How Foreclosure Process Works

Foreclosure is the legal procedure by which a mortgagor’s right of redeeming a mortgaged estate is extinguished, typically leading to the property being seized and sold. This legal procedure is undertaken by the mortgagee or other lien holder, who is a lender in most instances.

Foreclosure proceedings can initiate even after a single missed payment, but this is not very likely. A grace period is provided by most banks and lenders in the event of late payment, mostly with a fee attached. It takes being late by a full 30 days for the issue to escalate and come to attention.

Notice to accelerate

Upon being due by sixty days, a notice to accelerate is dispatched. At this point, partial payment is no longer accepted and the entire delinquent amount, alongside any late fees, must be paid in order to bring the loan current. A letter may also be sent giving a certain date, failure to pay by which may lead to an acceleration of the due date of the loan, and the start of the foreclosure process. It may be further stated that all attorney fees might be included to the delinquent amount in the event of non-payment by the date provided.

The demand letter

A demand letter is forwarded in the event that payment of the full amount is not made by the date stipulated in the notice to accelerate. An attorney is hired for the preparation of this letter, and it serves as a formal notification that the foreclosure procedure is going to go ahead in the court system in the event that the loan is not brought current immediately.

Notice of default

In the event that the full amount due, alongside any legal fees, is still not paid in response to the demand letter, a formal foreclosure is filed by the lender in the court. This is the notice of default and lists the entire amount which is required to be paid. A period of about twenty to thirty days is given before the notice of sale is given.

Notice of sale

A notice of sale is sent and also posted on the property. It is further recorded at the County Recorder’s Office in the county where the property is located. Finally, it is published in newspapers which are local to the county in question over a three-week period. The time and location of the sale are established within the notice of sale, and the property is sold in an auction.