What Happens During A Foreclosure?  

This article discusses exactly what to expect during a foreclosure.  It highlights what the process is and how it works.  It discusses what happens when you fail to make payments through the actual repossession of the home.

The initiation of foreclosure is a midpoint in the entire process of foreclosure and repossession.  It is never just an unexpected shock; it takes several months before the lender will take such a drastic step.  What has set the chain of events in motion is the lack of prompt payment by the homeowner. 

He has missed payments and the lender has taken the proper steps by sending late notices.  By the time the second payment has been missed the letters will be more firm in nature and there is phone contact that has been attempted by the lender.

The lender is within his rights to demand immediate and full payment and late charges.   Many mortgage institutions will send certified letters stating their intention of proceeding with foreclosure if the account is not brought up to date and will allow a bit more time before making the final call.

 Failing to Make Payments

If a homeowner should fail to make arrangements with the lending institution and still misses yet a third payment, the lending agency shall invoke a specific clause that is in a mortgage contract.  This particular clause is known as an acceleration clause. With the invocation of this standard and unrelenting clause, foreclosure is moving forward and is unstoppable.  The only arrangement that a homeowner can now make is to pay everything in full. 

This means that in order to halt the foreclosure, the homeowner must pay the entire balance due, plus legal fees and all late charges.
The homeowner will be receiving a certified letter of official intent to foreclose and these will most likely be hand delivered, often by a representative of the local sheriffs department.  There will also be a formal notice of foreclosure, which is still pending at this time, , published in the local newspaper.  This is done in order to satisfy the letter of the law.

There will be a foreclosure hearing in court and any interested parties with a financial interest in the house and transaction may appear in court. The hearing itself is more of a moot point, because non-payment is enough grounds to allow the judge to rule on behalf of the lending institution. The court will subsequently grant the foreclosure.

 Final Steps in Foreclosure

The lender can now publish the act and execution of foreclosure and offer the house for sale at public auction. On the day of the sale many other properties that have been foreclosed will generally be up for sale as well.  The lending institution may bid on the property, but it generally will be bought by someone else. 

The lender will have set requirements that call for a minimum down payment by certified funds and will usually require that any bidder have financing arranged prior to auction. The house will then become the property of the successful bidder.
There may be a brief period of time immediately following the sale that will allow the original property owner to redeem his home.  The only way to do that is to pay the entire amount. 

If the sale is closed and finalized, the monies realized will go to pay taxes and liens on the property; and then if any debts are owed and those creditors were at the hearing they are paid.  If there is any money left now, the homeowner will get that. There will also be an notice issued for the owner to vacate the premises. These notices are issued only after the auction and the final disposition and closing on the house.