What are the Stages for Foreclosure?

September 28th, 2009 | Tags: Foreclosure · Foreclosure Notice

foreclosures

A foreclosure happens when a homeowner is unable to meet their mortgage obligations. There are several stages to the foreclosure process. At many stages during foreclosure, there is an opportunity for the homeowner to repay back the debt and become up to date on their mortgage payments.

The first stage of foreclosure is when the homeowner is late on the mortgage payments for at least 3-6 months depending on whom they have serviced their loans from.

At this time, the servicer of the loan will ask a trustee at the ‘County Recorder’s Office’ to record a ‘Notice of Default (NOD)’. Along with this the homeowner will also receive a ‘Letter of Intent’. Ideally a homeowner should contact the lender within 30 days of receiving this letter.

When the homeowner contacts the lender, modification to the mortgage loan can be done, which will make it easier for the borrower to pay back the amount. If a loan modification program has been worked out, then the foreclosure process will come to an end. In case the homeowner is unable to contact the lender, the process goes into the next stage.

The lender will then place the property for sale in a public auction and the homeowner will receive a ‘Notice of Sale’. During the public auction, the home would be sold to the highest bidder. Typically the ‘Notice of Sale’ is published in local newspapers for a period of 3 weeks prior to the date of public auction.

In case the property isn’t sold at the public auction, it returns to the lender and becomes a lender owned property. The foreclosure is completed here and a notice of eviction is sent to the previous homeowners.

To stop the foreclosure, the homeowners can also do a short sale where they sell the property back to the lender in lieu of the payment for the mortgage amount.

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