What is the Process for Home Foreclosure?

The Basics

Home foreclosure describes when a creditor attempts to recover money that a person owes by taking a home and selling it at auction. The majority of home foreclosures happen when a person is unable to make payments on a mortgage, resulting in the bank that issued the loan evicting the party from the home and selling the property to another individual in an attempt to recover lost money. However, a foreclosure can happen in any situation where a person has been lent money and used the deed to a home as collateral.

The Process

Once the homeowner misses a mortgage payment the bank or other lending institution will send a letter in the mail stating such. At that point the homeowner must continue to consistently miss a number of succeeding payments. The bank or lending institution will continue to try to make contact with the person. If a repayment plan cannot be made to the satisfaction of both parties and payments continue to be missed, the bank will demand that the full amount of the mortgage be paid in full. This is perfectly legal as per the terms and conditions of a standard mortgage. As in most cases this will prove impossible, the bank will then begin the official home foreclosure process.

Sold at Auction

The bank or financial institution will send a specialized notice to the sheriff of the county where the property is located with information regarding the foreclosure process. At the same time, the bank begins the foreclosure process in court. The court will hold a hearing to discuss the terms of the bank's claim. The lack of payment by the homeowner will be reviewed, and the court will issue an order allowing the bank to continue with the foreclosure. The tenant will then be legally evicted from the property, and the bank will sell the home at auction to the highest bidder. A home foreclosure will then go on the individual's credit report and negatively affect it for years to come.

Time Span

The length of time it takes for a home to be foreclosed depends on the state. In general it takes at least six months from the time the first payment is missed to the time the tenant is evicted from the home. Once a bank has decided to foreclose, a lot of the waiting time depends on how long the bank takes to file certain pieces of paperwork.

References

• Foreclosure and Eviction
• Property Foreclosure Overview