Basic Foreclosure Process Overview
30 Days Late on your Mortgage
This is when you miss a payment and you are notified by your lender that you
have 30 days to pay your past due amount in full. This will most likely
include late fees. Depending on your lender you may receive calls, letters
and even a letter of intent to foreclosure. Typically if you only fall one
month behind, you will not be at risk for foreclosure. Once you fall 90 days
behind on your mortgage, your mortgage lender can legally instigate the
It is right after this time in which it is the best time to rework your finances, make an effort to work out a compromise with your lender, or put your home on the market.
Notice to Accelerate
Once you are sixty days past due, you will get what is called a notice to accelerate. At this point, you will need to bring the loan current and nothing else will do, usually, to stop the foreclosure process. You will need to pay the past amount plus any late fees they assess you.
Notice of Default
After you become 90 days late on your mortgage the bank, an attorney, or local sheriff issues a Notice of Default (NOD) to the homeowner as a certified letter.The NOD outlines homeowner debt and last-ditch remedies for reinstating the mortgage. The NOD will be recorded with a local government agency and a date is selected for a foreclosure auction.
The final step is a
Sheriff's or Public Trustee's Sale. The lender's attorney will schedule a
sale of your property. The auction takes place either in the trustee’s
office or on the steps of the county courthouse. The opening bid is set by
the foreclosing lender and typically is equal to the loan balance, the
interest accumulated, and any additional associated fees. The highest bidder
on the property must pay in cash and generally has 24 hours to pay the
complete sum. Although some states will allow you to come up with the cash
needed and stop the foreclosure process, not all states will allow this to
occur. During the auction or sale if no bids are received
higher than the opening bid, the lender purchases the property and puts it
back on the market.
This is obviously something the lender wants to avoid.
In the event that a third-party did not purchase the property at the Trustee Sale, the foreclosure process enters a post-foreclosure stage. The lender now has ownership of the property and it officially becomes a bank-owned property, or a Real Estate Owned (REO) property. This often occurs when many of the properties up for sale at the auctions are worth less than the amount owed to the lender. The REOs are then listed with local real estate agents to be sold at liquidation auctions held at either an auction house or at the property.