What to Expect During a Foreclosure
When you stop making payments on your mortgage, it will only be a matter of time before your home goes back to the bank. While the process may vary from one state to the next, the basic steps are the same. Knowing what to expect can make the foreclosure process a little easier if it happens to you.
Other People Are Reading
-
Notice
-
When you are late on your mortgage payment, the lender will typically send you a payment reminder. This could come in the form of a phone call from a customer service representative or a mailed statement.
Acceleration Clause
-
If you still do not make your payment, the lender will send you an acceleration notice. In your mortgage, there is a clause called the acceleration clause. This allows the lender to speed up all of the future loan payments and require you to pay it at once. If you cannot pay the balance within a short period of time, the lender will move forward with the foreclosure process.
-
Judicial vs Nonjudicial
-
Some states have judicial foreclosure laws while others allow nonjudicial foreclosure. If your state is a judicial foreclosure state, it requires your lender to file a lawsuit and get a judgment against you before foreclosing. In nonjudicial states, the lender can simply file a notice and then foreclose on your home. You will usually get about 30 days' notice with either option.
Selling the House
-
At this point, the lender will attempt to sell your house through a foreclosure auction. The lender typically hires an auctioneer. Buyers make bids on your property, and if the reserve price is met, your house is sold to the highest bidder. If the reserve price is not met, the house will go into the portfolio of the bank. You may also have a redemption period which allows you to buy the house back within a certain amount of time, depending on state law.
-
