Foreclosure Step By Step
What are the basic steps of a home foreclosure?
There are four steps in an institution's foreclosure on a homeowner's single family home. After the homeowner fails to make mortgage payments for one to three or four months, the first step is where the lending institution sends a notice of default to the homeowner giving him a very short period of time in order to come current in the mortgage payments. That completes the first step, is sending the notice, and running of a period of time for the homeowner to come current on their mortgage payment. Step 2 is should the homeowner not bring their mortgage current the lending institution then accelerates the remaining balance due on the mortgage in order that they're able to obtain the property in its entirety in foreclosure or for the entire amount of the balance on the mortgage. After acceleration the lending institution is required to move into step 3 where they adequately advertise the future sale of the homeowner's property to enough potential buyers so that over a period of from 90 to 150 days prior to the foreclosure sale that sufficient interest has been generated such that a good price is obtained for the homeowner's property in a foreclosure sale. Of course, the last step, in many cases, is the foreclosure sale, which is step 4, which happens, typically, in a day.
If a homeowner misses the lender's deadline, what happens next?
If a homeowner misses the lender's deadline established in the notice of defaults, then the lender does not want to foreclose on merely one or two payments each month for the next thirty years therefore the lender, in consideration of a term in the original trustee mortgage contract has the right to accelerate the entire remaining balance due on the mortgage, such that as soon as the lender accelerates the remaining balance, the homeowner owes the entire remaining balance on the mortgage today, no longer just one or two payments.
Is there anything a homeowner can do after the lender 'accelerates' the remaining mortgage balance?
Once a mortgage lender accelerates the remaining balance due on a homeowners loan, there are a few things that homeowners can do to forestall the process or reverse the process. Their options vary dramatically depending on whether they are in a mortgage state or a trustee state. In a mortgage state there are quite a few things that they can do legally, but the more effective ones are still to work with the lender and persuade them that some day they'll be able to come current on the mortgage loan. And in mortgage states the lenders are aware of the flexibility that homeowners have to delay the process and really want to help the homeowner come current. Where in trustee states the homeowner has less flexibility to delay the process and start again.
Does the foreclosure process differ by state?
Foreclosure practices throughout the different states in the United States differ mainly according to the reality that one quarter of the states in the United States are what they call trustee states where mortgages are not in existence. The other three quarter states in the United States are what they call mortgage states and the foreclosure process differs dramatically between trustee states and mortgage states primarily in the speed and rapidity that the foreclosure action progresses. In a trustee state, a foreclosure will occur in typically ninety to one-hundred and fifty days. Where as a mortgage state, the foreclosure process can be dragged out, depending on the individual state, for as much as two years.
Do home foreclosures involve anyone besides the homeowner and their mortgage lender?
A foreclosure on someone's home involves more than just the mortgage lender as well as the homeowner. It also involves finding a perspective buyer that will pay off the mortgage loan that the homeowner is no longer able to make mortgage payments. The lender is really in the unfortunate situation as a middle person who is merely trying to have a loan repaid and the only reason they are foreclosing on the home is because the homeowner does not have the ability to pay the mortgage or trusted terms as agreed and that is what requires the involvement of a third party, a buyer, who will typically obtain a mortgage from another source that will assume the kind of responsibility and promises that the original homeowner going through foreclosure is no longer able to do.
