Foreclosure Law in Kansas
In Fort Scott, Kansas, 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.
A foreclosure normally involves a forced sale of the house at auction, so the bank can recover at least some of the loss it has incurred as a result of the default. Banks normally want to rid themselves of the property as soon as possible, collect as much money as they can from the sale, and then move on.
In every U.S. state, including Kansas, a borrower has a right to a judicial sale of their foreclosed property. A judicial sale is simply an auction overseen by a court. The purpose of this is to make sure that the lender takes reasonable steps to sell the home for the highest possible price, and to ensure that the homeowner has an opportunity to bid on the house, if he or she is able. It is in everybody's interest for the bank to get the highest price possible for the house, even the borrower's. If the house fetches a higher price than what's left on the mortgage, the buyer can keep what's leftover. On the other hand, if it fetches less, the buyer might have to pay the deficiency.
In some states, original mortgages are recognized as "non-recourse" loans, making the above problem a non-issue. This basically means that once the mortgaged property is sold by the lender, the debt is discharged, even if the sale nets less than the remaining balance on the mortgage. The borrower will simply have to write this off as a loss. However, this usually does not apply to refinanced or second mortgages.
How to Possibly Avoid Foreclosure in Fort Scott, Kansas
It's extremely 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.
Because banks don't particularly enjoy foreclosing, they will probably be willing to work out an alternative payment plan with you, if necessary. However, if you think that this might be needed in the near future, you should contact your lender immediately. The sooner they know about it, the more options you have.
Finally, there is the "short sale." Normally 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 Kansas, 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 Fort Scott, Kansas real estate attorney help?
If you are worried that your Fort Scott, Kansas house is going to be foreclosed, and want to try and stop this, a brilliant real estate lawyer can help.