Foreclosure is a word that strikes fear in to the hearts of many homeowners , especially considering the current economic situation . Foreclosure is the process where by a lender reposseses real property after the borrower has fallen into default on their mortgage . Here is how foreclosure works.
The foreclosure process is initiated when the borrower fails to make their mortgage payment on time. Normally, the mortgage must be at least 30 days behid before a lender will begin foreclosure procedings, and many times it will be much longer . When they are more than 30 days late the borrower is said to be in default. If you are the homeowner, you will receive a formal notice from your mortgage holder that your loan is in default. At that time , the lender’s legal department normally files a notice with the court showing their intent to foreclose. The lender is not bound by law to begin the procedings immediately after the 30 day window expires , but they are within their legal rights to do so, and many mortgage holders want to get a return on their investment as soon as possible. The speed with which they proceed depends on their internal policies, your property, and the local market, their backlog, and various other factors. .
Different states have different regulations regarding when lenders can submit the actual foreclosure notice, however, and although many of the events are the same, when they occur may happen at different times in different states. For example, in Maryland, the bank must wait until 90 days after the loan is in default to actually file the paper work. In addition, they must also send the borrower a notice of intent to foreclose a full 45 days before they actually file the foreclosure papers.
The situation in California is a bit different. There, the bank is required to formally make contact with you, attempt to make alternative payment arrangements, and find a way that the foreclosure can be avoided. The paperwork can not be filed before 30 days after this contact is made. If no alternative arrangements can be made to stave off foreclosure, the homeowner will then be served with an official Notice of Default. After they have been served, they then have 90 days, after which a Notice of Sale must be formally served with a notice of sale .
The notice of sale only serves to inform the property owner that the lender intends to sell the property to satisfy the terms of the loan. There is still more time. They must then wait an additional 20 days before they can actually sell it at a foreclosure auction.
One of the states with the highest percentage of foreclosure in the past few years is Nevada. There , the process is somewhat different. Foreclosures in Nevada are not normally court proceedings, and are known as non-judicial foreclosures. The borrower must serve the borrower a notice of default, which gives them 35 days to make things right with their loan . If they don’t make their back payments or negotiate alternative arrangements with their bank, the bank can start to foreclose on their property .
A trustee will be appointed by the lender to effect the sale and recover the lender’s assets. They do this by invoking the power of sale clause that is a part of most residential real estate contracts in the state. A notice of sale must be served to the property owner, who then has 21 additional days before the actual sale. Although this time line makes it appear that a homeowner may have a mere 56 days before the foreclosure sale of their property, in reality Nevada foreclosure proceedings typically drag on for much longer. On most occasions it is closer to 6 months before the home is actually sold to satisfy the foreclosure terms.
From the examples above , you can see the foreclosure basically works the same way, but there are certainly differences from state to state. You best bet is to hire a good real estate attorney who specializes in this legal area. If you’re in this position, you may well be asking yourself “ How do I stop foreclosure?” The good news is that most lender really do not want to foreclose on your home. They want their money, sure, but the foreclosure process is messy and costs them resources they’d rather use for other things.
If you have hired an attorney to advise you on the intricacies of fighting foreclosure in your particular state, they will be able to help you navigate the tricky waters and get you through to the other side. It is possible to get the proceedings delayed long enough to allow the foreclosure to be stopped and alternative arrangements to be made. They may even be able to help you find some government help to stop foreclosure, or help you find a lender if you need to refinance to stop foreclosure.
Now that you know how foreclosure basically works, you are in a better position to do something about it. In any stressful situation it can be difficult to do the right thing, but when there is so much at stake, many people become paralyzed with fear and do nothing. That is a huge mistake. Now that you know what happens, you can begin to take action to solve your foreclosure problem.