Know the Steps to Foreclosure

by admin on February 26, 2009

There are many steps that go into a foreclosure. If you find yourself getting late on a mortgage payment, the last thing you want to do is bury your head in the sand. It’s important that you know the steps to foreclosure so you can act appropriately if it’s happening to you.

Late Payment During Grace Period If your payment is less than 10 or 15 days late, but still makes it into your mortgage servicer, there’s a very good chance you won’t even be assessed a late fee or penalty. There is a definite grace period for making your payment and it typicall starts after 15 days or so (each servicer is different).

Late Payment After Grace Period If you make your payment between 15 and 30 days you can expect to get charged a late fee by your mortgage servicer. You will also get a call from your lender asking you the reasons why your payment was late.

45-60 Days With No Payment Let your mortgage go this far without being paid or you will get an offical letter from your lender called a “demand” letter. This will let you know you are in breach of the mortgage and you are given a set amount of time to make the back payments (usually 30 days). You can also expect to start getting phone calls from mortgage collectors. The calls will only pick up in intensity, the longer the mortgage servicer goes without payment. Expect an offer from your mortgage company in the form of a repayment plan or a loan modification – this isn’t always the case, but the lender now realizes you are in dire straits and most likely need some assistance to pay back the loan in full.

90-150 Days With No Payment The bank will be gearing up for full on foreclosure by using an inhouse attorney (or hiring one) to handle the proceedings. The mortgage company may file a notice of default at the local state agency and it will probably be published in the local paper. Not only are collection costs building, you now have to repay legal costs incurred by the mortgage company. The fees and penalties assessed at this point can get overwhelming pretty quickly and it will be a lot to pay back to reclaim your house.

150-365 Days With No Payment Your mortgage owner will file a notice of trustee Sale and the house will be put up for foreclosure sale. The foreclosure sale is advertised in the local media outlets – newspapers are often the popular choice for these types of dispositions. Your property is then auctioned off and sold to the highest bidder in the ensuing foreclosure sale.

Please note that these timelines are only estimates and the actual process will vary depending on the owner of your loan and the state you live in. If you do find yourself getting close to foreclosure, pay attention to the process, don’t hide from it as that will hurt much worse in the long run.

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