The foreclosure process is information that too many people are learning about firsthand. With the increase in foreclosures across the nation, the entire housing market has gone into a slump. This is helpful if you are on the buyers side of the equation, but not for the seller. Learning more about how the procedure works may help you to avoid some of the worst aspects of losing your home. Although different states have somewhat different policies for seizing property, there are some general principles that apply.
A strong principle that must be considered before the activities begin, is to take action as soon as you know there is likely to be a problem. You should contact the lender and explain your reasons for not paying on time. The lenders usually want to help you avoid losing your home. Because there are so many homes in the foreclosure process, lenders are not anxious to have more properties added. It is an advantage to both the homeowner and the lender to hold onto the home and make payments on the loan.
In most cases, a borrower is sent a Notice of Intent to Foreclose when three payments have been missed. The lender doesn't have to accept a partial payment, although many do. The defaulted payments are not usually forgiven, they are added onto the end of the loan term. Some lenders will allow the borrower to make up a missing payment or two over near-term months. The status of the mortgage at this point is called Pre-foreclosure.
At the same time as the Notice of Intent is sent, the lender sends information about Emergency measures that might help the borrower. There are time limitations on this process and on other steps in the process as well. During this period of the process, homeowners can sell the property to a third party, can choose to turn the property back to the lender or can make up the payments.
If the borrower does not bring the account current, within the stated amount of time, the lender will turn the account over to a foreclosure attorney. The foreclosure attorney takes the account to the next level by filing an official Complaint at the county courthouse. The borrower has a fairly limited time period during which he or she must respond to the complaint. The time period is usually about six weeks. The options for the borrower are more limited at this stage. The loan can still be paid to bring the account current. Investors sometimes will purchase the property and take over payments if the loan allows for this type of action.
If the default is not cured, a judgment is entered against the borrower and the county Sheriff schedules a sheriff's sale date. Each mortgagor is notified of the date of the sale. The sale might be postponed for any of various reasons, but it usually is scheduled for sixty days or longer in the future.
Once the Sheriff's sale has been completed, the property is conveyed through a deed prepared by the Sheriff to the purchaser. If no bid is received, the bank receives the deed to the property. These properties have become so numerous that they are sometimes sold in batches to investors with the cash. Eviction action is taken at this time if the borrower has not already left the property.
The foreclosure process usually can require about six months, although some jurisdictions can speed up the process somewhat. A foreclosure on your history can be a financial anchor for many years, so it is better to take action to stop the foreclosure as soon as it becomes apparent that the borrower is in financial danger. There are alternatives open to the borrower that are less disastrous.