The word "foreclosure" is enough to have anyone sweating bullets. But for those who are actually facing a foreclosure, the fear can make the experience close to a nightmare. The best way to deal with anxiety when confronted by foreclosure is to educate yourself about it. After all, fear of the unknown is always way more intimidating than reality, so a crash-course in the procedure can help you feel confident, armed with knowledge for making good decisions and less stressed out. Timelines and legalities differ with location but there is a generalized pattern for the proceedings.
What is Foreclosure?
It is a legal course of action taken in order to extinguish a property owner’s rights to that property, due to default in principal and interest payments leading to 3-4 months of mortgage debt.
Banks expect monthly mortgage payments to be received on a particular due date with a ten-day grace period. If you surpass the 10-day grace period, you’re triggering the first stage of a foreclosure in which you will receive a notice. Keep in mind: if you send a payment, you may need to tack on a late fee and your credit might be marred but you can satiate the bank enough to seize the foreclosure proceedings!
30 Days Late
If you’ve not been able to make a payment within thirty days of your due date, you will receive a “Notice of Default” (NOD) listing basic contact and property information, the amount you are in default for, how many days you are behind, and sometimes intimidating verbiage explaining how you have become delinquent in correlation to the terms of the mortgage note you signed when you purchased your home. The notice may coarsely state that the bank has accelerated the mortgage note and allotted you X number of days to remedy the default.
The Fourth Month
At this point, it’s safe to say that you’re a few weeks away from being referred to your lender’s attorneys. Expect to have attorney fees tacked on as part of your delinquency - and to finally receive the villainous Foreclosure Notice. The notice will state that your bank has commenced the foreclosure procedure and scheduled it for auction.
Clearly, your house will go to the highest bidder resulting in relinquishing your property rights. Note: Some states host a redemption period in which you have time to buy back your house so check out the foreclosure guidelines specific to your state.
Also, if you get in touch with your county’s register of deed, he can inform you of the auction dates and times for specific properties. If you can attend the sale at which your house is on the block, you can note some contact information about the buyer. It may come in handy if you re-gain the means to buy back your home, particularly if there was a delay in sale.