Basic Stages of Foreclosure
There are a few stages that are important to any foreclosure process.Foreclosure works differently in different states around the country.The two ways different states use to foreclose upon a property are: judicial sale or power of sale.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many alert notices that you are in arrears beforehand.
- Mortgage lender files suit incourt.
- Court send letter demanding payment.
- You’ll have 30 days to bring payment to court to avoid foreclosure (extension vary).
- If no payment is made, a judgment will be entered and the lender can request the sale of your property.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate.
Power of Sale (Non-Judicial Foreclosure):
- The mortgage lender serves you notice demanding payment, the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property to the lender at a public auction (notice must be given).
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.Sometimes, if the sale of the property isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank after the foreclosure sale.Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.