What Is Foreclosure?
Foreclosure is the legal process that lenders employ to sell your home if you have defaulted on your mortgage. Each state has its own laws that regulate the foreclosure process; it can take between a few weeks to over a year to complete, depending on where you live. The point that foreclosure proceedings begin may also differ and can occur when you miss only one payment. There are two different types of foreclosures: judicial and non-judicial.
Judicial Foreclosure
Judicial foreclosure favors the borrower because it takes several months to complete and offers several opportunities to dispute whether the lender is within their rights to foreclose. Before the process begins, you will receive a 10-day notice from your lender to establish intent. This time may be used to catch up on missed payments so you can retain your mortgage. Otherwise, a lawsuit will be filed by your lender in which you can argue the foreclosure. If the court rules in favor of the lender, then you will receive a letter of intent to sell. The home may be sold in auction or by the bank when the market is ideal. You can stay in your home until the bank sends an eviction notice.
Non-judicial Foreclosure
In states that use non-judicial foreclosure, borrowers are given very short notice of the process. Most often, the first notice will be a notice of sale, but you may receive a notice of default before the notice of sale. This gives the homeowner about 30 days to try and reinstate his or her mortgage by paying all past-due payments and fees. However, if your home is sold before you are able to reinstate the loan, then there is no further recourse.
If you are falling behind on your mortgage payments, then seek debt counseling services to learn about your options. You may be able to keep your home by taking action immediately and working with your lender.
