Home Foreclosures—Process Banks Take When Foreclosing On A Home
Losing your home is a scary thing, and since 2008 foreclosures have become more common. While they are now slowing down, some people are still struggling to stay afloat while the job markets pick back up. Knowing how a foreclosure works and when it starts will help you know how to plan and try to avoid the situation.
What Is A Foreclosure?
When you enter foreclosure, it means that your lender is taking your home back due to non-payment. Unlike credit card lenders who can’t do much besides call you all day, mortgage lenders can “repo” your home, known as a foreclosure. In the event of a foreclosure you will be forced out of your home once it is sold. You cannot refuse to leave, and after the sale has been made you cannot reverse your situation.
The Foreclosure Timeline
Most states follow a pretty standard timeline on foreclosures, but please be sure to check your state specifics if you find yourself worried about missing a payment.
- First Missed Payment – your lender will contact you likely within the first 15 days after a missed payment. Answer this phone call. The sooner you can get something set up and the more informed you keep your lender the better your chances of keeping your home.
- Second Missed Payment – you will receive more phone calls. Explain your situation and keep in touch, make small payments if you can, you will be able to make these types of arrangements.
- Third Missed Payment – you will receive a letter from your lender stating your delinquency, and you will have only 30 days to bring the account current or make arrangements if still allowed. This is called a “Demand Letter” or a “Notice to Accelerate”.
- Fourth Missed Payment – the end of your 30 days in your Demand Letter is close, if you have not yet paid or made arrangement your case will be referred to the lenders attorneys. You will be responsible for the attorney’s fees and the foreclosure process has officially started.
- Sheriff’s Sale – your lenders attorneys will schedule your house to go up for auction, to be conducted by a sheriff of public trustee. You will be notified in writing of the date of sale, and your home will be sold to the highest bidder. You have until the date of sale to contact your lender to make final arrangements or make payment.
- Redemption Period – after your home is sold at auction you have a set amount of time, often 30 days, to vacate the home. If you do not leave the sheriff’s office will issue an eviction and you will be forced to leave.
If you fear for a foreclosure, stay in contact with your lender at all times. Make payments when you can, even if they are small. If you only miss one payment, try to keep it that way and talk to your lender about how you can make up that payment.
Author Bio
Former attorney David M. Sandy now sells Memphis homes. He finds his previous bankruptcy experience helpful in dealing with foreclosures.
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Category: Foreclosure
