Foreclosure Process
From LoveToKnow Mortgage
There is no aspect of the foreclosure process that is pleasant for anyone involved. Most lenders want borrowers to retain their homes, and most homeowners want to avoid foreclosure if at all possible.
The Foreclosure Process
There is more than one type of home foreclosure, but the overall process is relatively similar in most instances. Laws and regulations regarding foreclosure can vary by state. In every foreclosure, however, it begins with the borrower not meeting a financial obligation and ends with the borrower losing ownership of the home.
The Beginning of Foreclosure
It is not completely uncommon for a homeowner to miss a mortgage payment. Sometimes the homeowner simply forgets to send in the payment, or financial difficulties make it difficult to scrap together the total sum of the monthly payment. Problems arise, however, when homeowners do not keep in contact with the mortgage lender to explain the situation.
The first mortgage payment that is missed technically starts the foreclosure process, because without a missed payment (whether for the mortgage, equity loan or taxes) there is no risk of foreclosure. On the other hand, after whatever initial grace period the mortgage company allows, it is highly unusual and unlikely for the lender to immediately initiate the foreclosure process. Instead, at this point, most lenders will attempt to contact the borrower to find out where the payment is.
Foreclosure Initiated
It isn't until approximately the third or fourth missed payment that the foreclosure process gets into full swing. It is important to note here that many lenders are willing to work with homeowners to renegotiate the mortgage loan or figure out an alternative way to avoid foreclosure, so this broad timeline applies to people who do not work out an arrangement with the lender regarding the delinquent loan.
A mortgage lender initiating the process of foreclosure does not stop the homeowner's options completely. It is usually possible late into the foreclosure to bring the loan back up to date and stop the foreclosure.
Foreclosure Sale
If the homeowner is unable to modify the loan or bring the loan up to date, the home is sold by the lender. In some instances it is still possible to reclaim the home by bringing the loan up to date or by seeking foreclosure financing, but the loan will now have additional fees accrued such as late fees, attorney fees and any other fees tacked on by the lender.
The point in a foreclosure when the sale occurs will not be a mystery to the homeowner. Legally, the homeowner must be notified of the date of the sale using a variety of methods so there is no mistake as to what is about to occur.
After the sale occurs, the process is not complete until the time period has expired when the homeowner can still claim the house back by paying the amount owed, including the fees. The length of time varies depending on the type of foreclosure and the state in which the foreclosure process takes place.
Navigating Foreclosure
If you are unable to avoid foreclosure, there are plenty of resources available to assist you in navigating the foreclosure process. This can be an extremely stressful and confusing time, but may be a little easier to handle if you have a good understanding of the entire process.
A competent and experienced attorney is a great resource when navigating through the foreclosure process. The Department of Housing and Urban Development can also be a great resource and may be able to refer you to an approved counselor who can reveal to you what to expect throughout the process. There are also many different organizations –nonprofit and for profit- who can help you better understand the foreclosure process, including:
Learn More
This page has been accessed 90 times. This page was last modified 21:11, 31 July 2009.
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