Home foreclosure process is the legal process of a mortgage or similar lender taking back your home after you default on your home loan. The foreclosure process affects thousands of Americans each year, with the number of foreclosures reaching record numbers since the real estate crisis of 2008. Going through foreclosure involves distinct steps, most of which allow you to continue residing in your home.
Initial Notices: Pre-Foreclosure
When you first miss a mortgage payment, your lender will send you an initial notice that your payment is late. Depending on the lender you have, this notice might be very courteous, but based on how your mortgage is written, the lender might have no choice but to tack on some late fees or additional penalties.
Following the first notice of late payment, if you don’t bring your account current, the lender might continue to send additional notices to inform you of the account delinquency. How many notices the lender is willing to send depends on your mortgage terms. Some mortgages are very strict, with lenders moving toward foreclosure after just one late payment and subsequent notice. Others are more lenient, letting you miss several payments.
The best thing you can do when you receive initial late payment notices is to contact the lender and explain your situation. In many cases, the lender will work with you to get you back on track. For example, they might let you pay your late payment in installments. They know that filing a foreclosure suit is costly and time-consuming, so sometimes it is in the lender’s financial best interest to help you.
Pre-Foreclosure is the Best Time To Reach Out to Onyx REI for a Fair All Cash Offer for Your Home! Do Not Wait!
The Pre-Foreclosure stage stage occurs when the homeowner has missed mortgage payments but before the property is officially foreclosed upon. During this period, the homeowner may receive a Notice of Default (NOD) from the lender, indicating that they are in danger of foreclosure. This is often the best time during the foreclosure process or us to assist the homeowner with a fair cash offer to purchase the property. At this time we can help the homeowner avoid foreclosure and salvage some equity. A cash offer from Onyx REI can provide a quick and hassle-free transaction that can benefit both parties.
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Filing of Foreclosure Paperwork by Lender
If you ignore the notices your lender sends you, or if you cannot work out an agreement with the lender, the lender eventually hires an attorney and files paperwork with the court to begin a foreclosure case. This is legally necessary because you have the right to defend yourself against claims of loan default. The lender cannot repossess your home and sell it until it has successfully proven the default happened.
Once the lender has filed the proper paperwork, the court sends you a letter explaining that the lender intends to foreclose. You can respond to the letter in writing, and sometimes it is necessary to schedule a hearing so you can present your own evidence against the default claims. If you don’t respond at all, the judge may find in favor of the lender automatically. If the judge assigned to the filings finds there is sufficient evidence of default, he issues a formal Writ of Execution of Foreclosure. This notice tells the lender he can proceed with the foreclosure process if desired.
Contact of Sheriff
Upon getting a Writ of Execution, your lender has its attorney contact the sheriff for your jurisdiction. The purpose is to schedule a sale date for your home. The sheriff then sends you a Notice of Sale, which indicates that the lender is foreclosing. The lender tells you when the foreclosure or sale will occur, as well. Getting a Notice of Sale doesn’t mean you have to move out immediately, but it does mean you have a limited amount of time in which to gather the funds you need to bring your account current and stop the foreclosure process. Many mortgages have acceleration clauses that make it harder to bring accounts current. These clauses stipulate that the entirety of the mortgage is due, not just the amount you were late.
Sale of Home
If you do not pay what you owe on your mortgage by the foreclosure date, the lender proceeds with the sale of your home. Sometimes people can have friends or family members buy the home for them, but this is not typical. If the buyer’s deal doesn’t go through for some reason, the lender might offer the home to the next-highest bidder.
Eviction
Once your home is sold, it belongs to the new buyer, which means you no longer have legal claim to it. Thus, the new buyer has the right to evict you. If necessary, he might enlist the aid of law enforcement personnel to guide you from the property.
Considerations
Foreclosure can end at any point in the foreclosure process, depending on the evidence available and the financial situations of the lender and mortgagee. Eviction is always the worst-case scenario. Even if you go through the entire foreclosure process, it typically takes at least several months for the sale of your home to occur. If you are able to save your property, you still will have to deal with the affect the foreclosure and related reports have on your credit.
To prevent foreclosure from happening, it is imperative to select a home you truly can afford. Laws now make it harder for lenders to offer mortgages that are beyond a borrower’s means, but lenders make their offers based on the information presented or available at the time of application. It is up to you to look into the future and make some projections about what you’ll be able to do should your financial situation worsen. Additionally, use a lender with a good reputation. Do not sign anything until you have thoroughly read and analyzed each clause, and when in doubt, consult an attorney.