No foreclosure is immediate. Lenders can begin a foreclosure soon after a borrower defaults on loan payments -- how soon depends on the laws in various states -- but this is only the beginning. A foreclosure process occurs by court actions, with lengthy required waiting periods between stages and the possibility of stayed writs and other delays. In the end, a foreclosure may take months before it actually reaches the point of a home auction. The NTS is a key stage in the process of a foreclosure, as it signals the approach of the foreclosure sale -- one of the last warnings that borrowers receive before eviction.
"NTS" literally means notice of trustee sale. In other words, the court will be seizing the property on behalf of the lender, passing it into the hands of an appointed trustee and arranging an auction date for that trustee to try to sell the house for the remaining amount owed on the mortgage. The NTS is a legal document and an announcement. It is typically published in all local newspapers to notify buyers, sent directly to the borrower as a warning and may be available through various online services as well.
The NTS is not the first notice that borrowers receive -- in fact, it tends to be one of the last. Most states require lenders to first send a notice of default when they are beginning the foreclosure process to warn borrowers that legal action has been taken. A notice of eviction is also sent to borrowers to give them a deadline to leave the property or otherwise be removed. The notice of foreclosure sale is an actual judgment that creates the sale and authorizes the publishing of the NTS.
The foreclosure sale itself can have multiple outcomes. The trustee conducts the sale either at the home or at a courthouse and may present several foreclosed homes in a row in various bidding opportunities (more common since the house market crash). Interested bidders must be present and must at least bid the minimum amount set to cover the lost mortgage. Bidders must have the funds on hand to present to the trustee in order to buy the property. If no bidder purchases the property, then possession is given to the lender to sell the house on the real estate market.
There is a period of time, often several weeks, between the NTS and the actual foreclosure sale. This gives the borrower time to arrange an alternative. Ideally, the borrower should arrange a debt restructuring with the lender at the notice of default, but there is often a chance between the NTS and sale to come to a last deal involving different loan terms or a short sale.
What Happens to Liens in a Foreclosure?
Liens give a lender or creditor the right to hold real estate as collateral for repayment of a debt. First and second...