How foreclosures works
There is more than one reason why a house is placed in foreclosure. The primary reason is nonpayment on a mortgage loan. Other reasons include past due taxes that evolve into tax liens and past due home owners association fees.
Once the mortgage has been unpaid for three months; there is a possibility that the bank will foreclose on the property. The mortgage company will increase efforts to collect the past due amounts. The owner of the house will receive phone calls throughout the day, and letters will be sent through certified mail.
At this time the mortgage company will not accept partial payment on the past due amount. The loan payments will have to made current. This will be the past due amount plus any late fees or additional charges. At this time in the process, a demand letter will be sent requesting payment for the entire loan amount. Even at this point, the mortgage can still be brought current by paying the past due amount.
By this time the homeowner will receive letters that threaten to start foreclosure proceedings. Once the actual foreclosure proceedings have started; it is difficult to get any help from the mortgage company. Any communication will be done through the attorney who is handling the foreclosure. The attorney will communicate by sending letters indicating what needs to be done to halt the foreclosure process. There will also be a contact number, and dates which note the deadline to resolve the issue.
At this stage in the process; the amount owed will be the past due amount, all the fees incurred and the attorney’s fees. By now letters will be sent informing the property owner of the foreclosure, and the intention of putting the home up for auction. After receiving this letter, it will take approximately three to four weeks for the locks to be changed. A notice of foreclosure will be posted where it is visible on the property. The process can take up to six months and up to a year for some people.
Foreclosures by the home owners association (HOA) are more frequent, and are for a smaller amounts of money, and are easier to resolve. The association fees are due once a year, and the association will foreclose on the property if it is not paid. An attorney will contact the home owner and request payment for the past due amount. After no response, the association will file a notice to foreclose. A court date will be set and all parties will be notified. A default judgement will be made against any home owner who does not appear. The amount owed will now be the past due amount, filing fees, and the attorney’s fee. The sheriff’s office will contact the home owner, with notice of intent to auction the property.
Tax foreclosures are typically not brought against a primary homestead but will be carried out against other properties. A tax lien will be placed on your primary resident while other properties will be sold at auction if the taxes are not paid.
Foreclosure issues can be resolved by earlier communication by the parties involved. The burden is on the home owner to contact the mortgage company or HOA representatives and negotiate payment settlements.