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How Does Foreclosure Work - Understand Foreclosure In 4 Simple Steps
If you are asking yourself how does foreclosure work, then this article is going to provide you with answers. There are only a few steps to the foreclosure process. You might consider these steps if you are trying to avoid a foreclosure. These steps include things like the default being recorded, reinstatement of the loan, and more.
Step 1 - The Bank Records Notice Of Default
The first step of the foreclosure process is when the bank officially records the notice of default. This is the first day you miss the payment on your house. This usually does not really occur on the first payment but after a few missed payments. This depends on the bank and how they do the foreclosure process. Some banks begin the foreclosure process after two payments while others begin the process after three or four.
Step 2 - Reinstatement Of Loan
The second step to the foreclosure process is the reinstatement of the loan. The loan can be reinstated by you. This means that just because the foreclosure process has begun does not mean you have lost your house. You don't technically lose your home until the home has sold through an auction. If you can come up with the money to pay the missed payments and the late fees then you can reinstate your home loan. This is possible to do up until 5 days prior to the sale of the home through an auction.
Step 3 - Bank Sets Date Of Foreclosure
The third step of the foreclosure process is that the bank will set a date of foreclosure. This is usually 3 months after the notice of default is set or around 90 days. The home owner can continue to live in the home until this date. No one will come and evict you out of the home before this set date has arrived.
The next thing that will happen is that the notice of trustee sale prepared. It is also published as public information that the home is up for foreclosure. A copy is mailed to you and posted on the home.
Step 4 - Selling The House At The Foreclosure Auction
The final step to the foreclosure process is that the house is sold at the foreclosure auction. This can go two ways. Someone may bid at the auction on the home and the purchase it at a lower price than what you owe on the loan. If this is the case then the new owner will immediately have you removed from the home. This eviction can happen in less than 24 hours by the sheriff. If the home does not sell at the auction then the bank will still own the home. The bank may work toward evicting you right away. However, banks usually hire a company to take care of the home until they can sell it. This could give the home owners a few weeks.
Conclusion
So in summary - how does foreclosure work? The ideal time frame for a foreclosure to occur is around 3 months for a bank. This is what they would tell you. However, the actual time frame for a closure can take from 6 months to a year depending on how long the process takes and if the home sells at the auction. If you are going through the foreclosure process you don't have to move out of the home right away.
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