Steps Before a Foreclosure
Going through a foreclosure is a process that can potentially devastate your credit and make it difficult to get financing again in the near future. Being able to identify the steps leading up to foreclosure can help you determine when it is imminent. Understanding the process can help you avoid foreclosure and work out a solution with your lender.
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Notice of Default
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When you are only slightly late on mortgage payments, your lender might send you a reminder notice to make your payment. If you do not make your payment at that point, the lender may send you a notice of default. This means that you have not lived up to your end of the mortgage contract and the loan has now defaulted. This can also be called a notice of intent to foreclose on the property. At this stage, you can usually make your payment and fix the problem relatively easily.
Filing of Lawsuit
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If you live in a state where judicial foreclosure is required, the lender then files a lawsuit against you with the local court system. This lawsuit is required before the lender can foreclose on your property. You will receive a summons from the court system to appear on the court date. In states where nonjudicial foreclosure is allowed, the lender will simply provide you with a notice of default and then a notice of sale to let you know that it is selling your property.
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Chance to Respond
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At this stage of the process, you have a chance to respond to the foreclosure proceedings. If you are in a judicial foreclosure state, you can contact the courts after the lawsuit is filed to let them know if you plan on contesting the lawsuit or simply allowing the foreclosure to happen. If you are in a nonjudicial foreclosure state, you can reinstate the mortgage by paying off what you owe. This will include any late balance as well as the fees associated with being late.
Intent to Sell
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The next step in the foreclosure process is a notice of intent to sell the property. This is a notice that the lender provides once the lawsuit is finalized; it tells you the lender will be selling your property in the immediate future. This typically gives you about 10 to 20 days before the sale will take place. Once the sale takes place, you do not necessarily have to move out of the property right away. This will vary from one case to the next.
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