Foreclosure in any aspect is a negative situation. No homeowner will ever want to foreclose their home because of any financial crisis. But if the situation of foreclosure occurs the homeowner should be aware of the procedure of how to stop foreclosure in Rhode Island. Facing foreclosure is an awful situation. There are two ways through which the Foreclosure process takes place: Judicial and Non-Judicial. Rhode Island allows both types of foreclosures, judicial and non-judicial foreclosures. The foreclosure process has to follow state laws.
If you are currently in foreclosure it’s important for you to know, how you can stop foreclosure from taking place. There are various options you can opt for to stop a foreclosure from happening.
What Does Foreclosure Means?
Taking a loan from a bank or a lender to buy a house or property is very common everywhere. Paying back the borrowed amount in the given time duration is also very important. If someone fails to pay back the loan amount, the foreclosure situation is very likely to come into existence. Foreclosures begin after the very first missed payment.
Foreclosure can also happen if the homeowner fails to pay the property tax levied upon them. There are various reasons for falling behind in payments like, financial crisis, medical emergencies, and sudden loss of job.
Introduction to Foreclosure in Rhode Island
The foreclosure crisis peaked in 2010. The foreclosure process and mortgage services were heavily supported by state and federal laws after that. In Rhode Island, people must sign a promissory note and mortgage when they take a loan to buy property. These documents give people some contractual rights as well.
Rhode Island foreclosures most likely give you the right to many benefits. They are:
- Receive notice in the form of a breach letter before foreclosure.
- You can apply for loan mitigation.
- If you are in the military, you will get special protection.
- Get notified about the foreclosure and chance to respond legally.
- Pay off your debt to prevent a foreclosure sale.
- You can redeem the property after the sale.
- Get any excess money after a foreclosure sale.
Key Points About Rhode Island Foreclosures
- Primary Security Instrument- Mortgage and Deed of Trust
- Judicial Foreclosure- Yes
- Non-Judicial Foreclosure- Yes
- Right of Redemption- Varies by Process
- Timeline- Typically 60 Days
- Deficiency Judgements Allowed- Yes
Ways to Stop Foreclosure in Rhode Island
There are ways of stopping home foreclosures in Rhode Island that you need to know. Let’s cover them all:
Declare Bankruptcy
Yes, bankruptcy is a way through which foreclosure can be stopped. But you need to understand the concept of chapter 7 and chapter 13 of bankruptcy.
Chapter 13 bankruptcy in Rhode Island: It is a common option to go for to stop foreclosure. According to chapter 13 bankruptcy, you are given a payment plan of 3 or 5 years to catch up with the payment in arrears. The lenders will be given orders to stop going forward with the foreclosure process. They will have to give you time to get back to your payment arrangements.
Chapter 7 bankruptcy in Rhode Island: It is a liquidation form of bankruptcy. Unless you want the Rhode Island bankruptcy trustee to sell your house, it may be a less common option to pursue. Even though it is the lower-cost bankruptcy option, you still may not want to opt for this option.
You need to understand what your payment plan is. Is your payment plan regarding chapter 13 bankruptcy worth pursuing? For instance: you have $150,000 in arrears on your house and your payment plan is for 5 years / 60 months. Will you be able to pay an additional $2,500 every month to cover your arrears?
Applying for Loan Modification
It has become difficult to fully pay off the mortgage payments. There are many reasons why you can miss out on payments or get late in paying the mortgage. Before this unwanted thing happens, you may go to your lender and find out if they consider a loan modification option.
Reinstating Your Loan
Do you have enough cash to pay off all the loan amount? Approach your lender with a cash offer on the house. See if they accept the payment and permit you to continue paying your loan amount without any legal interference. Lenders only want to recover the loan amount and so they will accept your offer.
» Rhode Island Mortgage Companies: Click to know about the best mortgage companies in Rhode Island.
Plan for Repayment
Great! You can make payments again after missing out on some payments. Find out what your lender thinks regarding your repayment plan. In the repayment plan, you are allowed to pay the missed payments slowly along with the current mortgage payments. You can come up with an agreement on the repayment plan to stop foreclosure. According to this, you agree to pay your missed payments along with the normal payments.
Refinancing
Refinancing may be a difficult option to consider. Interest rates are going up only making it difficult to think of loans. You can start with a new lender which means a whole new agreement. There may be one drawback. It might become difficult to qualify for refinancing if your credit score is negatively affected.
Sell Out Your Home
It’s really sad even to think of selling your house. But it is actually a good option to sell your house in Rhode Island to avoid foreclosure. You may receive an amount more than the actual price of your home. Perhaps you could even buy a house worth more than the one you sold. You can stop something drastic from happening and your credit report will also not get spoilt.
Short Sale
A short sale means that you can sell your home for an amount that is less than the amount you owe. The reason behind this is that sometimes your home is sold for a lesser amount in the auction. The bank/lender is sometimes not able to recover the whole amount they are hoping for. Rhode Island home staging companies can help you get more than the asking price.
Deed In Lieu of Foreclosure
A deed in lieu of foreclosure takes place when the homeowner transfers the property to the lender. The homeowner hand over the property to the lender, clearing all the debts they owe. The property is then owned by the lender. You have to vacate the property as soon as possible. This way you can easily save yourself from any damage.
Frequently Asked Questions
How long does a foreclosure take in Rhode Island?
The typical foreclosure in Rhode Island can be completed in just 60 -90 days. Of course, there are circumstances that can extend that typical schedule.
What is the foreclosure process in Rhode Island?
In Rhode Island, lenders may foreclose on deeds of trusts or mortgages in default:
1) by using the judicial foreclosure process;
2) by filing a lawsuit seeking eviction;
3) by taking possession of the house;
4) by the borrower voluntarily giving up possession;
5) by using the non-judicial foreclosure process.
How long is a foreclosure held against you?
Foreclosure stays on your credit report for Seven years.
A foreclosure stays on your credit report for seven years from the date of the first missed payment that led to it, but its impact on your credit score will likely fade earlier than that.
Can you remove a foreclosure from your credit report?
Removing foreclosures from your credit report requires filing a dispute with each of the three major credit bureaus. These credit bureaus have the right to dismiss any disputes they deem frivolous. The credit bureaus examine each dispute's communication and proof before deeming it worthy of being considered.
Also Read
- How to Stop Foreclosure: Read the blog to know how you can stop foreclosure on your property.
- How to Avoid Foreclosure: Find out the ways by which you can avoid foreclosures so that you don’t have to face the foreclosure situation.
- Who Pays Closing Costs in Rhode Island: Read out the blog to know about the details regarding closing costs in Rhode Island.
Recommended
- Best Time of Year to Sell a House in Rhode Island: Read the blog to know about the best time of the year to sell a house in Rhode Island.
- Average Closing Costs in Rhode Island: Find out about the closing costs in Georgia.
- What is Lenders Title Insurance: Read the blog to know what lender’s title insurance means.
- Owner’s Title Insurance in Rhode Island: Read the blog to know about the owner’s title insurance.
- How to Get Preapproved for a Mortgage: Click here to know how to get preapproved for a mortgage.
- Free Websites to List For Sale by Owner: Go through the blog to know about free websites to help you list for sale by owner.
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