Foreclosure by sale is a process in which a property is sold at a public auction to satisfy the home's debt in whole or in part. A foreclosure occurs when a property owner is behind on making payments on the mortgage, leading to the property being seized or sold.
The foreclosure process varies from state to state, but the process is generally very straightforward. The foreclosure process typically lasts up to 6 months. The process depends on whether the foreclosure is a judicial sale or a nonjudicial sale.
Pre-Foreclosure: After the property owner fails to make two to three mortgage payments (30-60 days), the property is considered to be in pre-foreclosure. When the property is in pre-foreclosure, lenders will usually send a demand letter demanding full and immediate payment of the loan, plus any legal and late fees incurred. The homeowner has 30 days to make the payments on the debt owed or the foreclosure process will be initiated.
Notice of Default: After 90 days of non-payment by the property owner, the foreclosure process enters into the legal process. A bank will issue a notice of default to a local sheriff to deliver to the property owner. The notice of default will be recorded by the government agency and a date will be selected for a foreclosure auction. A notice of default also paves way for investors and other homeowners to consult a short sale on the property.
Foreclosure Auction: A public foreclosure auction will take place and the property may be sold at the auction to the highest bidder. The lender issuing the default can also purchase the property and sell it independently in a private sale. At this time, the homeowner must vacate the property or an unlawful detainer will be filed to evict the homeowner if he or she is still living on the property after the sale.
Post-Foreclosure: If proceeds of the sale are insufficient to satisfy the debt being foreclosed on, the lender can bring personal action on the homeowner borrower for the deficiency. In some states, the borrower may have a right to redeem after a foreclosure by paying the entire sale price.
At anytime prior to a foreclosure sale, the homeowner or mortgagor may redeem the property by paying the amount due. This is known as the right of redemption. If the mortgage contains an acceleration clause, the full balance on the mortgage must be paid in order for the homeowner to redeem.
The best way to avoid foreclosure is to ensure that your mortgage payments are made regularly and on time. However, there are several ways homeowners can avoid foreclosure proceedings before they occur:
Foreclosure can be a costly and complicated process. You should speak with an attorney regarding your foreclosure situation in order to determine your possible courses of action. A real estate lawyer can provide valuable legal information as well as representation in a court of law should a lawsuit become necessary. Contact a lawyer to learn more about your state’s foreclosure laws.
Last Modified: 05-30-2018 12:57 AM PDTLaw Library Disclaimer
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