The foreclosure process can be confusing and understanding what will happen can help you to better understand what is happening and when. The pattern of the foreclosure process is as followed. It is important to note that this is only a guide and that each lender will do things a little differently. This is also a great time to remind everyone that I am not a lawyer and any specific questions about foreclosure should be asked of your lawyer.
During the first month you will have a missed payment. This starts the process. 15 days after your missed payment you will be charged a late fee if you have not yet made your payment.
As you near a month past your payment due date you will begin to get collection calls. Your loan is now in default status. By day 45 you will see that your late fees are accruing.
At 60 days past your last payment you will get a letter from your lender. They will give you a deadline to get all things current. If you have a conventional mortgage the loan is sent to an attorney for the foreclosure process to begin. By day 90 mortgage payments 1-4 are due. Day 91 in the Foreclosure process is significant if you have an FHA Mortgage as this is the date that your loan will be sent to attorneys and the foreclosure process will begin.
When you get a mortgage you promise to pay the monthy payments. When you don’t pay these installments in a timely fashion the lender calls the balance due. This is called the acceleration clause. We are now nearing 130 days since your last payment. At this time your acceleration letter expires and the lender does what is called Foreclosure by advertisement. This means that they run an ad in the local paper for 6 weeks. At this point in the process you can still pay all late payments . Attorney’s fees are added to the arrear or end of the loan. On day 144 in the foreclosure process the occupant of the property will be served with notice of foreclosure. Note that it says occupant? This lets others who may be renting or living in the home time to plan to get out.
Day 174 – this is the final day to pay back arrears. Tomorrow is the Sheriff’s sale at the courthouse in the county where property is located.
Once the sheriff sale has occurred you enter the phase of the foreclosure process called the redemption period. This time frame is typically 6 months long. There are some exceptions so again ask your lawyer how your situation will look.
During the redemption period the owner has a couple of options. They can sell their home or try to refinance and remain in the property. As of day 355 if the loan is not paid off in full or possession is not kept, the owner must surrender the property.
The entire process takes close to a year. If you are behind on payments the best thing to do is to contact your lender right away. Sometimes they will work with you to restructure or modify the loan. The longer you wait the less likely they will be to work with you.
Having the expert advice from your lawyer as you move through this process will be very beneficial.