The Home Mortgage Foreclosure Process

Typically the mortgage company will start actual foreclosure proceedings (the "Demand Letter" or "Notice to Accelerate") about 90 days from the time you miss the first payment but the home mortgage foreclosure process starts much sooner. Do not wait until you receive a foreclosure notice to take action on saving your house.

Late fees are charged after 10-15 days. However, most mortgage companies recognize that homeowners may be facing short-term financial hardships. It is extremely important that you stay in contact with your lender within the first month after missing a payment.

After 30 days the lender will typically begin to take action to collect the past due debt. If you do not call the bank and ignore the calls of your lender, the foreclosure process may get started much sooner than if you contact them.

Three types of foreclosures may be initiated at this time: judicial, power of sale and strict foreclosure. All types of foreclosure require public notices to be issued and all parties to be notified regarding the proceedings. Once properties are sold through an auction, families have a small amount of time to find a new place to live and move out before the sheriff issues an eviction.

Judicial Foreclosure - All states allow this type of foreclosure, and some require it. The lender files suit with the judicial system, and the borrower will receive a note in the mail demanding payment. The borrower then has only 30 days to respond with a payment in order to avoid foreclosure. If a payment is not made after a certain time period, the mortgage property is then sold through an auction to the highest bidder, carried out by a local court or sheriff's office.

Power of Sale - This type of foreclosure, also known as statutory foreclosure, is allowed by many states if the mortgage includes a power of sale clause. After a homeowner has defaulted on mortgage payments, the lender sends out notices demanding payments. Once an established waiting period has passed, the mortgage company, rather than local courts or sheriff's office, carries out a public auction. Non-judicial foreclosure auctions are often more expedient, though they may be subject to judicial review to ensure the legality of the proceedings.

Strict Foreclosure - A small number of states allow this type of foreclosure. In strict foreclosure proceedings, the lender files a lawsuit on the homeowner that has defaulted. If the borrower cannot pay the mortgage within a specific timeline ordered by the court, the property goes directly back to the mortgage holder. Generally, strict foreclosures take place only when the debt amount is greater than the value of the property.


Foreclosure laws vary from state to state but this is a customary timeline.

First month missed payment – your lender will contact you by letter or phone.

Second month missed payment – your lender is likely to begin calling you to discuss why you have not made your payments. It is important that you take their phone calls. Talk to your lender and explain your situation and what you are trying to do to resolve it. At this time, you still may be able to make one payment to prevent yourself from falling three months behind. A housing counselor can help.

Third month missed payment – after the third payment is missed, you will receive a letter from your lender stating the amount you are delinquent, and that you have 30 days to bring your mortgage current. This is called a "Demand Letter" or "Notice to Accelerate." If you do not pay the specified amount or make some type of arrangements by the given date, the lender may begin foreclosure proceedings. They are unlikely to accept less than the total due without arrangements being made if you receive this letter. You still have time to work something out with your lender. A housing counselor can still help.

Fourth month missed payment – now you are nearing the end of time allowed in your Demand or Notice to Accelerate Letter. When the 30 days ends, if you have not paid the full amount or worked our arrangements you will be referred to your lender's attorneys. You will incur all attorney fees as part of your delinquency. A housing counselor can still help you.

Sheriff's or Public Trustee's Sale – the attorney will schedule a Sale. This is the actual day of foreclosure. You may be notified of the date by mail, a notice is taped to your door, and the sale may be advertised in a local paper. The time between the Demand or Notice to Accelerate Letter and the actual Sale varies by state. In some states it can be as quick as 2-3 months. This is not the move-out date, but the end is near. You have until the date of sale to make arrangements with your lender, or pay the total amount owed, including attorney fees.

Redemption Period – after the sale date, you may enter a redemption period. You will be notified of your time frame on the same notice that your state uses for your Sheriff's or Public Trustee's Sale.

Redemption is a period after your home has already been sold at a foreclosure sale when you can still reclaim your home. You will need to pay the outstanding mortgage balance and all costs incurred during the foreclosure process.

Many states have some type of redemption period. The redemption period and availability is often determined by whether the foreclosure is judicial or non-judicial. And, timelines and procedures can vary greatly from state to state. You can find specific information about the redemption period of your state (if applicable) by reading the state laws on foreclosure.

http://www.foreclosurelaw.org

Important: Stay in contact with your lender, and get assistance as early as possible. All dates are estimated and vary according to your state and your mortgage company.

HUD sponsors housing counseling agencies throughout the country that can provide advice on buying a home, renting, defaults, foreclosures, and credit issues.

http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm