How Long Does It Usually Take Before a Foreclosure?
The length of time it takes to complete a foreclosure varies greatly, depending on state laws. The foreclosure time-frame can also vary between lenders. There are two types of foreclosures, judicial and non-judicial. Both types of foreclosures have a certain procedure that must be followed. If you are concerned about foreclosure, it is important to fully understand the process.
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Pre-Foreclosure Period
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As soon as a borrower misses a payment, the clock begins ticking. Homeowners should communicate openly with their lenders to explore possible options to avoid foreclosure. A loan refinance, forbearance and modification are common methods that help homeowners prevent foreclosure. During the pre-foreclosure period, borrowers will likely receive phone calls and letters from the lender. The FTC encourages homeowners to remain in their homes instead of abandoning the property. The lender and court are less likely to negotiate with homeowners who walk away from a home.
Non-Judicial Foreclosure
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A non-judicial foreclosure is executed without the court. Some states allow both types of foreclosures. If your mortgage deed contains a power of sale clause, the lender has the authority to sell the home in the event of default. In a non-judicial foreclosure, the lender files a Notice of Default with the county recorder typically after the homeowner is 90 days late. Within 10 business days of filing the notice, the homeowner will receive a copy of the Notice of Default. The amount of time a homeowner has before the sale date will vary. Most state laws require the lender to send the homeowner a Notice of Sale and publish the sale at least 20 days prior to the sale date.
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Judicial Foreclosure
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A foreclosure that occurs through the court is referred to as a judicial foreclosure. The judicial foreclosure process generally takes longer than a non-judicial foreclosure. The lender must file a lawsuit against the homeowner to obtain a court order to foreclose the property. The lender turns the loan over to an attorney to handle the case. The Notice of Default is filed with the court. Homeowners are served a copy of the notice and required to file a response within a specified number of days. At this time, the borrower can challenge the information stated in the notice. The lender will need to prove the homeowner is in default. In some states, the homeowner can attend a trial to argue against the foreclosure. If a homeowner objects the foreclosure, it can extend the foreclosure process. Evidence must support the borrower's claim that the payments are not delinquent.
Foreclosure Auction
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The Notice of Sale must be published or posted in a public place. Some states require the lender to report the sale in the local newspaper for several weeks. The sale notice may also be placed directly on the property prior to the foreclosure sale. A foreclosure is sold through a public auction held either by the sheriff or trustee. The auction can take place on the courthouse steps or at the property itself. The price is usually equal to the balance remaining on the loan. Even after a foreclosure sale, many states allow homeowners a final opportunity to redeem the home. The right of redemption grants the homeowner a period of time to gather the entire loan balance plus fees to annul the sale. The right of redemption exists only in a judicial foreclosure.
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