The Foreclosure Process

The foreclosure process starts when a borrower misses a payment. This stage is called pre foreclosure. The lender will try to contact the borrower regarding the overdue payment or payments. If the borrower does nothing to try to resolve the issue the lender will file a foreclosure against the property. At this point the lender can demand the whole mortgage amount be paid in full. This is the point in the process where negotiating a payment plan is no longer a good option. If a borrower tries to work out a payment plan with the bank they will now be responsible for fees in addition to the back amount owed.

Once foreclosure begins a certified notice is sent to the borrower. Public notices are also printed in the newspaper to alert the public about the foreclosure. At this point the borrower may be approached by people trying to offer help. Some may say they can help you get out of foreclosure or that they want to buy your property. Borrowers should be cautious of anyone approaching them as there are many scams targeted at people in foreclosure. It is considered a vulnerable time when homeowners are willing to try anything to save their home and scammers take advantage of this. If a borrower falls for a scam they could end up in even more financial trouble or possibly be tricked out of selling their home and gaining nothing from it. There are waiting periods during this part of the process that allow the borrower to come up with the money to pay off the debt. Some borrowers sell their homes to get the money and avoid foreclosure.

After all waiting periods have expired the house is either sold at auction or taken back by the bank. The borrower may still have a chance to buy their property back. Half of the states give homeowners the ability to buy their property back at the selling price plus any fees within a six to twelve month period after the sale. The whole foreclosure process can take up to six months or more to be completed. During the process borrowers have many chances to settle the debt and keep their home from being foreclosed. Lenders are always willing to help borrowers avoid foreclosure, so borrowers should take advantage of these opportunities if possible. It is important to know that foreclosure can cause loss of a home, including any equity and damage to credit. Foreclosure laws vary from state to state and anyone facing foreclosure should seek the assistance of someone trained in foreclosure law to help them understand how the process works in their state.