Homes Foreclosure

With our economy in such a downshift, it is important to understand how the home foreclosure process actually works.  The reason for this is because many homeowners have or could face home foreclosure in the future.  With many homeowners losing their jobs or having a reduction in hours come their way, home foreclosure is inevitable for many.  By understanding the home foreclosure process in advance, you can understand what is going on should it happen to you.  You can also understand the options during the process that you have to avoid foreclosure.

What is Foreclosure?

Home foreclosure is when you are unable to make your monthly payments and the lender, the one who loaned the money for the homeowner to purchase the home, attempts to recover some of their money.  The lender will takeover the ownership of the property and sell it to recover all, or close to all, of the money left on the loan.

First Step in Home Foreclosure

The home foreclosure process is started when the homeowner is unable to make their monthly mortgage payments on their property.  At this time, the lender will then file a public default notice, also called a Notice of Default, or NOD.  This usually happens after you are about 60-90 days late in payments depending on your lender as well as your state.

Pre-Foreclosure

Homeowners can avoid their home being foreclosed on by entering into a foreclosure prevention program.  This happens during the grace period.  At this time, a refinance can be administered or even a new loan can be made in order to bring payments currents (pay off the late payments) and keep the home.  Alternatively, a mitigation specialist may contact the lender to work out an agreement for new payments in order to avoid foreclosure.

If the Mortgage Defaults Entirely

If you are unable to get current on your mortgage, you have a couple of options.  First, you can try to sell the home yourself to a third party to avoid having a foreclosure on your credit history.  Second, the lender can take over the property and put it up for auction to the public.  You will likely receive an Intent to Sale or Notice of Sale in the mail regarding the public auction – day and time, etc.  At this time, a third party can buy the home or the lender can buy back the home.  If the latter is the case then the home will then be known as a bank-owned property or REO, Real Estate Owned.

What You Must Remember

If you are in default, no matter how many months have gone by, you still have options.  Until the house is sold in public auction, you have options in most states.  You will need to look up, or speak with an attorney, regarding specific laws and regulations in your state so that you are aware of the exact process, the steps that you can take in regaining your home ownership and the time frame that you have to overcome past due payments and penalties to be back on track.

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