| Mortgage payment due today, the first of the month. Borrower misses it. |
Late charge assessed on payment.
Company that processes borrower's payments
(called the mortgage servicer) starts attempting to make contact
to find out what happened.
|
Servicer sends "demand" or "breach" letter
to the borrower pointing out that terms of the mortgage have
been violated.
Borrower given 30 days to resolve the situation
by paying the delinquent amount.
|
|
Servicer refers loan to foreclosure department.
Hires local attorney or other firm to initiate foreclosure
proceedings.
Depending on the state where the home is located,
the servicer's representative may record a formal notice of
foreclosure at the local courthouse, publish details of the
debt in the local newspaper, attend hearings on the case and
make appropriate court filings.
|
House sold at foreclosure sale or auction. Wide
time range due to different state requirements.
Borrowers in states with judicial foreclosures,
or those in which lenders have to retake property titles via
the court system, can get almost a year to straighten out
their affairs before the sale. Those in nonjudicial states
have as little as two months.
|
After
the sale, some states grant borrowers a "redemption period"
in which they can still repurchase the property if they have
the money. Others force consumers out immediately following
the auction. |
A big misconception is that banks want to
foreclose and that's the furthest thing from the truth. The
banks want the money, not the house. They want to work something
out with you.