Timeline for Foreclosure

From LoveToKnow Mortgage

Although the exact timeline for foreclosure depends on the lender and the state the home is located in, there is a general timeline that all foreclosures follow. Regulations vary by state, and some lenders are more aggressive than others when initiating a foreclosure, so there is not an exact timetable that is followed in every circumstance.

Foreclosure Explained

Foreclosure involves the mortgage lender taking possession of a home after the borrower defaults on the loan. Mortgage lenders have various grace periods for payment, so while one lender might initiate foreclosure as soon as possible other lenders may give borrowers a little more time before moving ahead with foreclosure.

It is important to note that the very best way to approach a potential foreclosure situation is not with avoidance of the issue. A lender who cannot get in contact with a borrower regarding a late payment may be more inclined to aggressively move forward with a foreclosure than a lender who is working directly with the borrower in an attempt to allow the borrower to keep the home.

Understanding the Timeline for Foreclosure

The actual timeline for foreclosure varies depending on the state in which the home is located and the procedures of the mortgage lender. Keeping in contact with the borrower may stretch the procedures out a little longer to give borrowers the chance to catch up and stop the foreclosure process, but most foreclosures follow this approximate timeline.

Mortgage Payment Missed

Certainly not everyone who misses one mortgage payment winds up in foreclosure, but this is the first step in the process. This is the very best opportunity to avoid foreclosure; even if one payment is missed there is still a great opportunity to catch up and avoid foreclosure altogether.

If you know that you will be late with a mortgage payment, contact your lender before the payment is even due. Some lenders offer a one-time skip-pay without additional fees.

The Lender Attempts to Contact the Borrower

If the borrower does not contact the lender regarding the missed mortgage payment then the lender starts trying to contact the borrower. This usually begins whenever the grace period expires for a late payment, usually after fifteen days. Some lenders may wait longer.

The initial contact is sometimes via telephone. Lenders will also send notices through the mail in an attempt to collect payment. At this point, borrowers can still easily avoid foreclosure by sending in the late payment or working out a payment plan with the lender.

The Lender Loses Patience

After no payment has been received despite repeated attempts to collect, the lender refers the loan to an attorney to begin foreclosure proceedings. The borrower still has the opportunity to stop the foreclosure by bringing the loan up to date, but by this point there are undoubtedly plenty of extra fees tacked onto the loan. This makes the amount of money needed in order to bring everything up to date much larger than it initially was when the payment was first missed.

This step in the timeline for foreclosure usually occurs relatively slowly because the lender wants to give the borrower the opportunity to bring the loan to current status. A homeowner is usually months behind in payments before actual foreclosure proceedings are initiated by the lender.

The House is Sold

If the borrower fails to bring the mortgage loan out of delinquent status and is unable to work out an alternate payment plan with the lender then the lender sells the home at a foreclosure auction.

Borrowers can attempt to purchase their home at the auction, but in most instances the home is sold to another buyer. At this point the borrower no longer owns the home and must move out. The amount of time the borrower is allowed to stay in the home depends on the laws of the state and other factors.

After the Auction

Although foreclosure laws vary by state, after the auction the borrower is not allowed to simply walk away from the entire ordeal. They still owe whatever deficit exists from the original loan compared to the amount of money received in auction.

The entire process of foreclosure typically takes anywhere from five months to a year. If you are facing foreclosure you should look into various foreclosure assistance programs in an attempt to keep your home.

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