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Understanding
the Foreclosure Process
It is
important to remember that when you have questions about the foreclosure
process that the laws differ from state to state. What might commonly be
done in one state might be illegal in
another. If you are involved in a foreclosure at the present time, you
would be well advised to consult an attorney about what you should expect
since every state has a fairly unique foreclosure process. If you are
simply looking for general information, you will find everything you need
to know about the foreclosure process right here. Foreclosure is a
stressful process for all parties involved, but if you understand the
process you might be able to lessen the stress and even stop the process
before your house is sold.
Leading
up to the foreclosure
When
the customer misses some mortgage payments, the lender or the
lender’s servicing agent will send late notices. When the customer
still does not make a mortgage payment, someone will attempt to contact the
customer in writing as well as by phone to resolve the missed payments and
see if they can’t get things back on track. If no arrangements can be
made and the customer continues to miss payments, the lender or someone on
the lender’s behalf will demand payment in full under the note based
on an acceleration clause. Once the acceleration clause is put into effect
the lender is allowed under the note to demand the full amount of your
mortgage be paid immediately because you did not live up to your end of the
deal. Once this stage has been reached the lender will not accept monthly
payments from you, but may accept a considerable amount such as three to
six months worth of mortgage payments to reinstate the loan. If no payment
arrangements are made between the customer and the lender or the
lender’s agent, the situation progresses into the formal foreclosure
process and it’s a good time to hire a lawyer.
Formal
Foreclosure Process
The
bank will send a notice of foreclosure to the residents of the home,
usually by sheriff or another court official. The bank will then begin
filing papers with the court to get the ball rolling in a legal way. In
most areas, legal notices will also appear in newspapers stating that the
home will be foreclosed . If no sufficient payment or accommodation is made
with the lender, notice and waiting periods will officially expire letting
the lender know that there is no way to reverse the foreclosure process.
The court will then process the paperwork and will hold hearings regarding
the lender’s claims, and the court will issue an order allowing the
bank to foreclose on the home. Some lenders can and will quicken the pace
by posting the notices in newspapers and appearing in court at the same
time, drastically shortening the length of time it actually takes to
foreclose on a home. After the court issues an order for foreclosure
notices and ads will appear for a foreclosure sale in local papers to help
the bank sell the home before any more time or money is lost. If there are
no payment arrangements made or settlements reached with the customer and
the bank by this time, the home will then be sold at auction to the highest
bidder or it will be put up for sale by a foreclosure realtor.
The
length of time that it takes for a home to be foreclosed on is usually six
months or more, although this can differ from state to state.
Because
most lenders do not want to foreclose upon their security interests in
homes, they would prefer that payment arrangements be made, the process can
often be put off. You do not have to move out of your house during the
foreclosure process. Because the process takes awhile and the lender will
consistently be trying to reach accommodation with you, you won’t
have to leave.
When
the home is sold at auction, you automatically become a tenant if you
continue to live there. The new owner must then take legal action in court
before you can be evicted. In all, it could be more than a year before you
are actually forced to leave your home. The judge can order you to be moved
out of the home and give you as little as 48 hours to move your belongings
out of the home. If you leave anything in the home the Sheriff will take it
into custody and you’ll have to pay moving and storage fees and
expenses to get the items back. If you fail to move after the judge has
handed down the order, you can be locked out of the premises. The whole
eviction process can take anywhere from six weeks to six months, with the
average case taking about a month and a half.
The
thing that many people don’t understand about the foreclosure process
is that it never has to be out of your hands. You can almost always turn
the situation around by showing the bank or mortgage holder that you want
reconcile the debt. If you are willing to make payments and talk to your
bank about the missed payments, you’ll generally find that they want
to work with you. It costs a bank time and money to foreclose on a home, so
they really want you to step up and start paying on your home again. This
is a good thing, because even if you feel as though you can’t
possibly get on top of your mortgage again, all hope is not lost.
Foreclosure is a big deal, but not something that you can’t get a
hold on.
California & Some
other States
California and some other
states allow foreclosure by Non-Judicial processes. The typical time of
process last about 120 –150 days and the deeds of trust and mortgages
with powers of sale are the security instruments used. “Power of Sale” is
created by the terms of the mortgage or deed of trust instrument and arises
when the borrower has agreed to sell the property in dispute to settle the
remaining balance from a loan in case of default. No court order to auction
off the property is required. The lender or beneficiary in the deed of
trust is permitted to authorize a foreclosure sales representative,
typically a “trustee,” to execute the “power of
sale”.
Deficiency
judgment rights, reinstatement rights, and the right of redemption depend
upon the process employed. Judicial foreclosure is used when no power of
sale exists in the security instruments. Lenders must file a lawsuit in
order to obtain a court order to foreclose by judicial foreclosure. It has
been a general practice that when the court declares a foreclosure, the
property will be auctioned off and will subsequently be awarded to the
highest bidder. When judicial foreclosure is used, lenders may obtain a
deficiency judgment, unless the underlying loan was a purchase money loan.
After judicial foreclosure, the borrower will have a one year period to
redeem the property. This one year right of redemption makes Non-Judicial
Foreclosure the Lender preferred route.
Power
of Sale
Foreclosure Guidelines
Should
the security instruments contain a power of sale clause, legal requirements
must be strictly followed. Non-judicial foreclosure generally must be
carried out as follows:
1. A notice of
sale must be: a) recorded in the county where the property is located at
least fourteen (14) days before the selling date; b) sent by
certified/registered mail, return receipt requested, to the borrower at
least twenty (20) days before the selling date; c) posted on the property
itself at least twenty (20) days before the selling date; and d) posted in
one (1) public place in the county where the property is to be sold. The
notice of sale must contain the time and location of the foreclosure sale,
as well as the property address, the trustee's name, address and phone
number and a statement that the property will be sold at auction.
2. The borrower is
given up to five days before the foreclosure sale to settle the default and
stop the process. The auction may be held on any business day between 9:00
a.m. and 5:00 p.m. and must take place at the location specified in the
notice of sale. The trustee may require proof of the bidders’
capability to pay according to their bid. The auction is open to the
public, in which the highest bidder earns the right to the property. If
necessary, the sale may be postponed by announcement during the auction
itself. Lenders cannot petition for a deficiency judgment after a
non-judicial foreclosure sale and the borrower has no right of redemption.
E-mail:
Info@HelpFor4Close.Com 866-673-7158
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