How to Know How a Foreclosure Works

If you haven't been able to sell your house and you don't just walk away, your lender will probably foreclose. Here's what to expect. After you miss a few payments, the lender will send you a letter reminding you that your payments are late and imposing a late fee. if you don't respond, the lender will wait another 60 days or so and then send you a notice telling you that your loan is in default and that it will begin foreclosure proceedings unless payment is received.

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Instructions

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1. After getting this notice, you have about 90 days to "cure" the default and reinstate the loan-pay all your missed payments, late fees and other charges. The only way to avoid foreclosure is to sell the house during this period. If you were being picky before, now is the time to accept any offer.

2. If you don't cure the default, the lender applies to a court for an order allowing it to sell your house at an auction. Then the lender publishes a notice of the sale in a newspaper. Between the dates when the notice is published and the sale takes place, most lenders let you reinstate the loan by making back payments and penalties.

3. If you don't reinstate the loan or sell the house, the lender will "accelerate" the loan. This means you no longer can reinstate the loan. The only way you can keep your house is by paying the entire balance immediately.
   
   If you don't pay the balance, your house will be sold at a foreclosure sale. Anyone with a financial interest in your house will attend. The house is sold to the highest bidder.

Tips & Warnings

• Even if your problem looks long-term, the lender may try to work with you to avoid foreclosure. In the past, lenders were quick to start foreclosure proceeding. In recent years, however, they have looked at new ways to work out mortgage delinquencies short of foreclosure.
• Stay on top of your mortgage. If you know you are going to be late or miss a payment call them and let them know. They are great with helping homeowners keep their homes. There is no money in foreclosure for the lender who has your bank note. They want you to keep your home.

Resources

• www.whatdoidonow.biz

[tundranut]

on 3/4/2009 Very nice. 5*

[changeling]

on 1/16/2009 Great info.

[wcs40110]

on 12/22/2008 There is so much to know but you got the basics. Thanks for sharing

[cwarren8135]

on 12/8/2008 I liked the article. I gave it five stars.