Mortgage Foreclosure Timeline: How the Foreclosure Process Works & How Long You Actually Have to Move if You Eventually Lose Your Home

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Many homeowners are terrified by the prospect of losing their homes. Unfortunately, it’s a real fear in today’s foreclosure crisis.

If you’re in danger of falling behind on your mortgage payments, or have already done so, arming yourself with how the foreclosure process works can alleviate a lot of your fears. You’re not going to be thrown out on the street anytime soon. You will have time to get your financial act together. So you can relax a bit if this is your fear.

What is the Foreclosure Process: The Difference between a Judicial and Non-Judicial Foreclosure

The first thing you should know is that this differs, depending on whether you live in a judicial or non-judicial state.

What is a Judicial Foreclosure?

Judicial foreclosures are handled via the court system, hence the name “judicial.” What happens is, a lender files a complaint that outlines what the debt is and why they should be able to proceed with the foreclosure. Once the lender files, the homeowner is then served and both appear in court to resolve the process.

If the court finds for the plaintiff (the lender), it will issue a judgment for the total amount owed on the loan, PLUS the costs of the foreclosure process – up to and including all legal fees.

What is a Non-Judicial Foreclosure?

Basically, non-judicial foreclosures don’t involve courts; ie, a lender doesn’t have to go to court to kick you out. The way non-judicial foreclosures works is, once the homeowner is in default, they are usually sent a Notice of Default (NOD) by the lender. This puts the homeowner on notice that their loan is in default and that legal action may be taken by the lender.

When a homeowner receives the NOD, they have a certain amount of time to “cure” the situation – eg, bring their mortgage current. If they don’t, the homeowner is then mailed a Notice of Sale, which is then recorded (usually at the County Records Office) and published in legal outlets like local newspapers, etc. After all this happens is when a public auction usually takes place.

The Foreclosure Process: An Overview

Now that you understand the difference between a judicial and non-judicial foreclosure, following is a brief overview of the foreclosure process – no matter which type of state you live in.

We also break down, every step of the way, how the foreclosure process affects the foreclosure timeline – as it relates to today’s market. Knowledge like this can help you better prepare financially for the future – no matter what happens.

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First Contact from Lender: Notice to Accelerate. If you miss several months of payments (usually two or three) and your account consistently remains 60 days past due, you will likely receive a “Notice to Accelerate” from your lender.

It means you will immediately need to bring the loan current to stop the foreclosure process and you have to pay the past amount along with the late penalty fees right away.

How a Notice to Accelerate Affects the Mortgage Foreclosure Timeline in Today’s Real Estate Market

Many lenders and mortgage servicers are so behind these days that while you may receive a Notice to Accelerate, it’s just the company following procedures. Many mortgage holders do nothing more at this point – other than continue to send you letters threatening to foreclosure.

Second Contact from Lender: Notice of Intent to Proceed with Foreclosure. If you don’t respond after receiving a Notice to Accelerate, usually the mortgage servicer’s and/or lender’s attorney will send you another letter.

In it, you are formally notified that if you don’t bring your mortgage current immediately, the foreclosure process will begin.

Note: At this stage, you are officially in what’s known as pre-foreclosure, which is the first stage of the foreclosure process. You have about three months (90 days) from the date of this letter to bring your home loan current. Again, how long you have depends on whether you live in a judicial or non-judicial state.

In pre-foreclosure, the county can list your property (along with others in this stage) in newspapers and other types of media (eg, websites) for the general public to view. The county also has the right to affix a visible “Notice of Foreclosure” on the property, which can be embarrassing.

Of course, if you catch everything up within the aforementioned time frame, then the foreclosure process stops. If not, then your lender will move on to the next stage in the foreclosure process.

How a This Notice Affects the Mortgage Foreclosure Timeline in Today’s Real Estate Market

Again, banks and lenders are behind (seeing a running theme here). It’s still just procedure. You may receive a few more of these letters before a formal Notice of Default (the next stage listed below) is issued.

Third Contact from Lender: Notice of Default. After the above notices have been sent, the next step your mortgage holder will take is filing a formal foreclosure notice (Notice of Default) with the court in your jurisdiction. It is usually sent when a homeowner has missed three payments on their mortgage.

It will list the entire amount you need to pay in order to avoid foreclosure. You will be given twenty to thirty days to act in response to this judgment before the foreclosure process proceeds further.

The above is in a “normal” real estate market.

How a Notice of Default Affects the Mortgage Foreclosure Timeline in Today’s Real Estate Market

In today’s foreclosure-ridden market, mortgage holders are so swamped because of the volume of foreclosures (and their own missteps, eg, robosigning, which has brought on legal consequences), that it may be months – or even a year or more in many cases – before they get around to actually issuing a formal Notice of Default.

And, even if they do, they won’t act on it right away. In fact, many lenders are intentionally NOT foreclosing on homeowners.

Fourth Contact from Lender: Notice of Sale. This is the last warning you’ll likely receive from your lender. If means the lender is going to sell your home on the courthouse steps via a foreclosure auction.

If a bid is accepted, the title of the property is transferred to the buyer. You no longer own the home. This stage is the actual foreclosure. If no one buys the property at auction, the bank/lender retains ownership. This is what’s known as the post-foreclosure process.

You can still stop foreclosure at this point, but you must come up with some money.

SHARE YOUR FORECLOSURE STORY: Are you facing foreclosure? Have a question about the process? Share your story and send in your question via the comments section below.

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Copyright © 2011 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

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