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The 4 Steps of the Foreclosure Process
A home foreclosure is something that no one ever wants to face. Home foreclosures can happen for a number of reasons but in the end most occur because the monthly mortgage payments weren’t made. But rest assured that no homeowner goes into foreclosure without forewarning. There are multiple steps to the foreclosure process which we have summed up below.
The first step in the foreclosure process is called the pre foreclosure stage. This is the point in time where the homeowner who took out the mortgage begins to fall behind on their monthly mortgage payments or breaks some other term in the mortgage contract. The mortgage lender will then begin sending notices to the homeowner.
They will also call the homeowner to try to get their money. If the homeowner cannot pay the money then the mortgage lender will try to work out a compromise with the homeowner. The compromise is usually a payment plan so that the homeowner can stay in the home and the mortgage lender gets some form of payment.
If a remedy can’t be reached at this point then the foreclosure process will continue.
Foreclosure Home Redemption Period
The second step in the foreclosure process is the redemption period. This happens after the homeowner defaults on their mortgage, but before the lender can legally evict them. It’s at this time that the mortgage lender will file a lawsuit against the homeowner. The homeowners have a period of time to respond to the notice, which varies depending on the state you live in.
It’s during these first two stages that a homeowner can try to sell their home before a lawsuit is carried out in order to avoid foreclosure. If the homeowner cannot sell their home then basically the only option to avoid foreclosure is to pay the loan in full which is very hard for many homeowners to manage.
The redemption period is granted by a judge after the homeowners get a chance to explain their case. This is a time period where a homeowner is given a certain number of days to pay their back mortgage payments and avoid proceeding further in the foreclosure process.
Auction Sale of Home Foreclosures
The third step in the foreclosure process is the auction sale. The auction sale is where a foreclosure home is sold at the county courthouse to whoever bids the highest amount over a set floor price. The auction sale usually happens about thirty days or more after the judgment hearing of the redemption period occurs.
The general public is given notice of auctions for home foreclosures in local news papers, at the county courthouse, and online at sites like HUDlips.org. In most states the auction is when the foreclosure home is officially transferred to the new owner.
The fourth and final step on the foreclosure process is called post foreclosure. At this point the lender now has control of the property within their real estate owned, or REO, department unless someone has already bought the home at auction.
After the sale is completed, the homeowner will be notified on the number of days they have to vacate the home. If they do not vacate the home by the date that is given, then the eviction process will begin and the local sheriff will come to the home to make sure the eviction is carried out if someone is still residing in the house.