Foreclosure Law in Kentucky

In Leitchfield, 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 typically take possession of the house, and then sell it at auction, to try to encompass 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. 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.

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. Essentially, 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 Leitchfield, 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.

You should remember that the bank doesn't really want your house. They authorized 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 keep you from defaulting, might be willing to accept lower monthly payments, at least temporarily.

In Kentucky, some buyers have no choice but to resort to a short sale. This is simply the sale of the house, and using the funds to pay off the remainder of the mortgage. One benefit of a short sale is that, if the house sells for less than the mortgage balance, the remaining debt is discharged, and the borrower is free and clear.

Can a Leitchfield, Kentucky real estate attorney help?

If you live in Leitchfield, 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.