Foreclosure processes are different in every state, ranging from the notices that must be posted or mailed, redemption periods, scheduling, notices issued regarding the auctioning of the property; however, a general understanding of what to expect can be found on in the foreclosure timeline below. In general, mortgage companies start foreclosure processes about 3-6 months after the first missed mortgage payment. Late fees are charged after 10-15 days, however, most mortgage companies recognize that homeowners may be facing short-term financial hardships. It is extremely important to stay in contact with the lender after the first month of missing a payment.
Three types of foreclosures may be initiated at this time: judicial, power of sale (non judicial) and strict foreclosure. All types of foreclosure require public notices to be issued and all parties to be notified regarding the proceedings. Non judicial foreclosures occur if your mortgage has a Power of Sale clause allowing the mortgage provider to auction off the home after a warning and waiting period. Nonjudicial foreclosures are often faster process than judicial foreclosures as they do not involve having to go to court. Once properties are sold through an auction, families have a small amount of time to find a new place to live and move out before the sheriff issues an eviction.
Judicial Foreclosure. All states allow this type of foreclosure, and some require it. The lender files suit with the judicial system, and the borrower will receive a note in the mail demanding payment. The borrower then has only 30 days to respond with a payment in order to avoid foreclosure. If a payment is not made after a certain time period, the mortgage property is then sold through an auction to the highest bidder, carried out by a local court or sheriff's office.
Power of Sale. This type of foreclosure, also known as statutory foreclosure, is allowed by many states if the mortgage includes a power of sale clause. After a homeowner has defaulted on mortgage payments, the lender sends out notices demanding payments. Once an established waiting period has passed, the mortgage company, rather than local courts or sheriff's office, carries out a public auction. Non-judicial foreclosure auctions are often more expedient, though they may be subject to judicial review to ensure the legality of the proceedings.
Strict Foreclosure. A small number of states allow this type of foreclosure. In strict foreclosure proceedings, the lender files a lawsuit on the homeowner that has defaulted. If the borrower cannot pay the mortgage within a specific timeline ordered by the court, the property goes directly back to the mortgage holder. Generally, strict foreclosures take place only when the debt amount is greater than the value of the property.
FORECLOSURE TIMELINE
First monthly payment missed the lender may contact the borrower by letter or phone.
Second monthly payment missed the lender will begin calling to discuss payments. Take these calls and talk to the lender to explain the situation. Making a single payment can prevent one from falling three months behind.
Third monthly payment missed will result in the borrower receiving a "Demand Letter" or "Notice to Accelerate" from the lender stating the delinquent amount, giving (30) days to bring the loan current. If the overdue debt is not settled after those (30) days, the lender may begin foreclosure proceedings.
Fourth monthly payment missed will incur all attorney fees as part of the delinquency.
Sheriff's or Public Trustee's Sale will have the attorney schedule a sale of the real property. This is the actual day of foreclosure. The borrower is notified of the date by mail or a notice is taped to the home's door. The time between the Demand or Notice to Accelerate Letter and the actual sale varies by state. In some states it can be as quick as 2-3 months. This is not the move-out date, but the end is near. The borrower has until the date of sale to make arrangements with the lender, or to pay the total amount owed, including attorney fees.
Redemption Period may occur after the sale date, depending on the state. The borrower will be notified of the time frame on the same notice for the Sheriff's or Public Trustee's Sale.