The Home Foreclosure Procedure in a Nutshell

Although most of us understand the basic meaning of a home foreclosure, it can be difficult to detail all the precise steps in the foreclosure process because this process is generally governed by the laws of each individual state. Thus, there are many variations on this process. In general, the foreclosure procedure gets started when the property owner fails to meet their principal and interest payments on their home property. Most foreclosure procedures tend to result in seizure and sale of the property.

The Home Foreclosure Spiral

How does the average homeowner get trapped in the foreclosure spiral? The process of foreclosure begins the moment that a mortgage loan payment is 16 days late. Once this cusp has been reached, full-blown foreclosure procedure is usually not far behind. At this point, the mortgage service provider may attempt to get in touch with the delinquent homeowner in order to create some kind of workable repayment schedule.

Once the homeowner has missed from three to six months of loan payments, the mortgage lender may order a trustee to draft and record a Notice of Default. This is known as a NOD at the Office of the County Recorder. The NOD aims to put borrowers on notice that they are in danger of facing foreclosure actions. This filing also sets off a reinstatement period that will usually last around five days before the property is officially listed or auctioned off.

In most cases, mortgage defaults that are not corrected within 90 days will result in a foreclosure. At this point, the home sale date is established. The homeowners will receive a Notice of Sale at this point. In most cases, a copy of this notice will get posted on the house or property and a copy is recorded at the Office of the County Recorder. The sometimes publish the notice of the sale in local newspapers.

Most of these foreclosure procedure trustee sales take place at the county courthouse. The location and time of the sale are usually specified at this time. Most of these foreclosure properties are awarded to the highest bidder at a local auction. Most winning bidders are required to pay in cash, with an initial deposit due upfront, and the rest due within 24 hours of the initial sale.

At most property auctions, the opening bid is set by a representative from the foreclosure lending company. In most cases, the opening bids will be equal to the outstanding mortgage balance, including any built-up interest and extra fees associated with Trustee Sales.

In most cases, the foreclosure procedure is straightforward enough, and it is not difficult to gain a close understanding of the foreclosure process, especially with experience. In general, most procedures give homeowners a window of opportunity to keep their mortgage loans current so that they can avoid a foreclosure procedure.