What Is Meant by Bank Foreclosure?
Bank foreclosure is when a property is repossessed by the bank, due to the homeowner defaulting on his mortgage payments. As of October 2010, it is estimated that one out of 10 homes are in the bank foreclosure process, or are so delinquent they will be entering the foreclosure process soon.
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Pre-foreclosure
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When a homeowner misses her first mortgage payment, the bank will contact the defaulting homeowner by letter or by phone. The bank will try to make arrangements with the homeowner so that she does not fall further behind in payments.
Notice of Default
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A homeowner will receive a notice of default from his lender after his mortgage payment is 60 to 90 days past due. This notice is usually received certified mail, and gives the homeowner a certain amount of time to bring the defaulted loan current. Once that period of time has expired the defaulted loan will be turned over to the banks legal department to begin the foreclosure proceedings.
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Trustee Notice
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A notice of trustee sale will be prepared and published in a legal newspaper once each week for at least three weeks, and a sale date will be set for the homeowner's property. A copy of the notice of trustee sale will be mailed to the homeowner, another posted on his property, and another copy will be posted at the location where the sale is to take place. All names of persons listed as owners on the property will be printed in the newspaper along with the property address, a legal description of the property, how much is owed on the property, the time and location where the sale is to take place, and the opening bid amount requested by the bank's legal office.
Auction
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Once the date of the trustee sale has been reached, the homeowner's property will be sold to the highest bidder. A trustee sale is usually held on the county courthouse steps, and potential bidders must bring a certain amount of cash to be able to bid. A cashier's check written to a bank's legal department in the amount of $5,000 is the most common requirement for potential bidders.
Solutions
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There are solutions to avoiding a bank foreclosure -- loan modification, forbearance plans and short sales, to name just a few. The first step is to keep in communication with your bank when you start missing payments, or if you foresee missing future payments.
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References
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