The Foreclosure Process

Every state has its own foreclosure process.  Still, by looking at the steps below you can have a general idea of what the foreclosure process is like.  To understand why foreclosures occur, one must first understand that it is very important that you know exactly how much you can afford to spend on a house.  A foreclosure is usually the result of a person’s inability to make timely payments on the mortgage he/she has taken out for a property.  Because of a foreclosure, people lose their homes and eventually the bank becomes the owner of their property.

Post_ForeclosureHouseIf by any chance you are facing a foreclosure, make sure that you understand all the rules that apply to your state.  Technically foreclosures should begin right after a payment is missed.  However, practically the process does not begin until you default and are unable to continue with the payment even during the grace period.

Typically this grace period lasts for 30 days.  After you have missed the second payment, you will start getting phone calls from the lenders. If by any chance you are able scrape the amount for the payment, the lender will usually ask you to make a payment for both the installments that were missed.  A few lenders will allow you to make a partial payment.

If for any reason you are still not able to come with the amount of two months and now the third month has passed, you will see some serious action being taken by the lenders.  This is usually the time when lenders start with the foreclosure process.  The process can begin in any one of the two ways.  Your house can either go through a judicial sale that requires involvement of the court or it could go through the power of sale which is carried out by the mortgage holder.

There are only 29 states that give mortgage holders the right to sell where as all states support the judicial sale process.  When you sign loan papers, you will see a power of sale clause if you live in one of the 29 states that allow this foreclosure process.  To understand both processes, let’s have a look at the steps that are followed during each.

When a judicial sale occurs, the mortgage lender files a law suit.  Housing court will send you a letter demanding that you make the payment.  Usually, you are given a period of 30 days to make the payment and avoid foreclosure.  If you are unable to make the payment during this time period, a judgment will be entered and the mortgage lender will request for the sale of the property through auction.  Once the property is sold, you will be handed the eviction notice and asked to leave your home immediately.

In a power of sale foreclosure, you will be asked by the lender to make the payment.  After waiting for the required time period, the lender will draw a trust deed and will temporarily give the trustee the right to the property.  The trustee will then sell the house at a public auction representing the lender.

It is important that all parties are notified before the process of foreclosure starts.  Homeowners should be given the proper chance and the foreclosure process should follow the rules stated.  Otherwise, the homeowner has every right to report the short comings in housing court.

Author:  TJ-Google+

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