Understanding The Home Foreclosure Process
Monday, February 4th, 2008 Subscribe To Our Feed
The home foreclosure process is complex, but not really that difficult. Although it varies from state to state, there is a fairly standard process used by counties for a home foreclosure.
We can say that a home foreclosure usually happens when the property owner fails to make his or her payments on the property - the principle, interest, and property taxes. Many owners will skip their property tax payments while maintaining the principle and interest payments on their home.
Most foreclosure procedures tend to result in seizure and sale of the property. If you are doing real estate investing, then understanding this process is essential.
The downward spiral of home foreclosures
The home foreclosure spiral is one in which owners find it dificult to escape once they’ve started down the path. The process of foreclosure begins the moment that a mortgage loan payment is 16 days late. Once this cusp has been reached, full-blown foreclosure procedure is usually not far behind. At this point, the mortgage service provider may attempt to get in touch with the delinquent homeowner in order to create some kind of workable repayment schedule.
The homeowner continues to miss payments. Home foreclosure proceedings may start after the homeowner has missed from three to six months of loan payments. From there, the mortgage lender may order a trustee to draft and record a Notice of Default.
The Notice of Default is known as a NOD at the Office of the County Recorder. The NOD aims to put borrowers on notice that they are in danger of facing foreclosure actions. This filing also sets off a reinstatement period that will usually last around five days before the property is officially listed or auctioned off.
The Foreclosure
In most cases, mortgage defaults that are not corrected within 90 days will result in a foreclosure. At this point, the home sale date is established. When this happens, the homeowners will receive a Notice of Sale. The Notice of Sale will get posted on the house or property and a copy is recorded at the Office of the County Recorder. They will sometimes publish the auction notice in local newspapers.
Most of these foreclosure procedure trustee sales take place at the county courthouse. The location and time of the sale are usually specified at this time. Most of these foreclosure properties are awarded to the highest bidder at a local auction. Most winning bidders are required to pay in cash, with an initial deposit due upfront, and the rest due within 24 hours of the initial sale.
When the auction takes place, the opening bid is set by a representative from the foreclosure lending company. You’ll see that the opening bid equals the amount owed to the lending company - the outstanding mortgage balance, including any built-up interest and extra fees associated with Trustee Sales.
The home foreclosure process is fairly straightforward, although a painful process for anyone to go through. Once you understand the basic foreclosure process, you can either get yourself out of the spiral if you are the homeowner, or take advantage of foreclosures in your area by understanding the best time to approach the homeowner about purchasing the property.
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