What Are The Steps in a Mortgage Foreclosure?

Foreclosure is the legal process by which a mortgage lender takes possession of property securing a mortgage loan. Governed by state law, foreclosures may be conducted by courts or civil proceedings, and timelines vary, but all have the same basic steps.

Demand Letter

Mortgage lenders typically send out demand letters when mortgage loans are two payments past due. This letter requests full payment of all amounts due and informs the homeowner of its intention to foreclose if the requested amount is not paid by a specific date.

Notice of Default

Foreclosure starts when a lender refers a case to an attorney or other agency that conducts the foreclosure. The foreclosure agent files a Notice of Default or Complaint, which declares the mortgage to be in arrears for a certain monetary amount and provides a date by which the defendant/homeowner must respond.

Public Record

Foreclosure is a legal process that is made a matter of public record through documents recorded in court or by a county recorder. This can lead to unsolicited contact from third parties.

Judgement /Notice of Sale

If the homeowners don't respond within the time allowed by law, a Judgment or Notice of Sale is filed. This document establishes the amount owed by the homeowner and provides the date, time and location of the foreclosure sale.

Reinstatement

Homeowners typically have until 24 hours before the foreclosure sale to reinstate their mortgage loans to a current status. They are required to pay all past due payments, late charges and foreclosure fees and costs.

Sale and Redemption

The foreclosure sale is held as stated in the recorded Notice of Sale or Judgment. The property is sold to the highest bidder; if no one bids, title reverts to the mortgage lender. Some states provide a time period after the sale during which the homeowner can redeem ownership by paying off the mortgage loan including interest and costs.