What happens during a foreclosure?

What happens during the foreclosure process varies from state to state. So, in order to understand exactly how much time you have, you need to locate your state’s laws and research the timelines and laws that pertain to your state.

While the process varies from one state to another, generally the home foreclosure process takes from 6-9 months. What is clear is that foreclosure is not a single event. In this process, the homeowner may have several opportunities to save their home by working on a loan modification with their lender or by performing a short sale and walking away legally.
There is a lot at stake and not only may you loose your home and credit history as well, but some of you are losing your marriages and sanity over this. Nobody wants to face a foreclosure, but knowing what to expect can help you see what options are available.

Hopefully you will choose to get educated and take the power back in your hands by getting active, having hope and fighting for your future. I have found that people who empower themselves come through this much stronger than those that stick their head in the sand.

I am telling you from experience, it feels so much better to fight and get educated than just throwing your hands in the air and giving up!

OK, now lets get back to the process…..

Generally after the 90th day of missed payments, which is 3 months delinquent, you can expect your lender, who usually works in tandem with your current mortgage servicer in order to file a court action called a notice of default or NOD which will legally start the foreclosure process.

 If after the notice of default (NOD) has been filed, the homeowner can’t pay the delinquent amount or work out a loan modification or short sale, the property will then be sold in an auction called a trustee sale. This notice will be sent to the you, posted on your front door, and published in a local newspaper.

For example, in California, court foreclosures only occur if a lender desires a deficiency judgment. However, in almost all cases, foreclosures in California are handled out of court. Again, this varies from state to state.

Non-judicial foreclosures are based on deeds of trust that contain a power-of-sale clause. The clause enables the trustee to initiate a foreclosure without having to file a lawsuit or go to court. The trustee is typically required to issue a notice of default and notify the borrower.

In states that have trust deeds like Florida, a trustee will sell your property at a trust sale, this process may take approximately four months. In states where you have a mortgage, a court proceeding will be required first, at which point a judge will allow the lender to take possession of the property, this usually takes about a year. During this time you can still make arrangements with your bank to prevent the foreclosure.

During the foreclosure, lenders issue a public notice that will be printed in the local newspapers announcing that you are in default on your payments. It basically says that the homeowner has defaulted on his or her mortgage and is used as a scare tactic.

 A copy of this notice is also mailed or posted on the front door depending on the law of the state where the property is located. This is also done to announce to other creditors and give them a chance to pursue any claims they may have against you for which your house is the collateral.

Unfortunately, these same notices will also identify you as prey to any local real estate investors or loan modification scammers who will be coming out of the wood work to tray and SCAM, oops I mean save you.

Be leery of anyone who cold calls you one the phone or sends you mail.

Often, homeowners are sent official looking mail and receive calls from what appear to be angles and they are actually dirty devils looking to steal you cash!

During this process, a homeowner can request what is called a loan workout and ask for a loan modification, short sale or deed in lieu of foreclosure. Often homeowners do not receive help until they are at least 30-60 days late on their mortgage.

I advise that all homeowners who think they may be late or are late to call, email, fax and mail their mortgage servicers until they get help. Document everything during this process because yes folks, it is a legal process and you may get sued.