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Foreclosure Article
The Four Steps of the Foreclosure Process
Although there general guidelines from the federal government about foreclosures, each states has its own specifics that will apply. There are two types of foreclosure; judicial foreclosures and non-judicial foreclosures. Judicial foreclosure will have action from the court, while non-judicial are done outside the realm of the court. The criteria for a judicial foreclosure is that a home is purchased through a mortgage; the criteria for non-judicial foreclosure is that a home is purchased through a deed of trust.
Step 1. Delinquency of payment.
Foreclosure proceedings begin when a homeowner becomes delinquent on payments. Typically this is usually when the borrower/owner is behind by three payments, but it can begin with one delinquent payment, depending upon the lender.
Step 2. Notice of Default or Lis Pendens.
This is known as the pre-foreclosure phase of the process. The lender will have a trustee record the Notice of Default at the county recorders office. It's during this time the borrower still has the opportunity to reinstate the loan or pay it off. It is also during this period that the bank accelerates the payment, requiring the borrower to pay the mortgage in full; no payments accepted. There is a period of 3 months before final proceedings begin.
Step 3. Notice of Sale.
The borrower will receive by registered mail or by the delivery from the Sheriff the Notice of Sale, or Notice to Foreclose. There will be a sign posted on the property with the Notice of Sale with the time and location of the sale. The information will be recorded at the county recorder's office, and published in the local newspaper in the county where the property is located over a period of three weeks.
Step 4. Foreclosure Auction.
This is called a Trustee Sale, Sale of Foreclosed Property, or, if property is being foreclosed for tax reasons, Tax Lien Sale. This is a public auction that is historically held on the county courthouse steps, but may be held at another site. The opening bid is set by the lender of the property. The amount is most likely is the outstanding balance of the loan plus accrued interest, plus legal fee and any other additional fees the lender want remunerated. The highest bidder wins and will receive the deed to the property at payment. If there aren't any bids higher than the opening bid, then the lender retains the property.
When a borrower becomes delinquent in payments, his best option is to work out an agreement with the lender, then make sure that he/she keeps that agreement. The longer the delinquency, the fewer options there are for the borrower.
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