If you have been wondering 'How does foreclosure work?' you are not alone. You should be aware of your rights and contact an attorney if you believe that your foreclosure is being improperly carried out.
Keep in mind that a foreclosure is really not in the lender's best interest. It costs them money to repossess and resell a home, and they are not real estate agents, but moneylenders who would rather collect payments from you than foreclose on your home. This puts you in a position of power if there is any hope at all that you can get back on your feet and resume payments.
You can often avoid foreclosure simply by preventing the process from being begun in the first place. Even when you are still current on yur payments, if you now you may have trouble in the near future, you can start talking to your mortgage company and figuring out a game plan to prevent your loan from being tagged for foreclosure once you stop being able to keep up with your monthly payments.
You need to understand how foreclosure works and realize that at nearly any point in the process you can stop a foreclosure. The steps below represent the normal course of events - if your experience differs or there is a deviation, you should definitely consult with a local attorney to ensure that you aren't being taken advantage of.
Preliminary foreclosure processes can start the first time you miss a payment. Your mortgage company will send you a letter stating that they have not gotten your monthly installment, and telling you that they expect you to remit it promptly. If you miss two or more payments, the amount you owe will increase as late charges and other fees such as compounded interest are added on.
After sixty days have gone by, the mortgage company may send you what is known as a 'notice to accelerate'. This is just another type of letter from your lender, in which they demand payment be made instantly to bring your loan current. They typically will not be willing to accept a partial payment at this stage; they will only accept a payment of the delinquent amount in full (counting the extra late fees and interest).
Your lender may also begin to threaten you with acceleration of the loan (meaning they will 'call the note', and demand that you pay off your mortgage in full). They may also make threats of adding an attorney's fees to your amount due, and to send the loan into foreclosure.
If you still can't catch up on your loan obligations, you will next receive a demand letter. This will state that unless you forward to the lender the total amount demanded on the notice to accelerate by that notice's due date, an attorneys will be hired by the mortgage company to send you a demand letter telling you to pay or else your home will be foreclosed upon.
Once the demand letter has been sent, if you do not respond, the mortgage company can file the notice of default with the court. The court will send you a formal notice informing you that you are legally in default. The notice will list the total balance of your loan.
After receiving this notice of default sent to you by the court, you will have an additional twenty to thirty days to respond If you don't, the attorney can file the notice of sale on the lender's behalf, and a sheriff's auction date will be set. This is the final step. If you do nothing, your home will be sold at auction, and your chance to stop foreclosure will have passed.
If, however, at any time before the sheriff's sale you contact your lender and display a willingness to make good on your debt, you should be able to work out an arrangement. It is recommended that you consult with an attorney to get the most favorable terms and to ensure you settle on terms that you will be able to uphold. If you know the answer to the question 'How does foreclosure work?' you have a much better chance of saving your home!