a sheriff sale, at which time the house will be sold to pay off the judgment and any other liens. Usually, though, homes do not sell for the total amount owed, as there are few buyers, but this is one of the risk lenders take when making loans.
After the sheriff sale will be the eviction process. If the former owners have already left the house, the eviction will not really affect them. But if they are trying to remain there for as long as possible after foreclosure, the borrowers should make sure to keep on top of the process so they know when to move out. Calling the county sheriff is usually the best idea to find out when a lock-out will be performed on a particular property.
In almost all cases, homeowners should respond to the foreclosure lawsuit or contact an attorney to help them do this. If only to delay the final order of judgment against the home for a few months, the rewards can be much greater than any risks. Showing the bank that a real defense will be mounted to foreclosure can also persuade the lender to begin negotiating for other solutions to help the borrowers save their home.