Understanding the Foreclosure Process

The idea of losing your home to foreclosure is a frightening thought. For most people, a home is not simply a place to live, but a place where life happens. As such, many people form emotional attachments to their home that make the prospect of foreclosure all the more difficult to face. For this reason, some people try to ignore their financial problems in an attempt to avoid what seems to be inevitable—foreclosure.

If you are facing foreclosure, don’t run away from what you think is inevitable. Get informed and face foreclosure head on. While you may not always be able to save your home, you may be able to find ways to get out of your current home, into a new home, and protect your credit from being tarnished with a foreclosure (see Foreclosure Relief Options). Below is a brief explanation to give you a better understanding of the foreclosure process and what you can expect if you default on your mortgage (keep in mind that the foreclosure laws and time periods vary from state to state):

The foreclosure process usually begins as soon as you start missing monthly payments. As soon as you miss a payment, your lender may start sending you letters demanding that you pay the amount you owe plus late fees.
If you fail to bring your loan current after a limited period of time (usually between 1-3 months), your lender will issue a Notice of Default (NOD). A Notice of Default will inform you that you are facing foreclosure if you do not bring your mortgage payments up-to-date.
Once the Notice of Default is sent, the Reinstatement Period begins. During the Reinstatement Period, the borrower must make their loan current to stop the foreclosure process. The lender may offer repayment options during this period. You also may sell the property during the Reinstatement Period to pay off the loan and avoid having a foreclosure affect your credit.
If the loan is not made current during the Reinstatement Period, the borrower will receive a Notice of Sale, which will also be posted on the property. Notices of Sale are recorded with the County Recorder’s Office and published in local newspapers.
About three weeks after the Notice of Sale is posted, the foreclosure is finalized with a Trustee Sale. At the Trustee Sale, the property is sold in an attempt to recoup as much of the lender’s losses as possible; the property is auctioned and sold to the highest bidder. Those bidding must be prepared to pay cash for the property if they win the bid.

If you are having difficulty paying your mortgage, the best thing to do is try to work out your financial issues with your lender before things get out of hand (see Working with Creditors http://www.bankruptcyinfonetwork.com/working-creditors.htm). Taking proactive steps to keep your home out of foreclosure in the first place should always be the first action you take when you are having financial difficulties (see Avoiding Foreclosure http://www.bankruptcyinfonetwork.com/avoiding-foreclosure.htm).
If you have questions about illegal lending practices, mortgage fraud or predatory lending, it is important to contact an experienced attorney. A qualified attorney may be able to help keep your home out of foreclosure and help you hold unethical lenders accountable for their actions. You may also be able to file bankruptcy and protect your home from foreclosure in some instances. An experienced bankruptcy attorney should be able to clearly explain all of your options and help you choose the best option for your circumstances.

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