Many homeowners have questions about how foreclosure works and how long they have between when they miss a payment and when the bank actually forecloses. If you’re wondering how long you have before you have to leave, it depends on whether your case will be handled in a judicial foreclosure or in a non-judicial foreclosure. Most states allow both, but some states only allow one or the other, so you’ll have to research to find out which your is for sure, but there’s a good chance yours will be non-judicial because it moves faster and costs less for the lender.
– You miss your first payment (for example, we’ll say this is your July payment and it was due on July 1).
– Your grace period expires (usually 15 days) and you haven’t paid. Your payment is now considered late by your lender. It’s not uncommon to begin getting letters or phone calls from them at this point. Don’t ignore these phone calls.
– At most lenders, once you’re 60 days late (September 2 in our case), your loan is considered in default and the lender can begin either the Judicial or Non-Judicial foreclosure process. To bring your loan current at this point, you’ll usually be required to pay all past due amounts (your July and August payments), all late fees, and your September payment.
This is where lenders have the most flexibility in the process. They aren’t required to enter the foreclosure process simply because you’ve fallen a certain number of days behind. If you’re in communication with them and have worked out a plan to get back current, you can stay out of foreclosure altogether, but you have to take action.
– Your lender’s lawyer will file a complaint with your county courthouse and request a court date. This typically doesn’t happen until you’re over 90 days late.
– You’ll be served a notice of this complaint.
– A hearing will be held in your county to determine the sufficiency of the complaint. If you believe you have legal grounds to dispute the foreclosure, this is where you and your lawyer would argue those grounds. At the end of this hearing, the judge will rule whether the complaint is sufficient or not. If it is, the foreclosure sale will be scheduled and your credit record will be marked as having a foreclosure. If it’s not sufficient, the judge will dismiss it. How long all of this takes is dependent upon the courts in your area. Typically, it takes about 30 – 60 days.
– A date will be set for redemption of the property if your state laws stipulate. You can still bring your loan current (including fees, etc) until the redemption date. Even if the house has been sold and someone has moved in, if the redemption date hasn’t passed, you can still get your house back…if you can get enough money.
– A date will be set for the foreclosure auction. This usually happens about 30 – 45 days after the sufficiency hearing.
*** A Judicial foreclosure typically takes anywhere from 6 months to 2 years from start to finish. ***
– Your lender will send you a Notice of Default in the mail.
– Your lender will send you a Notice of Sale to tell you when your home will be sold at the foreclosure auction.
*** A Non-Judicial foreclosure typically takes anywhere from 1 month to 1 year to complete. ***
– The foreclosure sale happens and your house is sold. In approximately 90 – 95% of cases, the owner of your first mortgage wins the auction because they bid the amount that you owe on that loan and usually no one else will go higher than that.
The owner of your home then contacts the county sheriff who posts a notice of eviction on your door. This notice gives you 24 – 72 hours to leave the house and have all of your possessions out. If you’re there when the sheriff returns, he will escort of off the premises and anything left on or in the property will then belong to the new homeowner.