What Can a Mortgage Company Do in a Foreclosure?

Mortgage companies and foreclosure

While the foreclosure laws vary from state to state, the foreclosure process that must be followed by mortgage companies is identical. A mortgage company can and cannot do certain things during a foreclosure process.

Collection Activity

After the first missed mortgage payment, the mortgage company can pursue collection activities. This can be done by phone calls and letters to the homeowner, informing him of the past-due payment or payments as well as any applicable late charges.

Notice of Default

Once the homeowner has fallen behind on payments, the mortgage company can send a notice of default via mail to the borrower. This notice informs the owner that she has defaulted on her original agreement with the mortgage company, and is the first step in foreclosure proceedings.

Notice of Acceleration

Approximately 30 to 60 days after the homeowner receives the notice of default, the mortgage company can send a notice of acceleration. This notice informs the owner that the entire amount of the mortgage is now due. This is the second step in foreclosure proceedings.

Notice of Foreclosure

After the notice of acceleration is sent by the mortgage company, the final step is the official foreclosure notice. The mortgage company can send this notice via certified mail or a process server, or utilize both methods. The notice of foreclosure informs the homeowner of the pending auction date, and serves as the final notice of non-payment.

Eviction

If the homeowner fails to vacate the property after the foreclosure auction is completed, the mortgage company has the right to evict him from the property. A sheriff is called to remove the homeowner from the premises and to dispose of all personal property that remains in the residence.

Deficiency Judgment

The mortgage company can file a deficiency judgment against the defaulted homeowner for the difference between the loan balance and what the property sold for. The mortgage company can also wait to file this judgment for up to five years after the foreclosure sale.

References

• Foreclosure and Eviction
• Foreclosure Overview