Understand the foreclosure process
There are instances when homeowners may struggle with their mortgage payments and may be facing a foreclosure filing. Yet many people do not fully understand the foreclosure process or they may be receiving conflicting information. not only that, but it is often a stressful time in the homeowners life. Below you will find the main steps of the foreclosure process. Note it can vary slightly by state. Increasing your knowledge of it may help you explore options and solutions that will allow you to save your home.
Missed mortgage payment
When a homeowners misses just one monthly mortgage payment, a default has occurred. While each bank or lender has its own policies in place for this situation, there will some type of communication that occurs. Most lenders will send a missed payment notice. Other lenders may call.
This communication will indicate that the homeowner did not pay their mortgage on time and that the lender has not received the payment. Most lenders do offer their customers a so called grace period before taking any action., but they are not obligated to do this. The grace period may range from 15 to 30 days.
For example, most mortgage payments are due by the first of the month, and if you factor in a 15 day grace period, a Notice of default or missed payment notice may not be issued until after the grace period expires, so say after the 15th. Sometimes a lender may add a fee to the payment if it is late. Some of the terms and conditions vary by state. In addition, the government may be able to assist or provide information from some of their services which can help homeowners, and click here to find information on government foreclosure assistance programs.
If a homeowner still does not make any payments if/when any grace period ends, the issue becomes more serious. If two mortgage payments are missed, the bank or lender may issue the homeowner a so called Demand Letter. While this step is more serious that a missed payment letter, it is still not to late to get back on track. The Demand letter is a much more formal notice that if the loan is not paid and is brought current in a very short period of time, that the lender will proceed with filing the foreclosure at the local court.
Even after the Demand Letter has been filed, many companies are still willing to work with the borrower to find a solution. The lender will be willing to make payment arrangements, allow a modification, or find some other type of solution. They may put you in contact with a credit or housing counselor which can improve your financial condition. The key to this entire process is to communicate with your lender.
Notice of Default
This is when the foreclosure is filed with the court. This occurs if the borrower has missed three months of payments, but it can vary by state or jurisdiction. This letter is the most formal type of communication that can occur. This official court document will list the amount of mortgage payments that need to be paid to bring your account current. You will have anywhere from 20-90 days to respond and to get back on track. This timeframe is typically referred to as the reinstatement period.
Notice of Foreclosure/Trustee's Sale
This notice is issued within 90 days of the Notice of Default. It establishes a sheriffs auction date which is when your house will be sold. The Notice of Trustee's Sale is recorded in the county courthouse where the property is located,
In addition to this notice, the lender needs to further advertise and communicate the current situation to the public. This is also often required by state law so that the homeowner has other chance to be notified. They will need to publish a notice in the local newspaper as part of the foreclosure process. This must be done three to four weeks before the date of the public auction. It is important to note that extent of the information that will be published. For examples, the owners' names, address, property description. and the date and location of the sale must be published in this newspaper filing.
Foreclosure auction, also known as the Trustee's Sale
This is the event at which the home is sold to the highest bidder. The home will be placed for sale at a public auction. The mortgage holder or its representative will usually determine what the minimum bid that will be accepted for the home is. That minimum can be based upon many factors, including unpaid taxes, the balance on the loan, and any other costs or fees that the lender has incurred and is trying to recover from the foreclosure process. Note this is done if no other solution has been arrived at between the lender, borrower, and their various representatives.
Anyone can bid on the property, including the current owner. The home will be granted to the highest bidder who meets all of the necessary requirements, including financial obligations. After the auction, or Trustee's Sale has been finished, a Trustee's Deed Upon Sale will be provided to the highest bidder. The home is now owed by that party.
The eviction process
As many people do not understand the entire foreclosure process, most do not know that they can continue to live in the home up until a public auction has finished. At that part of the process, a formal eviction notice will be sent to anyone who is currently residing in the home. This period of time can provide the former homeowner time to find a new place to live. The letter will demand that any occupants vacate the property.
Even after that eviction notice has been sent, the occupant will still usually be provided several days to pack up and leave. If that window of time expires and the occupant still doesn’t leave, in many cases the local sheriff will visit the home to remove any occupants. The sheriff will ensure the home is fully vacated as part of the foreclosure process. Read more other ways to delay a foreclosure, which of course can help the homeowner.
How to stop the foreclosure process
The process can take several months from start to finish. People need to understand that banks and lenders are willing to work with homeowners throughout this entire timeframe to find a solution. Many lenders do not want to foreclosure, as they will oftentimes lose more money than by working with the borrower.
So contact your lender often and early. Ask for the free help from a HUD foreclosure counseling agency. Seek assistance ideally even before you miss a payment. Explore loan modifications, government resources and other options, and be sure you understand the foreclosure process as this information can help you when dealing with your lender.