Foreclosure - Understanding the Foreclosure Process
Understanding the Foreclosure Process
It is important to remember that when you have questions about the foreclosure process that the laws differ from state to state. What might commonly be done in one state might be illegal in another. If you are involved in a foreclosure at the present time, you would be well advised to consult an attorney about what you should expect since every state has a fairly unique foreclosure process. If you are simply looking for general information, you will find everything you need to know about the foreclosure process right here. Foreclosure is a stressful process for all parties involved, but if you understand the process you might be able to lessen the stress and even stop the process before the house is sold.
Leading up to the foreclosure
First, the customer will miss mortgage payments and the bank will send late notices. When the customer still does not make a mortgage payment, the bank will attempt to contact the customer in writing as well as by phone to resolve the missed payments and see if they can’t get things back on track. If no arrangements can be made and the customer continues to miss their payments, the bank will demand payment under the note in full based on an acceleration clause. Once the acceleration clause is put into effect the bank is allowed to demand the full amount of your mortgage be paid immediately because you did not live up to your end of the deal. Once this stage has been reached the bank simply will not accept monthly payments from you, but may accept a considerable amount such as three to six months worth of mortgage payments to reinstate the loan. If no payment arrangements are made between the customer and the bank, the situation progresses into the formal foreclosure process and it’s a good time to hire a lawyer.
Formal Foreclosure Process
The bank will send a notice of foreclosure to the residents of the home, usually by sheriff or another court official. The bank will then begin filing papers with the court to get the ball rolling in a legal way. Legal notices will also appear in newspapers stating that the home will be foreclosed on in most areas. If no payments are made with the lender, notice and waiting periods will officially expire letting the lender know that there is no way to reverse the foreclosure process. The court will then process the paperwork and will hold hearings regarding the banks claims, and the court will issue an order allowing the bank to foreclose on the home. Most lenders will quicken the pace by posting the notices in newspapers and appearing in court at the same time, drastically shortening the length of time it actually takes to foreclose on a home. After the court issues an order for foreclosure notices and ads will appear for a foreclosure sale in local papers to help the bank sell the home before any more time or money is lost. If there are no payment arrangements made or settlements reached with the customer and the bank by this time, the home will then be sold at auction to the highest bidder or it will be put up for sale by a foreclosure realtor.
The length of time that it takes for a home to be foreclosed on is usually six months or more, although this can differ from state to state. Because the bank does not want a home to be foreclosed on and would prefer that payment arrangements be made, the process is often put off. The length of time will also depend on how aggressively the mortgage holder pursues your case. Luckily, you do not have to move out of your house during the foreclosure process. Because the process takes awhile and the bank will consistently be trying to reconcile with you, you won’t have to leave.
When the home is sold at auction, you automatically become a tenant of the home that has been foreclosed on. The new owner must then take legal action to have you evicted. The new owner can immediately give you a 72 hour eviction notice, and if you fail to respond he or she must take the matter up in court. If a judge files against you, you’ll have ten days to appeal, but if you are unwilling to pay rent and the foreclosure was open and shut, the judge is not likely to rule in your favor. In all, it could be more than a year before you are actually forced to leave the home that has been foreclosed on. The judge can order you to be moved out of the home and give you as little as 48 hours to move your belongings out of the home. If you leave anything in the home the Sheriff will take it into custody and you’ll have to pay fees to get the items back. If you fail to move after the judge has handed down the order, you can be arrested. The whole eviction process can take anywhere from six weeks to six months, with the average case taking about a month and a half.
The thing that many people don’t understand about the foreclosure process is that it never has to be out of your hands. You can almost always turn the situation around by showing the bank or mortgage holder that you want reconcile the debt. If you are willing to make payments and talk to your bank about the missed payments, you’ll generally find that they want to work with you. It costs a bank time and money to foreclose on a home, so they really want you to step up and start paying on your home again. This is a good thing, because even if you feel as though you can’t possibly get on top of your mortgage again, all hope is not lost. Foreclosure is a big deal, but not something that you can’t get a hold on.
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