The Foreclosure Procedure

Foreclosure is the proceeding, by a creditor, to regain property or other collateral following a default on mortgage payments. In other words, it is an action taken by the lender when a borrower stops making their home loan payments and does not contact or is not willing to receive communications from their lender

The stages of foreclosure are not that difficult to understand and it doesn't happen instantly contrary to popular belief. A homeowner who has just received a foreclosure notice will not be evicted immediately. Foreclosure procedure generally begins after 90 days of nonpayment and that's three months. Parties are able to bid on the property as part of the foreclosure sale, and the title will be transferred to the successful bidder, subject to any applicable redemption period. With this fact, a homeowner still has the opportunity to avoid foreclosure and do something about his/her missed payments.

The foreclosures process basically gets going when the financial institution orders a trustee to document a a Notice of Default (NOD) once a home owner missed installments for regarding 3 to six months. A notice is then sent to the consumer or house owner that s/he is dealing with foreclosure and so the reinstatement period begins till five days earlier than the house is auctioned off.

The foreclosure will be finalized or the foreclosure sale date will be established if the default isn't corrected within three months. Within this period that the loan was not brought current, the homeowner will receive a Notice of Sale, and this notice will also be posted on the property. This Notice of Sale will be recorded at the County Recorder's Office in the county where the property is located and then it will be published in local newspapers over a three-week period. The time and location of the sale is appointed in the Notice of Sale.

During the sale or auction, the property is auctioned in public to the one who pays the highest bid price in cash, which normally has a deposit up front and the remainder within 24 hours. The highest bidder will receive the trustee's deed to the property. The opening bid is the outstanding loan balance, interest accrued, and any additional fees and attorney fees associated with the Trustee Sale. The property will be purchased by the attorney conducting the sale, for the lender if there are no bids higher than the opening bid. If this happens, the property is considered Real Estate Owned (REO) where all junior liens aside from the property taxes are wiped out and the future owner will receive the property with a clean title.