What is the process of real estate foreclosure?
Foreclosure is a legal process, so be sure to check your state and county laws, as they can vary from state to state. However, in most cases, the stages of the property foreclosure process are similar. Let’s explore what each of these stages looks like.
Step 1: Payment Default
The foreclosure process begins when a borrower fails to make at least one mortgage payment. This is also known as payment default.
Some mortgage lenders offer a short grace period for borrowers to make payments before charging late fees.st 30 days from any outstanding payment. At this stage, the lender is usually willing to make arrangements or adjustments to help the borrower catch up with payments.
Step 2: Notice of Default (NOD)
After 90 days or if you miss three consecutive payments, the lender will send you a notice of default (NOD). The NOD gives the borrower his 30 days to pay off the payment before the foreclosure process officially begins. State law may require the landlord to post her NOD at the property’s front door.
Step 3: Foreclosure Introduction
A foreclosure inquiry occurs when a loan is more than 120 days past due and is sent to a law firm to initiate foreclosure legal proceedings. At this point, legal fees are mounting and quickly piling up making it harder to find workout options and keep up with payments.
Step 4: Notice of Sale to Trustee (NTS)
At this stage of the foreclosure process, both the borrower and lender may be discussing foreclosure alternatives. However, once it is established that the borrower has no way of keeping up with the payments, the lender will start trying to recoup the losses and send out a trustee’s notice of sale (NTS).
An NTS is a written notice notifying the borrower that the lender has a scheduled date for a foreclosure auction. The lender must also record the impending sale at the county registrar’s office and place an advertisement in the local newspaper. This public notice serves as an advertisement for the property and protects the landlord’s right to sue in court.
Step 5: Trustee Sale or Foreclosure Auction
After the mortgage lender has taken appropriate steps to notify the homeowner or borrower and the local government of the foreclosure, the foreclosed property can be sold at: public auctionHomes sold at foreclosure auctions are often sold at a loss, but if the home sells for more than the outstanding amount, the profits are used to pay other mortgages on the property.
Foreclosure auctions typically set a minimum bid equal to the outstanding mortgage balance, and the home is Selling as isThe renter must make payment and keep the home by the day of the auction.
Step 6: Real Estate Owned (REO) or Post Foreclosure
If the property does not sell at auction, the lender or bank takes ownership of the property.This house is known as Property holdings (REO) lenders can try to sell – usually at a lower price.
Step 7: Eviction
The final step in the foreclosure process is eviction, which is most synonymous with foreclosure. Once the foreclosure auction is closed, the property is assigned a new owner – the auction winner or the lender. The renter is notified to vacate the property within a certain period of time (usually she is 3-30 days). Failure to do so may result in litigation.