The Foreclosure Process
Foreclosure is a process when the bank or mortgage company takes back or sells off your home when you default on your home loan payments. The process might take from 2-3 weeks to a year and up. It depends on the lending institution and the state/jurisdiction in which you live. There are various stages to the foreclosure process.
Stage 1 Pre-Foreclosure: You will be late with a payment and get a notice from your lending institution. Most banks provide you with a ten-day grace period, so if you pay within the ten days you should be fine. In case you go over the ten days you will get a “missed-payment” notice in the mail and you’ll probably have to pay a late fee. It is all pre-foreclosure so if you pay up before Thirty days you should be fine, nevertheless you could have a bad mark on your credit record.
Stage 2 Notice of Default: When you are over 30 days late with your mortgage payment, the lender is likely to send you a “Notice of Default” (NOD) asking you to pay up or they will begin foreclosure proceedings.
Stage 3 Foreclosure Proceedings: When you ignore the bank and still have not contacted them or paid the total due, they will begin foreclosure proceedings and send you a foreclosure notice with a agenda for the foreclosure sale.
Stage 4 Foreclosure Sale: If the house is sold at auction to the winning bidder, it’s no longer your property if you live in a state with no redemption period. You have one more an opportunity to get your home back if you live in a jurisdiction which has a redemption period. A redemption period allows you a certain amount of time (just how long is determined by where the home is located and what rules apply) to purchase back the house from the new owner at their price plus any attorney’s fees and interest. If there is no winning bidder, then your bank takes ownership and you lose your property.
Stage 5 Eviction: If you reside in a state without any redemption period and there is a winning bidder or you haven’t bought the home back from the winning bidder in a redemption state within the allotted time, the winning bidder can officially have you evicted from your home by way of a court appointed officer.
At any time in the process you could potentially save your home, however it is much easier in the beginning. If you believe it’s not possible to make the payments, notify the lending company immediately and you might be able to work something out. There is currently a program established by the government called “Make My Home Affordable.” If approved, you’ll pay 31% of your gross monthly income for the mortgage.
Watch out as there are many scammers out there that look at the legal publications and may attempt to provide you with another option using an in advance fee. Generally, it’s going to waste your precious time with little or no results.
Be sure to check out my new site Money Management Smarts and get on the right financial track. Also check out my blog Money Management Info for the latest money strategies.