The Steps Of Foreclosure

Though an unfortunate fact of life for more and more homeowners, listed below are the steps of foreclosure. It is indeed a healthy idea to be able to build a family and live the life you have always wanted. However, certain things may come unexpectedly, ruining the life you have always dreamt of, and taking away the home you have always envisioned. Foreclosure definitely is at the top of the list.

Foreclosure happens when a borrower, otherwise called a mortgagor, has failed to redeem the mortgage by not keeping up with the necessary payments. The lender may then sell the property, the proceeds of which will go directly to the lender. Once caught in a situation like this, it is highly recommended that you take the initiative of contacting your lender and discuss with him all the possible solutions or remedies, and eventually come out with a win-win solution for both parties. The borrower in default, being the subject of all the attention of the lender, must look where he is currently standing and thus, it is seriously of great importance that he knows the steps and is completely aware of the whole foreclosure process.

NOTIFICATION

The first time you miss a payment, bear in mind that the lender is already keeping an eye on you. The second time, expect for maddening phone calls. As for the third missed payment, better check your mailbox. Generally, the lender gives the borrower 90 days to do well on his debt, giving all the possible options and eventually demanding full settlement plus the related expenses that were incurred and have accrued thereto. The whole foreclosure process usually takes 6 months to complete, and these three (3) months of continuous notification is termed pre-foreclosure.

PROPERTY MARKED AS AVAILABLE FOR SALE

Immediately after the pre-foreclosure period, a certified letter of foreclosure is sent to the borrower. The property is then offered for sale. The property subject for foreclosure is then made known to the public via publications and newsprints for the immediate liquidation of the asset. Also, the property has already been set to be auctioned.

SALE OF PROPERTY AND PAYMENT OF DEBTS

Auction is finally conducted. This is sometimes called sheriff’s sale. Of course, the highest bidder gets to own the property. However, if there is no highest bidder other than the lender, the property would then be offered in an open market. Obviously, the lender would certainly exert all its effort to recover from a bad debt. Once realized, the proceeds are set to pay the borrower’s outstanding balance plus all the related taxes and fees.

Short Sale

Foreclosure is such a red mark on your credit standing. Once known to have been a borrower in default, future loan applications and some other future financial transactions would ordinarily and expectedly be denied. To avoid this, the borrower often resorts to short sale. This is the selling of property at below market value, and settling the account thereafter via the proceeds with a promise to pay the balance at some future time. In this case, foreclosure is avoided and your credit standing was not put in jeopardy as you were able to pay off your loan.

AN ADVICE TO VACATE

As soon as title passes to the new owner, the borrower (previous owner) is then advised to immediately vacate the house to make room for the new owner.

While there are various remedies possible at each stage, once begun, the steps of foreclosure usually result in the final loss of home or property by the homeowner.

This entry was posted on Wednesday, May 26th, 2010 at 7:09 am and is filed under Foreclosures and Pre-Foreclosures, How Does Foreclosure Work, home loan foreclosure, steps of foreclosure. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.