What Happens During a Foreclosure?

A foreclosure is when a bank or lender takes the property title by forcing a sheriff’s sale on your home after you have failed to pay part of the debt owed.  If you fall behind on your monthly mortgage payments, the lender can sue for foreclosure and take over the property.

If you receive a notice from the lender of a foreclosure, you should not ignore the letter.  You need to call or write the bank or lender to explain your current financial situation and give them your financial information.  The mortgage lender may offer some help.  You can stay in your home for the time being as you may not qualify for certain types of help if you leave the property.  As long as the court hasn’t ordered for you to leave, you can stay.  Contact a housing counseling agency to give you information about services and programs offered by both private and public organization.

There are 2 major phases during the foreclosure process.

Pre-Foreclosure:

• You’ve missed several mortgage payments
• The bank sends late notices
• The bank or lender demands the mortgage be paid in full, including back interest, late fees and legal fees
• You do not make the payments

Formal Foreclosure:

• You receive a formal foreclosure notice
• The lender files a foreclosure action in court
• The court holds a hearing and issues a foreclosure order, giving the lender the right to sell the home
• Your notice period expires.
• Legal notice of the foreclosure sale is published in the local papers
• The house is sold to the highest bidder or the bank buys back the home
• You are evicted from the house and notified of any outstanding debt still outstanding after the sale.

Can I pay off what I owe?  Or is it too late?

If the court hasn’t issued a judgment to foreclosure, you can pay the interest, principal and the costs due and the foreclosure should be dismissed.  But if the court has issued a final judgment of foreclsoure and the home hasn’t been sold to a new oner, you can pay what you owe and stop the foreclosure – known as the redemption period.  You must pay the judgment, interest and costs ordered by the court.

Can I sell my house?  Or is it too late?

Yes, you can.  You need to tell the lender that you want to try to sell the home, in which the lender will give a certain amount of time to sell your house and pay off the amount due.  If you sell your home for less than what is owed AND you cannot pay the difference, then the lender could still sue you and get judgment against you for the rest of the money owed.