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