How the Mortgage Foreclosure Process works
The mortgage foreclosure process is different from the tax foreclosure process but is the more common one. When people are in foreclosure because they fail to pay their mortgage payments, the bank will foreclose on their home and the mortgage foreclosure process will begin.
Different states have different rules for the mortgage foreclosure process. Lenders have to follow the rules when filing foreclosure on homes. Some states have more rules to follow than others but most of them have the same basic mortgage foreclosure process.
The mortgage foreclosure starts when a homeowner misses payments multiple times. The lender usually wait until three payments have been missed before they start thinking of foreclosure. A homeowner can call the lender to agreement a payment plan to avoid foreclosure and avoid being in default.
When the account is in default, the next step of the mortgage foreclosure process is the notice of default. The homeowner is not in foreclosure yet but the notice of default is the first real evidence of the mortgage foreclosure process.
After about three to four months, if an agreement cannot be reached between the homeowner and the lender, then the lender will send he notice of foreclosure to the homeowner. The notice of foreclosure and the notice of trustee’s sale will both be filed and served to you either by mail or by the Sheriff depending on the state you are in. By this point, public notices would have been posted for everyone to see.
Sometimes the lender will also put the foreclosure sign up infront of the home that is being foreclosed on. This part of the mortgage foreclosure process is the worst for homeowners because friends and neightbors can see that they are in foreclosure and it is embarrassing.
The homeowner usually has few chances to pay off the mortgage balance and get the home back in his or her name. However, most people in foreclosure cannot find money to pay off the bank and getting a new loan can only lead to more problems. The last day a homeowner can reclaim the home is about six days before the foreclosure auction.
When the day of the trustee’s foreclosure sale arrives, the lender will auction off the foreclosed home to the highest bidder. This is the final stage of the mortgage foreclosure process when the lender can finally get rid of the property and get some of the money back. Highest bidders are often people looking for cheap homes to fix or move into. Many of them are real estate investors.
Tags: Foreclosure
