The Foreclosure Process
Foreclosure is a legal proceeding by a creditor to regain property or other collateral following a default on mortgage payments.
The foreclosure process varies from one country to another and generally begins from when a borrower defaults at least one mortgage payment. If the said borrower misses the grace period of up to 15th of the month, the lender sends a missed payment notice but after two payments are defaulted the lender follows up with a demand letter. If possible, the borrower can still make arrangements with the lender and would have to remit the due payments within 30 days.
After 90 days of missed payments, a notice of default is sent. In some countries the notice is prominently shown on the home and then the loan will be handed over to the lenders foreclosure department in the area of the property. The borrower will then be given another 90 days to settle the payments. This is known as the reinstatement period.
After the period ends and the borrower still hasn’t paid his due loan then a notice of trustee sale will be recorded in the county where the property is. The lender then publishes a notice in the local newspaper giving the availability of the property at a public auction, its whereabouts, owner’s names, legal description and sale location.
The property is then free to a public auction and is granted to a highest bidder meeting necessary requirements. The lender calculates a starting bid considering value of the outstanding loan and any unpaid taxes associated with the sale. The buyer then decides how long the previous owners will stay in the foreclosed property and is provided with a trustee’s deed upon sale. If the property is not sold in the auction, the lender becomes the owner and attempts to sell it through a broker or a real estate owned asset manager.
The last notice sent is the eviction notice when the borrower overstays the period given by the buyer to vacate the premises and sometimes a local officer can be sent to hasten the eviction.
Its unfortunate to have your property foreclosed but having prior knowledge of it can help prepare you for what is to come.