Foreclosure Process - How it Works

Everyday, thousands of homeowners in the United States who have been missing their mortgage payments for months are losing their homes due to foreclosure. Although a lot of people know the consequences of defaulting on their home loan, not many can really get a good grasp of the foreclosure process. It is a pity that borrowers only become interested in this legal process if they are already about to be kicked out of their homes or properties. If only they have researched and studied how foreclosure works, they might have prevented this dreaded procedure.

The long and winding foreclosure process actually begins when a borrower starts to miss his or her mortgage payments. Usually, defaulting for one or two months would not really instigate foreclosure, especially if the borrower was able to keep his or her debt up to date. However, if you continue to miss payments for three or more months, your lender will start to give you a late payment notice. If you contact your lender and explain your situation or ask for extension, then you might not have a problem. But if you continue to miss payments and at the same time ignore the late payment notices sent by the lender, then your bank will be forced to evoke the acceleration clause, wherein the lender can demand that you pay your mortgage in full. Furthermore, your bank will also need to order a NOD, or Notice of Default, at the Office of County Recorder.

Once the bank uses the acceleration clause, you know that the formal foreclosure process is already starting. This means that if you do not pay your remaining mortgage balance in full as well as the legal fees, late charges and other penalties within three months, you will be receiving a Notice of Sale, which will be posted on the door of the property that is being foreclosed. The Notice of Sale will need to be recorded at the office of County Recorder and also published in several local papers for a period of 21 days.

The foreclosure process ends with the auction of your property. This can also be called a foreclosure or sheriff's sale. Anybody can participate in the auction. However, the highest bidder must remember that the winning bid must be paid in full within 24 hours. The money from the auction will first go to the real property taxes owed by the homeowner then to the mortgage and other creditors. If there is money remaining from the auction, then the homeowner will get a share.

This is a basic outline of the foreclosure process [http://www.wesavehomes.com/foreclosure_process.php], each state and local government has specific laws and policies that may alter foreclosure rules. It is very important you research your local foreclosure laws and foreclosure rights if you are facing foreclosure. This could mean the difference between keeping your home or not. It is also highly recommended that you seek legal assistance from a loan modification attorney when dealing with foreclosure. It has become a very detailed process due to all the news laws, programs and foreclosure alternatives.