The mortgage foreclosure process happens when a homeowner fails to pay his or her mortgage payments and the bank forecloses on the home. A mortgage foreclosure process is not the same as a tax foreclosure process which happens once a year. Mortgage foreclosure is a bigger problem for homeowners who cannot afford to pay their mortgages.
The mortgage foreclosure process is long and involved. Different states have different foreclosure rules and slightly different mortgage foreclosure process. Lenders seeking to foreclose have to comply with state's mortgage foreclosure process which can be costly and time consuming.
For the people in foreclosure, the mortgage foreclosure process usually starts with them missing monthly payments. The lenders usually don't threaten foreclosure until three payments have been missed. The mortgage account is considered in default at this point.
The next step in the mortgage foreclosure process is the notice of default or even a letter threatening foreclosure. Once the account is in default, the lender will send a letter of default to the borrower. This is a scary time but the lenders are still open for negotiation at this point.
The notice of default often accompanies the notice of trustee's sale and they are served to the homeowners. In some states, these notices are mailed by certified mail and in others, although more rare, they are served by the Sheriff.
Sometimes the lender will also put the foreclosure sign up infront of the home that is being foreclosed on. This part of the mortgage foreclosure process is the worst for homeowners because friends and neightbors can see that they are in foreclosure and it is embarrassing.
Before the sale of the foreclosed home begins, the homeowner has the last chance to pay off the debt in full to stop foreclosure. However, most people cannot find the money to pay all off. Banks are still open to negotiation at this point if the deal is good enough. Usually a homeowner has until six days before the auction to pay off the mortgage balance and reclaim the property.
On the actual day of the foreclosure sale, good foreclosure properties receive bids from people looking to buy cheap homes. The mortgage foreclosure process ends with the sale of the home to the highest bidder. Some of these bidders are real estate investors looking for good investment properties.
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