Introducing the Foreclosure Process
Foreclosure happens when a homeowner falls behind on their mortgage payments and has no desire to take the steps necessary to avoid this process. Although foreclosure works differently in each state, there are some basic steps that make up the process regardless of where you live.
Before we get into the finer details of how foreclosure works, here are the two different types (based on the state in which you live):
- Judicial foreclosure: the lender is required to file a lawsuit to proceed with the foreclosure.
- Nonjudicial foreclosure: the lender is able to foreclose on a home without going to court.
The Foreclosure Process
Here are the steps of the foreclosure process in a judicial state:
1. You fall behind on your mortgage payments. Although a lender can legally begin the foreclosure process after one missed payment, most wait several months to get a better idea of what is going on.
2. The lender notifies the homeowner of an intent to begin foreclosure. Generally speaking, this consists of a notice being sent to the person. This notice informs you that foreclosure can be avoided by making missed payments, while also taking care of any fees and interest.
3. The lender files a lawsuit. If you are unable or unwilling to make the missed payments, the lender will move forward with the process by going to court and filing a lawsuit.
4. The lender provides notice of the foreclosure lawsuit. This is known as a foreclosure summons and can be delivered to you at home or at work (wherever you can be found).
5. You are given time to respond. The summons will explain where the lawsuit stands and what you need to do next. It will also tell you how long you have to respond if you are interested in fighting the lawsuit. Typically, this is somewhere between two and four weeks.
You don’t have to respond, but if you want to save your home it is a good idea. It is the responsibility of the lender to prove to the court that the foreclosure is justified based on the terms of the loan.
6. Once the judge issues a decision, the lender will send the homeowner an intent to sell letter. As the name suggests, this lets the person living in the home know that the lender is going to sell the property in the near future. In many states, the homeowner still has the chance to make back payments and fees to avoid foreclosure.
7. Foreclosure auction takes place. This usually happens at a local county court house, giving buyers the chance to bid on the property. If nobody is interested, ownership will revert to the lender.
How Long does the Foreclosure Process Take?
While this differs from state to state, it typically takes anywhere from three to five months for the entire process to be completed. When the homeowner responds to the summons with a complaint, the process can drag out much longer.
Bid on Foreclosed Homes at Auction
If you are interested in buying a foreclosed home, you can do so at auctions in your area. With our listing service, you can find and learn more about the many properties going to auction.
Everyday, we update our database with new properties so you can decide which auctions to attend and how to approach the biding process.
We have helped thousands of people find and buy foreclosures up to 60% below market value.