Understanding The Home Foreclosure Process

Note: The home foreclosure process is slightly different in every jurisdiction. The following is just a general overview of what you might be able to expect; however, this is not intended to be legal advice. If you are facing a home foreclosure, consult an attorney for the laws relevant to your situation.

There is nothing more stressful than losing your home. There were more than 3.5 million foreclosures in 2010. If you are not sleeping at night, it is important to understand the house foreclosure process. Even if you miss one payment a lender can still start foreclosure. The home foreclosure process starts with them sending you a letter informing you that you are 30 days late and to make your past-due payments immediately.

After you are 60 days late, the lender will send you a notice to accelerate. This means you must become current by paying the mortgage and any late fees that you have incurred. If you do not comply, the bank foreclosure procedure will continue. If the foreclosure process has started you may also be responsible for legal fees that have been incurred by the lender.

A demand letter is the next step. The lender will send you a letter requesting payment and if you do not comply you will be sent a notice of default.  If you do not respond to the notice of default within 30 days your home will be issued a notice of sale. This simply means an auction date will be set and the house will be sold.

The basic steps for a bank foreclosure are:

• The owner financed their home through a bank or REO
• The owner missed payments and failed to meet their obligations
• The bank or REO takes back the house
• The bank puts the property up for sale to recoup the borrowed money

There are many ways that you can stop the foreclosure process. Hiring a foreclosure lawyer can help you devise a plan that may allow you to keep your property. However, lawyers are expensive and let’s face it: if you can afford a lawyer you probably wouldn’t have been behind on your mortgage in the first place.

A Silver Lining…For Buyers

If you are in the market for a new home understanding the home foreclosure process could help you find a great investment as bank owned properties are priced to sell. The banks also want to get rid of the properties as quick as possible. This means that they will consider offers that are lower than the value of the property. While some say that bank owned properties are generally not in good shape, this is not necessarily the case. There are definitely some bargains out there. The trick is wading through all the crap first in order to get to the good stuff. If you are an investor, the housing market has never been better. Research your options and know what is best for you.