. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

What you should know about foreclosure and its stages

Mortgage’s trial:

A foreclosure occurs when a property owner is unable to make their loan payments. If a homeowner can’t keep up with the payments, he simply has to relinquish the property to the bank that holds the mortgage on the home. A bank can initiate a foreclosure action against the owner. They may sell or repossess (take possession of) a property to recover the amount owed on a defaulted loan secured by the property. The rights of the owner of a property are lost due to non-payment of the mortgage. If the owner is unable to pay the outstanding debt or sell it through a short sale, the property goes to a foreclosure auction. If the property is not sold at auction, it becomes the property of the lending institution. Foreclosures are pretty straightforward sales because banks generally don’t want to be “home owners,” they want to be “lenders.”

Here are the five stages to foreclosure:

• Late payments:

Foreclosure is a long process, which varies from state to state. A repossessed property is a property that has already been taken by the bank. This stage begins when the homeowner falls behind on mortgage loan payments (or sometimes other terms of the loan). This is usually due to difficulties such as unemployment, divorce, death or medical problems. Lenders can wait for a second, third, fourth, or even more late payment before sending a public notice to the homeowner.

• Public notice:

After three to six months of late payments, the lender files a public notice called a ‘Notice of Default’ (NOD) with the County Recorder’s Office, stating that the borrower has defaulted on their mortgage. The notice of default and intent to sell must be mailed to the owner within 30 days of recording. This notice is intended to inform the borrower that he is in danger of losing all rights to the property and may be evicted from the home.

This NOD includes the property information, your name, the amount you are behind, the number of days you are behind, and a statement that you are in default according to the terms of the note and mortgage you signed when you purchased your home. .

The owner has a set period of time to respond to the notice and/or submit outstanding payments and fees. If money owed or other default is not paid within a certain time, the lender may choose to foreclose on the borrower’s property.

The next step for the lender is to file a notice of sale on the property. However, if the borrower catches up on their payments, the foreclosure process can be stopped.

• Before foreclosure:

This stage begins when the lender files a property default notice, which informs the property owner that the lender will take legal action if the debt is not honored. After receiving the notice from the bank, the homeowner enters a grace period known as “pre-foreclosure.” During this time, the owner can work out an agreement with the bank or pay the amount due before the mortgage is foreclosed. Pre-foreclosure property owners may participate in a short sale to pay off outstanding debts. If the borrower pays the default during this phase, the foreclosure ends and the borrower avoids eviction and the sale of the home. If the default is not paid, the foreclosure continues.

• Auction:

If the default is not resolved by the prescribed deadline, the lender or its representative sets a date for the sale of the home at a foreclosure auction (sometimes called a Trustee Sale). The sale of the Notice of Trustee Sale (NTS) is recorded at the County Recorder’s Office. The notice is sent to the borrower, posted on the property, and printed in the newspaper. At auction, the house is sold to the highest cash bidder, who must pay the high bid price in cash, usually with a deposit up front and the remainder within 24 hours. The winner of the auction will receive the deed from the trustee of the property. The executing lender sets an opening offer on the property, which is generally equal to the outstanding balance of the loan and any other fees. The money from the sale is used to pay foreclosure costs, interest, principal, and taxes, etc. Any remaining amount is paid to the owner. In many states, the borrower has a “right of redemption” (can recover outstanding cash and stop the foreclosure process) at the time the home is auctioned.

• Post foreclosure:

If a third party doesn’t buy the property at the foreclosure auction or there are no bids higher than the opening bid, the lender takes over. The property will be purchased by the attorney making the sale, for the lender. If this occurs and the opening offer is not met, the property is considered Bank Owned or Real Estate Property (REO). This occurs because many of the properties for sale at foreclosure auctions are worth less than the full amount owed to the bank or lender, or when no one bids on them. “Bank-owned” property is put back on the market for sale, usually listed through a real estate broker.

Leave A Comment