The foreclosure process may seem daunting at first, but the basic steps are not that complicated.
The foreclosure process will normally begin around three-to-six months after the borrower misses the first mortgage payment. At this point of the process, the borrower may be able to work something out with the lender. Avoiding the lender will typically accelerate the foreclosure process. If the process commences, the borrower has the right to stop the foreclosure at anytime during the process by paying off the debt.
One caveat about the foreclosure process – each state is different in their timelines, as well as some of the steps in the process. However, there are some basic steps that most states follow. Depending on the state, the foreclosure can take anywhere from 27 days to over a year. The process is generally broken down into two major phases: Pre-foreclosure Period and Notice of Sale / Auction.
The pre-foreclosure phase normally begins after the lender files a Notice of Default or Notice of Pending Lawsuit with the court. The lender is required to notify anyone impacted by the default. There is a specified timeframe between the court action of the Notice of Default and the second phase of the process. However, this timeframe differs for each state. For example, California requires three months after the Notice of Default before the lender can file a Notice of Sale / Auction, while Florida can be 20 days.
Notice of Sale / Auction
After the state-authorized prescribed timeframe has passed, if applicable, the lender can then file a Notice of Sale or Notice of Auction. Normally, the notice must be published for a specified amount of time. Once the auction occurs, the winning bidder may take possession of the property in a certain amount of time if no one disputes the sale.
In some states there is a redemption period, where a borrower may redeem the property if the note and applicable fees are paid during the redemption period. However, not all states provide for a redemption period.
While the foreclosure process is similar in most states, it is imperative to know the steps and timelines individual state mandate.