Foreclosure How To Buy

How the Mortgage Foreclosure Process works

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The mortgage foreclosure process is different from the tax foreclosure process but is the more common one. When people are in foreclosure because they fail to pay their mortgage payments, the bank will foreclose on their home and the mortgage foreclosure process will begin.

Different states have different rules for the mortgage foreclosure process. Lenders have to follow the rules when filing foreclosure on homes. Some states have more rules to follow than others but most of them have the same basic mortgage foreclosure process.

For the people in foreclosure, the mortgage foreclosure process usually starts with them missing monthly payments. The lenders usually don’t threaten foreclosure until three payments have been missed. The mortgage account is considered in default at this point.

If the mortgage account is in default, then the lender will send the homeowner a notice of default. This is not a foreclosure notice but if you receive a notice of default, the next one might be a foreclosure notice. Most homeowners are scared but the lenders are often more than willing to negotiate at this point.

After about three to four months, if an agreement cannot be reached between the homeowner and the lender, then the lender will send he notice of foreclosure to the homeowner. The notice of foreclosure and the notice of trustee’s sale will both be filed and served to you either by mail or by the Sheriff depending on the state you are in. By this point, public notices would have been posted for everyone to see.

Sometimes the lender will also put the foreclosure sign up infront of the home that is being foreclosed on. This part of the mortgage foreclosure process is the worst for homeowners because friends and neightbors can see that they are in foreclosure and it is embarrassing.

Before the auction date or the date of foreclosure sale, the homeowner can still pay off the mortgage balance in full and the mortgage foreclosure process will cease. But, most people cannot find enough money to pay off the mortgage balance. Sometimes, there are loans to stop foreclosure but they are rare nowadays. The last chance the homeowner has to get the home back is about six days before the sale.

When the day of the trustee’s foreclosure sale arrives, the lender will auction off the foreclosed home to the highest bidder. This is the final stage of the mortgage foreclosure process when the lender can finally get rid of the property and get some of the money back. Highest bidders are often people looking for cheap homes to fix or move into. Many of them are real estate investors.

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