Property foreclosure is the last thing a homeowner wants to face. Unfortunately, thousands of people face foreclosure every year. Many homeowners think that a foreclosure notice means they will eventually lose their home, but that isn’t always the case. A foreclosure notice is only one step in a process that can take months. During that time, you’ll have many opportunities to bring your loan current and keep your house, but only if you understand how the foreclosure process works.
Below you’ll find the basic steps of foreclosure. Keep in mind that this is a general overview of the process. Each state has its own laws regarding the foreclosure process.
Missed Payment Notices
Every mortgage lender expects to be paid on time, but most understand that things happen in life. Many lenders offer a ten-day grace period on your payments. As long as your lender receives your payment within ten days of the due date you should be fine.
If they haven’t received your loan payment by then, you can expect a letter notifying you that your payment is late and needs to be paid quickly in order to avoid further action, such as the start of foreclosure proceedings. At this point, the missed payment may be noted on your credit report and you’ll likely need to pay a late fee, but the lender is unlikely to take further action.
Notice of Default
If your payment is late by 30 or more days, your lender may issue a notice of default. A notice of default is required prior to your lender beginning foreclosure proceedings. A notice of default is essentially a warning from your lender that you need to bring your payments current or you can potentially lose your home.
A notice of default contains:
- Information about you and your property
- The amount you’re behind
- How late your payments are
- A statement that you are in default according to the terms of your mortgage agreement
Notices of default often contain language explaining that if you don’t pay all late payments immediately, the lender will take further action up to, and including, foreclosure.
If you are unable to satisfy the terms of the lender’s default notice, you will eventually receive of notice of foreclosure. This simply states that the bank has started the foreclosure process and your house has been scheduled to be sold at auction. A foreclosure notice contains information pertaining to:
- How much you currently owe on your loan
- The interest rate of your loan
- The foreclosure auction date, time, and location
- Your lender’s name
- Contact information for the lender’s attorney
Prior to the auction date, you still have the opportunity to maintain possession of your property. In some cases, you will only need to bring your payments up to date, but most often you will need to either pay off the entire loan or obtain new financing.
Bidding at the foreclosure auction opens at the amount owed on the mortgage plus any interest and fees owed. The property goes to the highest bidder. If there are no bids, the mortgage lender becomes the owner by default.
In many states, once your home has been purchased at auction you lose all rights to it must move out or face eviction. However, some states offer homeowners a redemption period of up to six months allowing them to buy back their property.
While buying a foreclosure can present some challenges, it also opens up a wealth of opportunities. Get access to foreclosure addresses, auction dates and locations, loan history and more with our foreclosure property search.