What Happens in Foreclosure?
The housing crisis currently plaguing the U.S. has made "foreclosure" an all-too-familiar word to many ears. But what happens in foreclosure? The foreclosure process varies greatly from state to state.
If you're facing foreclosure and in need of help understanding what happens during foreclosure where you live, you may want to contact a lawyer in your area.
The Foreclosure Process: A General Outline
Here's a look at the major steps that happen in the process of mortgage foreclosure.
- Missed mortgage payment. This is what touches off the foreclosure process. By not paying on time, the homeowner breaks the terms of the mortgage agreement. If a bank is threatening foreclosure but you haven't missed any payments, there may have been an error on the bank's part, which you'll want to work to resolve.
- Late charges and contact from the mortgage servicer. Usually between 16 and 30 days after the first missed payment, the mortgage servicer attempts to make contact with the homeowner about the situation. In most cases, a late fee will be assessed to the account.
- Letter of breach or demand. Between days 45 and 60, if the homeowner does not make payments, the mortgage servicer will send a letter indicating that the homeowner has breached the terms of the mortgage contract. In many cases, the homeowner is given a period of 30 days to resolve the issue (i.e. pay the amount owed).
- Foreclosure proceedings begun. Between days 90 and 105, the mortgage servicer begins the foreclosure process by assigning a lawyer to handle foreclosure proceedings. Some states allow the mortgage servicer to publish a notice of foreclosure in local papers, along with information about the borrower's debt.
- Foreclosure sale. Here's where state laws vary significantly. The actual foreclosure sale could happen at any time between days 150 and 415 – to determine the foreclosure laws where you live, you may want to speak with a bankruptcy lawyer. The difference in time period can be attributed to the fact that some states require mortgage lenders to pass through the court systems in order to foreclose and others do not. In non-judicial foreclosure states, homeowners may have as little as two months to get their affairs in order before leaving their house; in judicial foreclosure states, that period could be as long as a year.
- Redemption period. In some states, homeowners are offered a final grace period after the foreclosure sale in which they may reclaim their house by buying it back.
Foreclosure laws are complicated, and the prospect of facing an impending foreclosure can be intimidating. If you need help in your situation, consider speaking with a personal bankruptcy attorney today. Simply fill out the quick case review form to connect with an attorney now.