The Foreclosure Process

The foreclosure process is a long and complicated procedure by which a lender takes possession of, or puts a lien on, a piece of real estate. The process begins when the party with the mortgage, the mortgagor, ceases to make payments on the property for 90 days; at that point, the mortgage company, the mortgagee, begins the legal steps to take the property. From start to finish the process can take upwards of 18 months and can have a devastating effect on those living in the foreclosed residence.
| Monday, March 14, 2011
While each state is different, the foreclosure process generally follows as thus:

When a mortgagor misses the first monthly payment, the mortgagee will typically call or send a letter offering some type of limited assistance, such as housing counseling. After the second consecutive missed monthly payment, the mortgage company will again call or send a letter, again giving the mortgagor the chance to explain what is going on and to take advantage of any type of assistance the mortgage company offers. At this point, many mortgagees will allow mortgagors to pay one month’s payment so they are only 30 days behind, and not begin foreclosing proceedings. If these offerings are of no help or not taken advantage of and a third month’s consecutive payment is missed, the mortgage company will most likely begin the foreclosure process.

This process begins with a Demand Letter or Notice to Accelerate which formally tells the mortgagor how much they are in arrears and what they need to do to get the account current. At this point the mortgage company typically gives 30 days to get the account current; if this time passes with no action, the mortgage company’s attorneys get involved, and then the mortgagor is responsible for their fees in addition to their back mortgage payments and associated fees.

The mortgage company’s attorneys will arrange a Sheriff’s Sale or Trustee’s Sale, where the property is put up for auction and those living in the home must vacate by. At the auction, usually, the property will be sold, and the mortgagor begins the redemption period, or a time where they can try to come up with the necessary funds to buy the home back, even if it was sold at the auction. This period of time varies depending on the state laws, so it can be anywhere from a few months to over a year. It is important to note that virtually at any point in the foreclosure process the mortgagor can try to negotiate and compromise with the mortgage company to stop the foreclosure process, pause it, or reverse it all together. Communicating with one’s mortgage company is the best way to stay in a home and avoid the foreclosure process all together.

Foreclosure is not something that occurs overnight, and it is not a definite thing once the process is begun. The entire procedure is lengthy and there are many opportunities to reconcile a mortgage with a mortgage company, and keeping the lines of communication open between mortgagor and mortgagee truly is the best way to avoid a foreclosure proceeding.

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