The Foreclosure Process
When homeowners can no longer make the mortgage payments on their home, and a short sale or loan modification is not approved, then eventually the lender will sell the home at a foreclosure auction. The lender must follow a process which basically gives the homeowners an opportunity to avoid the foreclosure and bring the loan current.
There are basically three stages in the foreclosure process:
- Pre-foreclosure (default)
After a couple of months of non-payment by the homeowner on the mortgage, the lender can record a Notice of Default with the County Recorder’s Office. Some lenders may do this when the homeowners are 3 months behind on their payments, others when they are 6 months behind. This notifies the homeowners that they are facing a foreclosure, and it starts a time period in which the homeowners can bring the loan current.
- Foreclosure Sale (Auction)
If three months go by after the Notice Of Default, and the loan has not been made current, a date is set for a foreclosure sale. The Notice of Trustee Sale will be recorded at the County Recorder’s office, as well as being sent to the homeowner and being posted on the property. The Notice of Trustee Sale is also published for three weeks in newspapers of the county in which the home is located. Many times it happens that these sales dates get postponed. A bankruptcy filing will delay a sale, as well as the lender allowing more time for the seller to complete a short sale. - Real Estate Owned (REO)
If no one bids on the home at the Trustee's Sale, then ownership of the home goes to the lender that initiated the foreclosure. The home then becomes an REO (Real Estate Owned). Since the lenders are not in the business of owning real estate, but in the business of lending money, they will now want to sell the home. They will list the home for sale with a real estate agent. They will want fair market value for these homes, so usually there is no great bargain. In fact, many of these homes are in disrepair and are sold in 'as-is' basis. Many of these homes will also not qualify for FHA financing.
It is our goal to keep you in your home. For FREE assistance with a loan modification or to discuss the other options that may be available to you when facing foreclosure, contact us at your earliest convenience.