Foreclosure Process

From the Superpages.com

No one purchases a home with the intention of not paying the mortgage, but life circumstances can change without warning. When you find yourself in the position of losing your home, understanding the foreclosure process can provide some measure of comfort. Receiving a notice of foreclosure does not always have to equal losing your home.

What is Foreclosure?

The foreclosure process cannot begin until you miss a defined number of consecutive mortgage payments. Foreclosure laws vary by state, but missing one or two payments is not typically enough. In most cases, you must miss three to six consecutive payments before your lender decides to foreclose.

Simply put, a foreclosure is the process by which the lender takes your home for non-payment. They must provide you ample notice as set forth by the foreclosure laws in your area and you have the opportunity to bring your account current to keep the home. In no way can the lender ever kick you out of your home on whim.

Foreclosure Steps

The first stage of the foreclosure is the reinstatement process. During this stage, your lender notifies you of their intent to foreclose on your property and sends a notice to the County Recorder’s Office to put it on record. Starting on the filing date, you have three calendar months to pay all monies you owe on the account. If you can afford to bring the account current within this timeframe, they take no further action.

If, however, you are unable to repay what you owe, you move to the next step of the foreclosure process. In this phase, your lender holds an auction on the steps of the county courthouse for the county where you live—or where your property is, if different. Either someone will purchase your property for more than you owe the lender or your lender buys the property for the money you owe them. In either situation, you are no longer the legal property owner.

Foreclosure Auction Details

Before you reach the auction phase of the foreclosure process, you will receive a Notice of Sale from your lender. This notice tells you when and where they will hold the auction. The notice should also specify the final day you can make your account current to stop the auction.

When someone buys a home through the foreclosure process, he or she must be able to pay cash for the full amount within 24 hours of winning the auction. IRS tax liens and the first mortgage lien are part of the sales price, but any secondary liens, like a purchase money second or a home equity loan, are not included. In most cases, the charge off of these loans in addition to your mortgage foreclosure is detrimental to your credit score.