Foreclosure Law in Kentucky

In Flatwoods, Kentucky, foreclosure is a process through which a lender that issued a mortgage loan retakes possession of the property that was bought 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 usually take possession of the house, and then sell it at auction, to try to encompass the balance of the mortgage. Banks normally 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. Essentially, 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.

In a large number of states, but not all of them, mortgages are a type of loan recognized as a "non-recourse loan." While the regulations governing these loans are complex, it most essentially means that, once the house is sold, and the sale price doesn't cover what the borrower owes, the lender can't go after the borrower for the remainder. They simply have to take the loss.

How to Possibly Avoid Foreclosure in Flatwoods, Kentucky

Communication between you and your lender is perhaps the most significant way to prevent foreclosure. Ignoring the issue is guaranteed to be counterproductive. Honesty is the best policy when it comes to dealing with lenders.

Throughout all this, you should remember one thing: the bank doesn't really want your house. After all, banks aren't real estate speculators, they're mainly money lenders. They stand to make a great deal of money if you are able to make your mortgage payments until it's paid off. They're likely to make much less if they're forced to sell your house.

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

As a last resort, you might consider a "short sale," which results in loss of the home, but it normally leads to a great deal of the debt on the mortgage being forgiven. Basically, a short sale in Kentucky involves selling the house for whatever price it can fetch. The proceeds from the sale go to the lender, and if it sells for less than what's left on the mortgage, the balance of the debt is forgiven.

Can a Flatwoods, Kentucky real estate attorney help?

In Flatwoods, Kentucky, dealing with a possible foreclosure is never easy. However, the assistance of a seasoned real estate lawyer can make the whole process much more bearable, and possibly delay or even prevent the foreclosure altogether.