From start to finish, the foreclosure process is one of the only issues I have not yet touched on in a less than tangential way in my previous writings examining foreclosures, mortgages, and real estate. Although this is a broad subject handled differently in each state, a brief overview can help homeowners prepare for, deal with, and recover from a financial catastrophe that prevents them from making their mortgage payments. Homeowners may have trouble determining whether they are eligible for mortgage assistance programs without understanding the foreclosure process. They risk losing their homes because they choose the wrong alternative to working on or squander time hunting for a perfect answer when none exists. They can avoid both outcomes by being familiar with the bank’s and the court’s roles in the foreclosure process.
Whenever a homeowner faces financial hardship, such as the loss of a job or a significant sickness or disability, they should start worrying about foreclosure. Homeowners following this site for any time know that having an emergency fund is crucial. However, they should not count on their savings to last over a few months. If they are having trouble making ends meet but haven’t missed a mortgage payment yet, it’s also a good idea to contact the mortgage servicer and explain the issue, stressing that things aren’t entirely out of control. Lenders may agree to a temporary rate reduction or to homeowners’ requests to temporarily suspend payments in exchange for later repayment when their income has improved.
However, the risk of foreclosure increases when homeowners fall behind on their mortgage payments without first making alternative arrangements with their mortgage lender. Since the bank assumes that most families that temporarily fall behind on their mortgage payments will eventually get back on track, it often will not foreclose on a property if only one or two settlements have been missed, especially if the owners are maintaining contact to explain the issue. However, at some point, the lender will likely initiate foreclosure proceedings to sell the property at public auction to recoup some of the loan’s overdue principal. They will start the foreclosure procedure whenever they determine this is the most practical means by which they can be repaid.
Instead of handling the foreclosure process in-house, banks typically hire local attorneys to submit the necessary paperwork to the county court and distribute public notices. The attorneys will try to contact the borrowers to discuss the possibility of resuming loan payments or paying off the debt. The lender’s legal team will file suit against the homeowners who cannot afford the cheaper options. In this case, the homeowners will be served papers and asked to attend a default hearing. They may be given more time to avert foreclosure if they appear in court. Most homeowners would probably try to avoid this hearing at all costs out of fear of being immediately sued and forced into a debtor’s prison for failing to pay their mortgage. The homeowners’ attorneys will work toward a sheriff sale once the lender receives the default judgment.
Most states require notice of the sheriff’s sale to be publicized in local media or public forums before the sale occurs. Homeowners may learn about the foreclosure auction for the first time through a friend or relative who sees the property listed in the newspaper and contacts them. The process is moving swiftly toward a point where the family will no longer own the home, and there will be no way to stop the sale. Although the sheriff auction can be halted, allowing the homeowners more time to avoid foreclosure, the time to explore a practical alternative is now. The more prolonged the homeowners wait to try and salvage their homes, there will be less of the possibility of success.
Beginning bids in sheriff’s sales are typically predetermined but might range from one county to the next. Sometimes, an outsider will outbid the homeowner at the auction and end up with the house. However, in most cases, the bank will purchase the property back, paying off the loan and regaining possession of the home with its funds. Within a week to a few weeks following the sale, the sale can be certified, the homeowners’ names will be removed from the title, and they will no longer have the right to continue residing in the home (unless a redemption period is provided for by state law).
Homeowners who have had their properties foreclosed on are often offered a “redemption period” during which they can remain in the property and seek to sell, refinance, or pay off the debt. Lenders cannot begin eviction procedures until redemption has ended, and homeowners are not need to have any intention of keeping the property. The legislation allows homeowners to reclaim their property even though the bank technically owns it. Homeowners should familiarize themselves with the foreclosure safeguards afforded by the laws of their local state because not all states have a redemption period, and the amount of time varies significantly from state to state.
The eviction process will commence once the sheriff sale has been confirmed in jurisdictions that do not allow for redemption after the auction or once the redemption period has ended in states that provide such protections. The court and the lender’s lawyers will send the homeowners further paperwork to appear at a hearing to force them to vacate the property by a specific date. Homeowners that show up to this hearing may be able to get more time to leave their property or perhaps repurchase it from the bank. If they don’t show up, the lender gets possession, and the sheriff is called to effectuate the eviction.
It may take a week to a month from when the sheriff is called until the homeowners are physically removed from the property. Foreclosure victims may have a few weeks to find a new living place. Still, they shouldn’t waste time because the department’s time and resources are limited, and many other investigations and foreclosures are waiting. Despite the sheriff’s customary practice of posting a notice at least three days before eviction, three days are not much time to pack up a whole house and go. The family may be able to negotiate for a few extra days or a week at most to reach a peaceful solution, but they should not count on being able to halt the eviction process entirely. If the foreclosure process has reached this point, the former owners should focus on moving on with their lives and making a fresh start rather than facing an embarrassing eviction in front of their neighbors.
Homeowners should begin their investigation into the foreclosure process by understanding the foreclosure laws in their state. This will fill in many of the blanks left by the preceding description, including the time required for each stage and the duties of both the borrower and the lender. Knowing the ins and outs of the foreclosure process is no guarantee that a homeowner will be able to save their property, but it will give them a far better idea of what they can do to stop the process and how much time they have left to do so.
The goal of the ForeclosureFish.com website is to assist homeowners in avoiding foreclosure by giving them access to free foreclosure information and guidance. Foreclosure victims are encouraged to put together a thorough strategy to avoid foreclosure with the help of hundreds of blog entries, articles, and instructional tools. Learn more about foreclosure and how to stop it by visiting ForeclosureFish.com today.