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Steps In The Foreclosure Process


Understanding the bank foreclosure process

Home foreclosures were up nearly 50% in the first half of 2009 in some states in America. While the federal government immediately moved to address the issue, assistance programs may have come too late for some homeowners, while others were ineligible. New home loans secured after the close of 2008 are also not eligible for relief. Therefore, a large percentage of homeowners unfortunately must take an interest in understanding the bank foreclosure process.

If your home loan is threatened by a loss of income, predatory lending scheme or other financial woe, don’t lose your cool. Authorities on the economy and the real estate industry point out that the widespread incidence of loan default works, to some extent, in homeowners’ favor. Banks are suddenly inundated with real estate-owned properties that may or may not sell soon or at all. Home loan companies would much rather work with people who want to continue to make mortgage payments, even if it means reduced interest or other factors.

Foreclosure lawsuits are expensive, especially with the assistance of a foreclosure attorney, and whether lenders take legal action comes down to what will save them the most money.
You may have several options that help you avoid foreclosure, such as:
  • Immediate stay in foreclosure proceedings
  • Reduction in monthly payments
  • Allowance of late payments
  • Freeze on mortgage interest rate
Pre-Foreclosure Redemption Period

If you haven’t made a house payment in 90 days, your lender may file suit. A notice of default is published according to your state regulation, which gives real estate investors who might be interested in purchasing your property an advance alert.

Lenders may be willing to make a deal with you during pre-foreclosure in order to continue your financial relationship. You might be able to get other financing that will help you catch up on your late payments, and the lender may forgive the violation of your loan agreement. Or your real estate attorney may find illegal Truth in Lending terms within your loan documents that will allow you to countersue and stop the foreclosure process.

If you are more interested in selling your property for what you can get and possibly sparing a foreclosure on your credit report, you can do that now instead. This can put you in a more affordable home and keep you out of financial trouble. Make sure you have legal guidance so that any transaction will be lawful and beneficial to you.

Home Foreclosure Timelines

The pre-foreclosure redemption period gives you from 30 to 365 days to take action, depending on the state of jurisdiction. The legal foreclosure stage can take as little as two months, depending on whether the state bases ownership transfer on property titles or liens. Your attorney will describe the judicial or nonjudicial procedure and timeline, and inform you of your options at each juncture.

Again, do not panic. Unscrupulous investors take advantage of desperate homeowners at this time. Foreclosure “rescue” companies pop up and disappear before making good on promises to turn you property title into cash for you. Your attorney can help you prepare to find other housing or to file a countersuit against the mortgage company in order to delay foreclosure. The value of your home may have changed, allowing you other avenues of either making your loan payments or finding a willing buyer before foreclosure takes effect.

If the market has not responded and your economic situation has not improved by the court deadline, you will lose the right to remain in the property. An auction, or sheriff’s sale, will take place, in which the property may be purchased by anyone with cash or ready financing. Your home may not sell, however. In this case, it is returned to the lender, who then faces marketing the property all over again.

If you are in danger of losing your home, it is important to speak with an attorney who specializes in real estate law before making any hasty decisions.
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