Georgia Foreclosure Issue

[EntoMan]

I am one of those facing foreclosure. Due to being unemployed, I cannot save the house, and I was unable to sell it. So now it is in foreclosure and scheduled to be sold July 7.

We moved out of the house nearly 6 months ago, which is in GA, and into a rental house in Alabama. Now that the house is in foreclosure, I'm not sure what to expect. The foreclosure is from the primary lender, and I know the house won't sell for enough to pay both the primary and the secondary lenders (1st/2nd mortgage). Someone told me that the foreclosure extinguishes all liens, including subordinate ones. But I'm reading otherwise. Does anyone know if a deficiency judgment can be issued against an unemployed person, and would it be from the primary or secondary lender? If so, is a lender seriously likely to do that, knowing they couldn't get a dime? It would seem to be a waste of time.

And does anyone know, should it come down to this ... if I need to file Chapter 7 bankruptcy after the foreclosure (due to deficiency judgments), do I have to file it in Georgia or my current residence of Alabama?

Thanks for any help.

[Moe Bedard]

EntoMan,


Welcome to the forum and thank you for joining..............


In Georgia lender can seek a deficiency judgement
Georgia Foreclosure Law

A foreclosure will eliminate the junior liens for the primary lien holder (investor) through the foreclosure...................that doesn't apply to or eliminate the debt owed by the homeowner ............the homeowner would still be obligated on the deficiency between what the property sold for in foreclosure and what was owed on the property in states that are recourse states and allow for deficiency judgements.

In Georgia the statute of limitation on enforcing that judgement looks like it can be at least six years.........so they can come after you at any point in time up to that time and possibly beyond if they are able to renew the judgement............

After a creditor wins a lawsuit against a debtor and is awarded a judgment by the court, there is a time limit for collecting that judgment. However, many states allow judgments to be renewed one or more times, which could substantially extend the enforceability of a judgment, if the creditor is vigilant about the renewals. This can potentially result in a permanent legal obligation until it is paid.


The best thing that you can do is to consult with a real estate/foreclosure attorney that is familiar with debt collection practices and judgements in your state to let you know the process and what you are facing as a result of foreclosure in Georgia and to answer your questions.

[gwkttk]

Wow EntoMan, small world.

We moved out of our Georgia home (Forsyth County) in June 2007. In our case, we bought what is now our primary home over here in Alabama (Winston County, just outside Jasper) before the bottom had dropped out. We've been trying to sell our Georgia home for over two years. Like most folks, we're underwater and have no hopes of getting what we owe, but we're not even getting any interest in the property after dropping the price several times to well below what we paid. We would've approached the bank about a short sale if we'd gotten an offer, but that hasn't happened. We made our last payment Feb. 1, 09. Got a call from the bank during the last week of May. We told them we were ready to let them foreclose and wouldn't be making any more payments. It didn't seem to faze them. They are apparently used to it by now. They offered and sent a Deed-in-lieu 'package' and I sent them the required documents. We'll see what happens.
GEORGIA FORECLOSURE

In General
Virtually all foreclosures in Georgia are through the exercise of the private power of sale contained in the security instrument, which, in Georgia, is known as a Security Deed. The procedure is entirely non-judicial and often takes less than 2 months.

In most instances the lender has the right to accelerate the debt and commence foreclosure upon any material breach of the Security Deed or Note, which it secures. Once the debt is accelerated, the borrower has no right to prevent foreclosure by merely paying missed mortgage payments, unless the security deed provides otherwise. Most security deed forms (the conventional FNMA/FHLMC security deed) do provide the borrower the right to cure the default after acceleration, usually up to five days prior to the foreclosure sale.

Publication of Notice and Notice to Interested Parties
Foreclosure is commenced by submitting a foreclosure advertisement to the official county newspaper for publication once a week during each of the four consecutive weeks prior to the sale date. The sale date is always on the first Tuesday of each month (unless that day is New Year's Day or the Fourth of July, in which case foreclosures will be held on the Wednesday of that week).

The advertisement must contain the following:

Description of the security deed
A legal description of the property and property address
Date and place of the sale
Other requirements dictated by the Security Deed
The purpose of the publication is to notify the public of the sale and encourage competitive bidding. Anything in the advertisement tending to discourage competitive bidding may provide a basis for enjoining the sale.

If the borrower's residence is involved, Georgia law further requires that the lender notify the borrower of the pending foreclosure by mailing a notice at least 15 days before the sale date by certified mail, return receipt requested. Unless the borrower has provided a different mailing address, the notice is sent to the property address and is deemed given on the date it is postmarked. The notice consists of either a copy of the foreclosure advertisement as published, or the advertisement as submitted to the newspaper for publication. A foreclosure of a residence is not valid unless this notification is timely mailed to the borrower.

Most lenders' attorneys also provide the borrower with a "ten-day letter" advising that the lender intends to enforce the provisions in the note and security deed regarding the payment of attorney's fees in addition to principal and interest. The "ten-day letter" must advise the borrower that he/she has 10 days from receipt of the notice to pay all principal and interest without incurring attorney's fees. If the borrower fails to pay all principal and interest within 10 days of the receipt of the notice, then the lender's right to collect the full amount of attorney's fees is perfected. Most Georgia security deeds and notes provide for reasonable attorney's fees, which under Georgia law is 10 percent of principal and interest.

Georgia law does not require that junior mortgagees or other junior lien holders be notified of the pending foreclosure. However, lenders often choose to send notice for practical reasons. If a junior mortgage is foreclosed subject to a senior mortgage, there is no requirement that the senior mortgagee be notified.

Foreclosure Sale
After the foreclosure advertisement is duly published in the county newspaper and the borrower has been provided with the 15-day notice of sale, the foreclosure sale can take place on the first Tuesday of the following month (except those rare cases when the sale will be on the following Wednesday, as explained above). The sale takes place before the door of the superior court for the county in which the land is situated, at the place where the sheriff's sales are conducted. The sale must take place between the hours of 10:00 a.m. and 4:00 p.m. Consistent with the published advertisement, the sale is a public auction of the property, generally conducted by the lender's attorney. If the security deed so permits (and it usually does) the lender is entitled to bid at its own foreclosure sale. The lender's attorney conducting the sale may, and generally does, make bids on behalf of the lender. The property is sold to the highest bidder, who must either pay in cash or certified funds at the time of the sale.

Generally, Georgia law does not require that property in foreclosure be sold at market value or at any particular amount. The sale is valid even if it only brings a nominal amount. Where the lender does not intend to pursue a deficiency judgment, it is customary to bid in the property for debt plus costs. However, where the lender intends to pursue a deficiency judgment, then it is essential that the land be appraised before the sale and that the lender bid no less than FULL FAIR MARKET VALUE of the land. As explained below, a deficiency judgment will not be allowed if the property forecloses at anything less than full fair market value.

Effects of the Foreclosure
Unlike many states, Georgia gives the borrower no right to redeem the property after the sale. If properly conducted, the foreclosure sale divests the borrower of all rights in the property and eliminates all junior liens (other than certain tax liens and liens held by the United States government). A junior federal tax lien encumbers the property and gives the United States 120 days after the sale to redeem the property. This assumes that the IRS has been given proper notice of the foreclosure sale at least 25 days before the sale. If not, the federal tax lien will survive the foreclosure sale. Also, if the United States or any agency thereof has a junior lien, it may claim a one-year right to redeem.

As stated above, Georgia's foreclosure procedure is entirely non-judicial. However, court action concerning the sale is required if the lender intends to file a deficiency judgment action. Before filing a deficiency judgment action, the lender must have the sale "confirmed" by the court. Making a report of the sale to the judge of the superior court within 30 days after the sale commences a confirmation case. A hearing is scheduled shortly thereafter at which time the lender must prove that the foreclosure sale was proper in all respects and that the sale brought the FULL FAIR MARKET VALE. Without solid evidence as to market value (normally through testimony of an appraiser), the judge will not confirm the sale. The borrower may offer his own appraisal to persuade the judge that the sale brought less than fair market value. If not confirmed, the foreclosure sale usually still stands as valid. Generally, the only adverse consequence of denial of the confirmation is that the lender loses the right to file a deficiency judgment action. Additionally, the court may order that the property be re-foreclosed if the circumstances so warrant.

Foreclosure Deed
The Deed Under Power conveys the property to the successful bidder at the foreclosure sale. The holder of the Security Deed executes the deed as "attorney-in-fact" for the borrower. The Deed Under Power vests in the purchaser the same right, title, and interest in the property as the borrower had. No payment of transfer tax is required on a foreclosure.

If the foreclosed property is to be conveyed to an insuring governmental agency, it is customary for the lender to take title in its own name through the Deed Under Power, and then transfer title to the agency through a separate limited warranty deed. Thus, Georgia is a "two-deed state".




I found the above info to be a little more descriptive as to the foreclosure process in Georgia, under what circumstances a deficiency judgment can be pursued, etc. I hope it helps and is not a violation of the forum's rules.

Before I say anything more, I'll say what you've probably already heard and read over and over: Consult an attorney personally for advice regarding your foreclosure, possible deficiency judgments, etc. The reason you hear and read it over and over again is because it's good advice and you should heed it.

I have a very good friend who works for a law firm. What she tells me is something I've also read over and over: Deficiency judgments on first mortgages are very rare. So rare, in fact, that she told me about one. And then pointed out that the reason that she could tell me some details about it (no names, of course) was that it was a rare occurence, and people were discussing it in and around the office, because they are so rare. Note I said 'rare', not 'impossible'.

Second mortgages are another matter. We had a small second on our Georgia home. I've read the documentation carefully. It specifically says that if the first leinholder forecloses then the second becomes an 'unsecured debt', subject to typical debt collection practices. We've taken a 'wait and see' position on that one, but are prepared to pay it off if need be. You should probably be prepared to deal with any second mortgage by what ever means appropriate (bankruptcy, negotiation, etc.).

Where in Georgia were you and where did you end up in Alabama? We might have been and/or are now neighbors!

G