How Does Foreclosure Work – 4 Simple Steps To Making Sense Of Foreclosure
If you are asking yourself how does foreclosure work~ ,then this article is going to provide you with answers. If you break it down there are really only a few steps in the foreclosure process. You need to understand these steps if you think you are at risk from foreclosure. These steps include the reinstatement of the loan and the default notice being recorded.
Step 1 – Bank Acknowledges A Notice Of Default
The bank registering the notice of default is the first step in the foreclosure process. This is basically the first missed payment on your house. This wont occur on the first missed payment – only after a few. This all depends on your bank/lender and how they manage their internal foreclosure process. Banks all have different policies as to when they begin the foreclosure process – after 2, 3 or 4 misssed payments.
Step 2 – Reinstatement Of Loan
The next step in the foreclosure process is getting the loan re-instated. The loan can be re-instated in your name. This means that just because the foreclosure process has begun does not mean you have lost your house. You don’t lose your home until it is sold through the auction. If you can come up with the money to pay the missed payments and the late fees then you can reinstate your home loan. This is a possibility in the 5 days leading up to the foreclosure auction.
Step 3 – Foreclosure Date Is Set
The next step in the foreclosure process is for the bank to set the physical date of the foreclosure. Normally this is 3 months after the notice of default is sent. The home owner is allowed to continue living until this date is reached. Until the set date arrives, no-one can evict you.
Next the notice of trustee sale will be prepared. It will be made public that the home is up for foreclosure. A copy will then be mailed to you and also placed on the home.
Step 4 – Selling The House At The Foreclosure Auction
The final step to the foreclosure process is that the house is sold at the foreclosure auction. This can go 2 ways. Someone may bid at the auction on the home and the purchase it at a lower price than what you owe on the loan. If this is the case then the new owner will immediately have you removed from the home. This eviction can take place in less than 24 hours, and be carried out by the sheriff. If the home is not sold at auction, the bank will retain the home. The bank may work toward evicting you right away. Normally banks will get a company to manage the house until they can sell it. This might give the home owners at least a couple of weeks.
Conclusion
So to sum it up – how does foreclosure work? Your average bank would expect to finalize a foreclosure within 3 months. This is what they would tell you. However, the actual time frame for a closure can take from 6 months to a year depending on how long the process takes and if the home sells at the auction. If you are in the midst of the foreclosure process- you need not move out of home just yet.
