A staggering number of Americans have been faced with foreclosure during our country’s current economic turmoil. Unemployment, underemployment, and other unforeseen factors have created impossible financial conditions for many people, including those who have a stellar track record of fiscal responsibility. Simply put, we understand that the current foreclosure crisis is not just impacting people who borrowed well beyond their means.
Are you one of the millions of Americans behind on your mortgage? If so, we encourage you to call our Homeowner’s HOPE™ Hotline at 888-995-HOPE™. The sooner you do, the sooner we can help. Our counselors can help you get a clear picture of your finances and provide you with important information about avoiding foreclosure.
What exactly does it mean to be facing foreclosure? Essentially, when a homeowner fails to make his or her agreed upon mortgage loan payments, the lender (typically a bank or mortgage company) will try to avoid any additional loss by taking possession of the home, which is the collateral that had secured the loan.
Foreclosure is a legal process that employs many terms that may be new to you. We’ve put together a helpful glossary to help you understand the most common words and concepts. You can always call for clarification as well.
Although the foreclosure process may vary from state to state, here is a general description of the foreclosure process:
Please Note: Foreclosure laws and timelines differ from state to state. Please contact your state Attorneys General office to determine your specific states foreclosure laws.
- Step One: Notice of Default
The first step in the foreclosure process is the issuance of a Notice of Default by the lender, which typically occurs after the homeowner is 30-45 days past due on their mortgage. It will usually be sent to the homeowner by certified mail. The lender will set a period of time for the homeowner to pay the lender the required amount past due and return the loan to good standing.
If you have recently received a Notice of Default or are 30 days behind on your payments, click here for additional information.
- Step Two: Legal Filing
If the homeowner does not pay off the amount past due by the stated deadline, the lender may elect to proceed with foreclosure. There are generally two types of foreclosures: judicial and non-judicial. In judicial foreclosures, the lender may file a lawsuit in order to obtain a court order to sell the property. This usually happens after 90 days of delinquency. In a non-judicial foreclosure, the process follows the procedures spelled out in the mortgage (or deed of trust) that allows a trustee – the bank or mortgage company – to foreclose on and sell the property.
- Step Three: Notice of Foreclosure Sale
After the required time has elapsed, typically after 120 days without making a payment, the homeowner will be sent a notice of foreclosure sale, which will provide notice of the date by which the premises must be vacated and may include the total amount in arrears as well.
Please Note: At any point during these proceedings, you may be able to keep your home if you pay off the loan and all foreclosure proceeding costs accrued.
- Step Four: Public Sale
The sale of a foreclosed home could involve a public sale held by an auction, where the highest bidder can buy the property. If there are no buyers, the lender may buy the property by submitting a credit bid based on the amount owed on the mortgage. If the lender takes the property, it could be sold in a private sale at a later date.
If the homeowner has not vacated the property by the time of the foreclosure sale, an unlawful detainer lawsuit could be filed to evict the homeowner. You may ask for time to move out of the property; however the bank does not have to grant the request and may request that you evacuate the property immediately.