Foreclosure Law in Kentucky

In Paducah, Kentucky, foreclosure is a process through which a lender that issued a mortgage loan retakes possession of the property that was purchased with the mortgage in the event that the borrower has defaulted on his or her payments.

When consumers have to deal with foreclosure, it almost always involves a home. The bank will typically take possession of the house, and then sell it at auction, to try to cover the balance of the mortgage. Banks usually want sell the property quickly, for as much money as possible.

In every state, including Kentucky, homeowners have the option to go through what is known as a foreclosure by judicial sale. Basically, this means a court will oversee the sale of the house to ensure that the bank makes reasonable efforts to sell it for as high a price as possible (to help avoid a deficiency that the borrower may have to pay), and to ensure that any money which might be left over from the sale (after the balance on the mortgage is paid) goes to the borrower.

Some states treat mortgages as "non-recourse loans." A non-recourse loan is one that is secured by the borrower's property, but for which the borrower is not personally liable. Basically, this means that a lender in a foreclosure can take the house that was mortgaged, but nothing else. If the house sells for less than the lender is owed, it cannot go after the borrower.

How to Possibly Avoid Foreclosure in Paducah, Kentucky

It's very important that you engage in continued communication with your bank. Lenders are surprisingly willing to make accommodations if it means they still get paid something, but in order to accommodate your situation, they have to know about it.

You should remember that the bank doesn't really want your house. They granted a mortgage hoping to make a profit from interest, and that's what they'd much rather do. They aren't in the business of buying and managing real estate. Therefore, banks will sometimes go to surprising lengths to accommodate your financial hardship, especially if it's temporary.

If you experience a sudden change in your financial situation, your lender, in an effort to prevent you from defaulting, might be willing to accept lower monthly payments, at least temporarily.

Finally, there is the "short sale." Usually considered a last resort, a short sale results in the borrower losing their home, but discharges almost all of their remaining mortgage debt. If the house is worth far less than the balance of the mortgage, this might be a good option. In Kentucky, when a house is sold in a short sale, the proceeds go to the lender. If it sells for less than the mortgage balance, whatever's leftover is forgiven. If it sells for more, the surplus goes to the homeowner.

Can a Paducah, Kentucky real estate attorney help?

If you live in Paducah, Kentucky and believe that your house is in danger of being foreclosed, you may have more options and protections than you think. You may not know what all of them are, but an experienced real estate lawyer probably will.