Foreclosure processes vary by state. Some differences among states include the notices that must be posted or mailed, redemption periods, the scheduling and notices issued regarding the auctioning of the property. A general understanding of what to expect can be found on our foreclosure timelines. If you are worried that you might not be able to make your mortgage payments, then you should learn about your state's foreclosure laws and processes.
In general, mortgage companies may start foreclosure processes about 3-6 months after the first missed mortgage payment. Late fees may be charged after 10-15 days, however, mortgage companies sometimes recognize that homeowners may be facing short-term financial hardships. It is extremely important that you stay in contact with your lender within the first month after missing a payment.
After 30 days, the borrower is considered in default, and the foreclosure processes might begin to accelerate. If you do not contact the bank, or if you ignore calls from your lender, then the foreclosure process may move forward more quickly. At any time during the process, you may wish to talk to your lender or a housing counselor about the different alternatives and solutions that may be available to you. In the states Trustee Corps conducts business, there are two main types of foreclosure:
Nonjudicial foreclosure is the most common type of foreclosure in most states Trustee Corps does business. It is used when there is a power-of-sale clause in the deed of trust that secures the mortgage loan by giving the trustee the authority to sell the home to pay off the loan balance at the request of the lender if the borrower defaults (fails to make payments). When a lender uses the nonjudicial foreclosure process against a borrower who fails to pay on a mortgage for his or her primary residence, the lender gives up the right to collect a deficiency judgment against the borrower. But most lenders prefer this process anyway because it is much faster and less costly.
Judicial Foreclosure involves filing a lawsuit to get a court order to sell the home (foreclose). It is used when there is no power-of-sale in the mortgage or deed of trust. Generally, after the court orders the sale of your home, it will be auctioned off to the highest bidder. A judicial foreclosure allows the lender to get a deficiency judgment against the borrower. In some states, the homeowner has the “right of redemption,” which allows him or her to buy the home back from the successful bidder at the auction for a certain amount of time after the sale. The process is longer and more costly than a nonjudicial foreclosure.
For more information, please visit the US Department of Housing and Urban Development’s website at http://www.hud.gov.
Use of This Information
The following information is provided for convenience and is not a substitute for the advice of an attorney. Use of this information is at your own risk. No representation or warranty as to the legality, accuracy, correctness, or acceptance of this information by any state or jurisdiction is indicated. Check with your local courthouse or consult an attorney to ensure accuracy before utilizing this information or documents. Legal advice should always be sought from legal counsel in the relevant jurisdiction. Trustee Corps does not accept any responsibility for use of these documents.