Foreclosure Timeline
Foreclosure Timeline
Foreclosure is a legal process in which mortgaged property is sold to pay the loan of
the defaulting borrower. Few people think they will lose their home, they think they have
more time. Here's how it happens. Note: Timeline and foreclosure laws and are based
on the statutes of each state.
First month missed payment – your lender will contact you by letter or phone. A
housing counselor can help.
Second month missed payment – your lender is likely to begin calling you to
discuss why you have not made your payments. It is important that you take their
phone calls. Talk to your lender and explain your situation and what you are trying to
do to resolve it. At this time, you still may be able to make one payment to prevent
yourself from falling three months behind. A housing counselor can help.
Third month missed payment – after the third payment is missed, you will receive
a letter from you lender stating the amount you are delinquent, and that you have 30
days to bring your mortgage current. This is called a "Demand Letter" or "Notice to
Accelerate". If you do not pay the specified amount or make some type of
arrangements by the given date, the lender may begin foreclosure proceedings.
They are unlikely to accept less than the total due without arrangements being made
if you receive this letter. You still have time to work something out with your lender.
A housing counselor can still help.
Fourth month missed payment – now you are nearing the end of time allowed in
your Demand or Notice to Accelerate Letter. When the 30 days ends, if you have not
paid the full amount or worked our arrangements you will be referred to your lender's
attorneys. You will incur all attorney fees as part of your delinquency. A housing
counselor can still help you.
Sheriff's or Public Trustee's Sale – the attorney will schedule a Sale. This is the
actual day of foreclosure. You may be notified of the date by mail, a notice is taped to
your door, and the sale may be advertised in a local paper. The time between the
Demand or Notice to Accelerate Letter and the actual Sale varies by state. In some
states it can be as quick as 2-3 months. This is not the move-out date, but the end is
near. You have until the date of sale to make arrangements with your lender, or pay the
total amount owed, including attorney fees.
Redemption Period – after the sale date, you may enter a redemption period. You will
be notified of your time frame on the same notice that your state uses for your Sheriff's
or Public Trustee's Sale.
In general, mortgage companies start foreclosure processes about 3-6 months after the first missed mortgage payment. Late fees are charged after 10-15 days, however most mortgage companies recognize that homeowners may be facing short-term financial hardships. It is extremely important you stay in contact with your lender within the first month after missing a payment.
After 30 days, the borrower is in default, and the foreclosure processes begin to accelerate. If you do not call the bank and ignore the calls of your lender, then the foreclosure process will begin much earlier. At any time during the process, talk to your lender or a housing counselor about the different alternatives and solutions that may exist.
Types of Foreclosure
Types of Foreclosure
Three types of foreclosures may be initiated at this time: judicial, power of sale, and
strict foreclosure. All types of foreclosure require public notices to be issued and all
parties to be notified regarding the proceedings. Once properties are sold through an
auction, families have a small amount of time to find a new place to live and move out
before the sheriff issues an eviction.
Judicial Foreclosure. All states allow this type of foreclosure, and some require it.
The lender files suit with the judicial system, and the borrower will receive a note in the
mail demanding payment. The borrower then has only 30 days to respond with a
payment in order to avoid foreclosure. If a payment is not made after a certain time
period, the mortgaged property then is sold through an auction to the highest bidder,
carried out by a local court or sheriff's office.
Power of Sale. This type of foreclosure, also known as statutory foreclosure, is
allowed by many states if the mortgage includes a power of sale clause. After a
homeowner has defaulted on mortgage payments, the lender sends out notices
demanding payments. Once an established waiting period has passed, the mortgage
company rather than local courts or sheriff's office carries out a public auction.
Non-judicial foreclosure auctions are often more expedient, though they may be subject
to judicial review to ensure the legality of the proceedings.
Strict Foreclosure. A small number of states allow this type of foreclosure. In strict
foreclosure proceedings, the lender files a lawsuit on homeowner that has defaulted.
If the borrower cannot pay the mortgage within a specific timeline ordered by the court,
the property goes directly back to the mortgage holder. Generally, strict foreclosures
take place only when the debt amount is greater than the value of the property.
Important: Stay in contact with your lender and get assistance as early as possible. All dates are estimated, and vary according to your state and your mortgage company.
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