Understanding what happens during a foreclosure could mean the difference of losing and keeping your home.
Foreclosure is the process that lien holders go through to get back the money they loaned out on property that was purchased, such as through a mortgage.
Are you facing foreclosure?
Has the process the foreclosure of your home already begun?
Are you curious what will happen if you can no longer make payments to your home loan?
Foreclosure can be a scary, and sometimes complicated, process. However, it can be broken down into just three main steps.
What Happens During a Foreclosure:
1: Notice of Default
When you've come behind in your payments to your mortgage company and the loan is defaulted on, they can then file a Notice of Default with the County Recorder's Office that starts the foreclosure.
This is sometimes known as pre-foreclosure. You then have notice of your reinstatement period. If you pay up the deficient funds to your loan and bring it current, then the foreclosure can be stopped. You can also refinance the home, or short sell it to get out from under the defaulted mortgage.
2: Notice of Sale
If you haven't brought your loan current or made some kind of other arrangements to stop the foreclosure within ninety days, then the County Recorder's Office will establish a date on which your property will be auctioned off, and you will receive the Notice of Sale. The Notice of Sale is made public for three to four weeks by posting it on the house itself as well as publishing it in the newspaper.
3: Trustee Sale
At the place and time designated on the Notice of Sale, the property will be auctioned off for cash. The highest bid will win the home, and receive the trustee's deed to the property. The opening bid is usually the amount of the lein against it, plus any fees and penalties owed as well. If no one bids higher than the opening bid (usually because the house is worth less that what was owed) then it becomes an REO (Real Estate Owned) property.
Remember, that if you are in foreclosure, there are still ways in which it can be stopped and you can keep your house. What happens during a foreclosure takes time, and that gives you time to refinance the home, become current on your payments, or maybe even try loan modification. A Notice of Default, and sometimes a Notice of Sale, doesn't mean that you can't still do something to save your home.