If you default on your home loan payments in Georgia, the servicer (on behalf of the loan owner, called the “lender” in this article) will eventually begin the foreclosure process. The method will most likely be nonjudicial; judicial foreclosures, although rare, are also allowed. Georgia law specifies how foreclosure procedures work, and both federal and state laws give you rights and protections throughout the foreclosure.
If you get a loan to buy a home in Georgia, you'll likely sign two documents: a promissory note and security deed, which is like a mortgage. The promissory note is the document that contains your promise to repay the loan along with the repayment terms. The security deed is the document that gives the lender a security interest in the property and will probably include a power of sale clause. If you fail to make the payments, the power of sale clause gives the lender the right to sell the home nonjudicially so it can recoup the money it loaned you.
If you miss a payment, the servicer can usually charge a late fee after the grace period expires. Most mortgage loans give a grace period of ten to fifteen days, for example, before you’ll incur late charges. To find out the grace period in your situation and the amount of the late fee, review the promissory note or your monthly billing statement.
If you miss a few mortgage payments, the servicer will probably send letters and call you to try to collect. In most cases, federal mortgage servicing laws require the servicer to contact you (or attempt to contact you) by phone to discuss foreclosure alternatives—called “loss mitigation” options—no later than 36 days after a missed payment and again within 36 days after each following missed payment. No more than 45 days after a missed payment, the servicer must let you know in writing about loss mitigation options that could be available, and assign personnel to help you. Some exceptions to a few of these requirements exist, like if you file for bankruptcy or tell the servicer not to contact you under the Fair Debt Collection Practices Act. (12 C.F.R. § 1024.39).
Many security deeds in Georgia have a provision that requires the lender to send a breach letter if you fall behind in payments. This notice tells you that the loan is in default. If you don’t cure the default, the lender can accelerate the loan (call it due) and go ahead with the foreclosure.
Federal law generally requires the servicer to wait until the loan is over 120 days delinquent before officially starting a foreclosure. But in a few situations, like if you violate a due-on-sale clause or if the servicer is joining the foreclosure action of a superior or subordinate lienholder, the foreclosure can begin sooner. (12 C.F.R. § 1024.41).
Again, the majority of foreclosures in Georgia are nonjudicial. Because the out-of-court process is most common, this article focuses on those procedures.
No later than 30 days before the sale date, the lender has to mail you (the borrower) a notice of intent to foreclose. The notice usually includes a copy of the foreclosure advertisement published in the official county newspaper (see "Notice of Sale" below), and must include the name, address, and telephone number of the individual or entity with full authority to negotiate, amend, and modify all terms of the loan. (Ga. Code Ann. §§ 44-14-162, 44-14-162.2).
The lender also usually sends a notice informing you that you have ten days after receiving the notice to pay the loan's principal and interest to avoid liability for attorneys’ fees. This 10-day notice is often included with the 30-day notice of intent to foreclose. (Ga. Code Ann. § 13-1-11).
The lender has to advertise the foreclosure sale in a newspaper for four weeks before the scheduled sale date. (Ga. Code Ann. § 9-13-140).
The sale is an auction, open to all bidders. The lender bids on the property using a "credit bid" rather than bidding cash. With a credit bid, the lender gets a credit up to the amount of the borrower’s debt. Sometimes the lender bids the full amount of the debt; sometimes, it bids less. The highest bidder at the sale becomes the new owner of the property.
“Reinstating” is when a borrower pays the overdue amount, plus fees and costs, to bring the loan current and stop a foreclosure. Georgia doesn't have a law that gives the borrower the right to reinstate the loan, except for high-cost home loans. But most security deeds do provide this right. Check the paperwork you signed when you took out the loan to find out if you get the right to complete a reinstatement and, if so, the deadline for reinstating.
Sometimes, a foreclosure sale doesn’t bring in enough money to pay off the full amount owed on the loan. The difference between the sale price and the total debt is called a “deficiency balance.” Many states allow the lender to get a personal judgment, called a “deficiency judgment,” for this amount against the borrower.
Under Georgia law, the lender can get a deficiency judgment by filing a separate lawsuit after the foreclosure—but only if it reports the sale to a court within 30 days, and the court confirms the sale. (Ga. Code Ann. § 44-14-161).
Some states have a law that gives a foreclosed homeowner time after the foreclosure sale to redeem the property. In Georgia, however, you don't get a post-sale redemption right after a nonjudicial foreclosure.
If you don’t move out after a Georgia foreclosure sale, the purchaser must first make a demand for possession and then may begin eviction proceedings.
Foreclosure laws are complicated. Servicers and lenders sometimes make errors or forget steps. If you think your servicer or lender failed to complete a required step, made a mistake, or violated state or federal foreclosure laws, you might have a defense that could force a restart to the foreclosure, or you might have leverage to work out an alternative.
Consider talking to a local foreclosure attorney or legal aid office immediately to learn about your rights. A lawyer can also tell you about different ways to avoid foreclosure. Likewise, a HUD-approved housing counselor can provide helpful information (at no cost) about various alternatives to foreclosure.