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The Steps In A Foreclosure Process

Different states have varied foreclosure process steps but all of them follow a general pattern. You should research the laws and practices of your state when you are faced with a foreclosure. When you miss to make your payments, foreclosure proceedings can commence. However, this is not very likely as most lenders give a grace period (usually 30 days) for late remittances. After subsequent missed payments, the lender will call you and demand you clear your balances.

When payments are defaulted for over 3 months, things get serious and the lender can commence foreclosure proceedings in two ways: judicial sale or power of sale. Judicial sale requires the lender to make the proceedings through a court while power of sale gives him the freedom to carry out the proceedings on his own.

Judicial sale is allowed in all states while power of sale is legal in only 29 states. If a power of sale will be used, it must be indicated on the loan papers. The method is usually faster than a judicial sale.

Before foreclosure proceedings can begin, both parties must be notified. For example, if the homeowner had another loan taken against the property with a third party, the banker must be notified and his loan amount must be considered when determining the auction price of the property. In case the third party banker is not paid, the new homeowner may be liable to pay the mortgage owed. Most of the time, the lender buys back the property and puts it up for sale in the housing market at a later date.

Deficiency judgments can also be advanced against the borrower if the price at which the home has been sold is lower than the loan amount. The difference between the selling price and the amount owed may be required, although some states ask for the difference between the amount owed and the fair value of the property.

There are different types of foreclosures, for example, condo foreclosures, HUD foreclosures, government foreclosures, property tax foreclosures, VA foreclosures and so on. While these foreclosures may be carried differently, the foreclosure process is largely the same and follows the above steps.