A foreclosure occurs when a property owner cannot make payments on their loan. If a homeowner unable to keep up with payments he simply had to relinquish the property back to the bank that holds the mortgage on the house. A bank can bring a foreclosure action against the homeowner. They can sell or repossess (take ownership of) a property in order to recover the amount owed on a defaulted loan secured by the property. A homeowner’s rights to a property are forfeited because of failure to pay the mortgage. If the owner cannot pay off the outstanding debt or sell it via short sale, the property then goes to a foreclosure auction. If the property does not sell at auction, it becomes the property of the lending institution. Foreclosures are fairly straight-forward sales because the banks typically do not want to be “home owners”, they want to be “home loaners”.
Here are the five stages for foreclosure:
• Missed Payments:
Foreclosure is a long process, which varies from state to state. A foreclosed property is a property that has already been taken over by the bank. This stage begins when the homeowner falls behind on home-loan payments (or sometimes other terms of the loan). This is usually due to hardships such as unemployment, divorce, death or medical challenges. Lenders may wait for a second, third, fourth or even more missed payments before sending the homeowner a public notice.
• Public Notice:
After three to six months of missed payments, the lender records a public notice called ‘Notice of default’ (NOD) with the County Recorder’s Office, indicating the borrower has defaulted on his mortgage. Notice of default and intention to sell must be mailed to the homeowner within 30 days of the recording. This notice is intended to make the borrower aware that he is in danger of losing all rights to the property and may be evicted from the home.
This NOD includes the property information, your name, the amount you’re delinquent, the number of days that you’re behind, and a statement indicating that you’re in default under the terms of the note and the mortgage you signed when you purchased your home.
The homeowner has a given period of time to respond to the notice and/or come up with the outstanding payments and fees. If the money owed or other breach is not paid in a given time, the lender may choose to foreclose the borrower’s property.
The next step is for the lender is to file a notice of sale for the property. However, if the borrower catches up on his or her payments, the foreclosure process can be…