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Foreclosure Explained – How Does Foreclosure Work?
By Vic Hurlstorm | May 29, 2009
If you are asking yourself how does foreclosure work~ ,then this article is going to provide you with answers. There are only a few steps to the foreclosure process. You should be considering these steps if you are in the process of avoiding foreclosure. These steps include the reinstatement of the loan and the default notice being recorded.
Step 1 – The Bank Records Notice Of Default
The first step of the foreclosure process is when the bank officially records the notice of default. This is the first day you miss the payment on your house. This wont occur on the first missed payment – only after a few. This all is dependent on the way your bank handles the foreclosure process. It depends on your bank whether they will begin the foreclosure process after 2, 3 or 4 missed payments.
Step 2 – Reinstating Your Loan
The next step is to get the loan re-instated. The loan can be re-instated in your name. As the foreclosure process has just begun, this does not necessarily mean that your house is gone. You don’t technically lose your home until the home has sold through an auction. If you can come up with the money to pay the missed payments and the late fees then you can reinstate your home loan. This is possible to do up until 5 days prior to the sale of the home through an auction.
Step 3 – Bank Sets Date Of Foreclosure
The 3rd step is for the bank to set the actual date of the foreclosure auction. This is normally 3 months after the notice of default is sent. The home owner is allowed to continue living until this date is reached. No one will come and evict you out of the home before this set date has arrived.
Next the notice of trustee sale will be prepared. It will be made public that the home is up for foreclosure. A copy will then be mailed to you and also placed on the home.
Step 4 – Selling The House At The Foreclosure Auction
The final step to the the foreclosure process is that the house is sold at the foreclosure auction. This can go 2 ways. It is however possible for someone to make a lower bid at the auction than your outstanding loan amount. If this is whats happening, the new owner of the house can get you immediately removed from the home. This eviction can take place in less than 24 hours, and be carried out by the sheriff. If the home is not sold at auction, the bank will retain the home. The bank may work toward evicting you right away. However, banks usually hire a company to take care of the home until they can sell it. This will give the home owners a few weeks.
The Conclusion
So in summary – how does foreclosure work? The ideal time frame for a foreclosure to occur is around 3 months for a bank. This is what they would tell you. You should understand the actual time a foreclosure takes is 6 months to a year – depending on what happens and if the home is old at auction. If you are going through the foreclosure process you don’t have to move out of the home right away.
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