Every state has a law on the foreclosure process. Each state deals with foreclosure differently. However, the general idea of what to expect before, during and after the foreclosure is essentially the same. Without knowing what pre-foreclosure means, it is difficult for home owners to determine what steps need to be taken to stay out of the mortgage foreclosure process
What is a pre-foreclosure?
In short, pre-foreclosure starts at the first sign of financial strains that causes a homeowner to become delinquent on their mortgage loan. At this point, when the homeowners are struggling, they should contact the lender before missing a payment. At this point the lender may suggest options to help the homeowner lower their mortgage payments for the time being.
Once homeowners begin to miss payments, the situation turns into a serious concern for both the lender and the mortgage holder. One or two missed payments isn’t usually enough to worry the lender into making the decision of foreclosing on the home. Most lenders will give the homeowner time to get back on their feet. This is especially true if the homeowner is keeping in contact with the mortgage lender.
But if there comes a time when the payments go so far behind that it looks like they won’t be paid, then the mortgage lender has to exercise the right to cure default. At this point, the lender will start pre-foreclosure proceedings by hiring an attorney to file the paperwork with the county court.
The foreclosure law of most states requires the lender to send a notice to cure default. This notice provides a time frame to allow the homeowner to pay the defaulted loan amount in full. Homeowners will be sent a letter regarding this suit against them, and be requested to appear in the county court before a judge to state their case. The judge can then decide to allow more time to cure the default.
Most homeowners avoid this hearing thinking that they will be sued at this hearing for not paying their mortgage. This is a big mistake. If a homeowner does not attend, then the lender is given judgment immediately. Many homeowners do not realize that this court session is as much for them as it is for the lender. The judge is actually the mediator at this point, holding the best interest of both parties in mind. When the lender is given the judgment, the pre-foreclosure process moves to foreclosure and the attorneys will begin proceedings towards selling the home to recoup any losses at this point.
Most state foreclosure laws mandate that the sheriff sale be published for a certain period of time in newspapers or public notices in the county. At this point, the foreclosure process is quickly proceeding to a point where there will be no options left to save the home. The sheriff sale can be stopped, giving the homeowners more time to stop foreclosure entirely if there is a realistic solution to the problem. If the homeowner has a realistic solution then this is the time to pursue it.
The longer the homeowners wait to save their home, the less chance of success will exist. At the sheriff sale, the property will be auctioned off at a set starting price, which varies from state to state and county to county. The sale can be confirmed within a week to a few weeks after the sale. The homeowners will no longer be listed as owners of the house, and will have no right to remain living in the property, unless state law allows for a redemption period. Not all states allow homeowners a redemption period, and the length of time varies widely from state to state, which makes it necessary for homeowners to research what protections their own state's foreclosure laws allow them.
After the sheriff sale starts the eviction process. The homeowners will be sent paperwork again by the court and the lender's attorneys requesting their appearance at a hearing, the purpose of which is to order the homeowners to leave the property by a set date.
Since the foreclosure process differs from state to state, homeowners should start researching what to expect by reading their foreclosure laws. Simply knowing how the foreclosure process works will not guarantee that any homeowner will be able to avoid foreclosure. By seeking outside assistance, homeowners have a much better chance to stop foreclosure and to know how much time they have left to save their homes.
