Foreclosure Information

Types of Foreclosure

The state in which you live will determine the foreclosure route your lender will take. There are two types of foreclosures: judicial and nonjudicial. In order to develop a solid game plan, find out your state’s foreclosure avenue.

Judicial Foreclosure: Judicial foreclosures are processed through the courts. Your lender will hire an attorney to file a foreclosure lawsuit against you. You will be served with the foreclosure papers and the litigation process begins. You may hire an attorney to defend your case or represent yourself in court. During this time period, you may also negotiate directly with your lender to avoid loosing your home to the bank. Judicial foreclosures can take as little as a few months or as much as a year or more (depending on your situation).

Non-Judicial Foreclosure: Non-judicial foreclosures do not require court intervention. This means that your lender can proceed with auctioning your property without proving its case to the court. A homeowner is served a Notice of Default or Notice of Sale advising of when the auction date will be set. However, some states require only the publication of the Notice of Sale to announce the sale, with no direct owner notification. With nonjudicial foreclosure, you must bring a lawsuit against your lender to stop the sale.

Judicial Foreclosure Timeline

Day 1-15
Lenders expect your mortgage payment on or before the due date. If your payment is not received, most lenders offer an additional 10-day grace period. Once the grace period expires, expect a letter or a phone call from Client Support to find out if there is a problem.

Day 16 to day 30
A nominal late fee is charged to your account. The lender or its servicing company is not sympathetic to your problem and expects a payment in full. After 30 days, all three credit bureaus (EFX, EXP, TRU) are updated and a 30-day late claim is added to your credit report. Derogatory credit will remain on your credit report for 7 years.

Day 30 to day 90
If your mortgage payment is 30 days late or more, the lender will mail out a demand letter or notice of default that basically demands payment in full. The notice includes your name, account number, how many days you’re behind and how much you owe to bring the account current. The notice goes on to make you aware that the lender will be forced to take drastic measures that include foreclosure proceedings. The notice of default is your wake up call.

Day 90 to day 120
The lender sends your loan to the foreclosure or loss mitigation department. At this point, your credit is in flames and refinancing to a competitive rate is no longer an option. Your lender is probably contacting you on a daily basis to collect past due payments. It will not be long until you are served with the foreclosure action.

Day 120 to day 180
During this time, you likely will be served with the foreclosure action. If you do nothing, your home will likely be sold at public auction sometime between 120 and 180 days after you are served. At this point, many people assume they are out of options. Nothing is further from the truth. You still have the opportunity to get current or discuss other alternatives, including mortgage modification, with the bank.

Public Sale: Once a foreclosure judgment is entered against you, the court will advise you of the public auction date of your property. Even after you are noticed of this date, the lender may agree to stay the sale to make alternative arrangements with you. If you proceed to the sale date, the highest bidder will become the owner of the property. Note that you can bid on your own property. Generally, you will need cash at the sale or very shortly thereafter.

IMPORTANT NOTE ABOUT TIME FRAMES: Please note that the time frame is state sensitive. Borrowers living in states that have judicial foreclosures can get almost a year to straighten out their affairs before the sale. In non-judicial states, homeowners have as little as thirty (30) to sixty (60) days to leave the premises.