The foreclosure process in Georgia is a relatively quick process, taking only a couple of months. Don’t be caught off guard if you are facing a potential foreclosure. Read on to learn about each step in a Georgia foreclosure from missing your first payment all the way to eviction.
For more articles on Georgia foreclosure law and programs to help you avoid foreclosure, visit Nolo's Georgia Foreclosure Law Center.
Georgia Mortgage Loans
When you take out a loan to purchase residential property in Georgia, you typically sign a promissory note and a deed of trust (called a “Security Deed”). A promissory note is basically an IOU that contains the promise to repay the loan, as well as the terms for repayment. The Security Deed provides security for the loan that is evidenced by a promissory note.
Find out more in our article What’s the Difference Between a Mortgage and a Promissory Note?
To learn more about mortgage terminology, see our Glossary of Foreclosure Terms.
What Happens When You Miss a Payment
If you miss a payment, most loans include a grace period of ten or fifteen days after which time the loan servicer will assess a late fee. (Loan servicers collect and process payments from homeowners, as well as handle loss mitigation applications and foreclosures for defaulted loans.)
The late fee is generally 5% of the overdue payment of principal and interest. To find out the late charge amount and grace period for your loan, look at the promissory note that you signed. This information can also be found on your monthly mortgage statement.
Learn more about fees that the lender can charge if you’re late on mortgage payments.
What Happens When You Fall Behind in a Few Payments
If you miss a few mortgage payments, your mortgage servicer will probably send a letter or two reminding you to get caught up, as well as call you to try to collect the payments. Don’t ignore the phone calls and letters. This is a good opportunity to discuss loss mitigation options and attempt to work out an agreement (such as a loan modification, forbearance, or payment plan) so you can avoid foreclosure.
Learn the difference between a loan modification, forbearance agreement, and payment plan.
Pre-Foreclosure Loss Mitigation Review Period
Under the federal Consumer Financial Protection Bureau servicing rules that went into effect January 10, 2014, the mortgage servicer must wait until you are 120 days delinquent on payments before making the first official notice or filing for any judicial or nonjudicial foreclosure. This is to give you sufficient time to explore loss mitigation opportunities. (If a servicer's sole purpose of providing a notice is to inform you that you are late on your payments and/or explain what your loss mitigation options are, the servicer can deliver the notice within this pre-foreclosure period.)
The Breach Letter
Georgia Security Deeds often contain a clause that requires the lender to send a notice, commonly called a breach letter or demand letter, informing you that your loan is in default before it can accelerate the loan and proceed with foreclosure. (The acceleration clause in the Security Deed permits the lender to demand that the entire balance of the loan be repaid if the borrower defaults on the loan.)
The letter must specify:
- the default
- the action required to cure the default
- a date (usually not less than 30 days from the date the notice is given to the borrower) by which the default must be cured, and
- that failure to cure the default on or before the date specified in the notice may result in acceleration of the debt and sale of the property.
If you do not cure the default, the foreclosure will be initiated.
Georgia Foreclosure Process
Most residential foreclosures in Georgia are nonjudicial, which means the lender can foreclose without going to court so long as Security Deed contains a power of sale clause. (A “power of sale clause” is a paragraph in the Security Deed that authorizes the nonjudicial foreclosure sale.)
30-Day Notice of Intent to Foreclose
No later than 30 days prior to the date of the scheduled foreclosure sale, the lender must send the borrower notice of the initiation of proceedings to exercise a power of sale. The notice must be sent via registered mail, certified mail, or overnight delivery, return receipt requested, to the property address or to any other address the borrower has designated by written notice to the lender.
The notice will include:
- a copy of the notice of sale, which includes the date and location of the sale, that will be published in the official county newspaper, and
- the name, address, and telephone number of the individual or entity that has full authority to negotiate, amend, and modify all terms of the mortgage (which is generally the loan servicer).
To get more information about loan modifications and other options to avoid foreclosure, see our Alternatives to Foreclosure area.
Publication of the Notice of Sale
The foreclosure sale must be advertised in the official county newspaper where the property is located once a week for four consecutive weeks prior to the scheduled sale date.
Ten-Day Attorneys' Fees Notice
The lender’s attorney will also send the borrowers a notice informing them they have ten days from the receipt of such notice to pay the principal and interest without incurring attorneys' fees. This notice is often included with the 30-day notice of sale.
Reinstatement Before Sale
There is no statutory right to reinstate the loan prior to the sale in Georgia (except for high-cost home loans). However, most Security Deed forms, such as the conventional FNMA/FHLMC Security Deed, provide the borrower the right to cure the default after acceleration and reinstate the loan, usually up to five days prior to the foreclosure sale.
Learn more about reinstating a loan to avoid foreclosure.
The Foreclosure Sale
Foreclosure sales are held at the county courthouse on the first Tuesday of the month (unless that day is New Year's Day or the 4th of July, in which case foreclosures are held on the Wednesday of that week) between 10:00 A.M. and 4:00 P.M.
The property will be:
- sold to the highest third-party bidder, or
- revert to the foreclosing lender and become REO.
(The lender will typically bid in the amount of the debt plus costs. However, if the lender intends to pursue a deficiency judgment, then the property must appraised before the sale to ensure that the lender bids the fair market value of the property.)
Deficiency Judgment Following Sale
When a lender forecloses on a mortgage, the total debt owed by the borrower to the lender frequently exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a “deficiency.” In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount from the borrower.
Learn about methods that creditors can use to collect judgments.
Lender Procedures to Obtain a Deficiency Judgment
First, the lender must file a report of sale with the superior court of the county in which the land is located within 30 days after the nonjudicial foreclosure sale. (If this deadline is missed, then the lender cannot get a deficiency judgment.)
Then, the court will hold a hearing before it confirms the sale. (The lender must serve the borrower with notice of the hearing at least five days prior to the hearing date.) At the hearing, the court will verify that the foreclosure sale price is at least as much as the fair market value of the property. The court will also evaluate whether or not the lender followed proper foreclosure procedures by looking at:
- the notices that the lender sent to the borrower
- the foreclosure sale advertisement that the lender published, and
- whether there was any fraud or irregularities in the sale.
If the sale is confirmed, the lender can file suit for a deficiency judgment against the borrower. If the sale was not proper, the court may order a resale of the property. Due to complicated process and risk of resale, many lenders do not pursue deficiency judgments in Georgia.
Find out more about Deficiency Judgments After Foreclosure in Georgia.
Georgia has no statutory right of redemption after the foreclosure. (A redemption period is the legal right of a mortgage borrower in foreclosure to pay off the total debt, including the principal balance, plus certain additional costs and interest, in order to reclaim the property.) Once a home has been foreclosed, it cannot be redeemed.
Learn more about redemption periods.
Eviction Following Foreclosure
If you don’t vacate the property following the foreclosure sale, the new owner will likely:
- offer you a cash-for-keys deal (where the new owner offers you money in exchange for you agreeing to move out), or
- file a dispossessory action to evict you from the home.