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.
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