Foreclosure Process

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The foreclosure process is complex
It even varies drastically according to state, type of loan document, type of foreclosure sale, etc. Our goal is to simplify and demystify the role of all steps from pre-foreclosure to post foreclosure so you can finally understand this process entails.

First and foremost, it's necessary to clarify that the process described here is related to Judicial and Non-Judicial foreclosures only. Strict foreclosure and other types of foreclosure do not necessary follow the same steps.

In the beginning, there's just a missed mortgage payment.
The lender can issue a Notice of Default (NOD) anytime after your payment is over 35 days in default. There's no estimated time to when the lender will record a NOD with the county where the property is located. For this reason, after then 35 days of default, it is important to check your county's official site for this recorded document on a weekly basis. Once the NOD is recorded, you have officially entered the Pre-Foreclosure stage which lasts 90 days.

If a payment or payment arrangement is not negotiated with the lender by the end of this curative period, a second notice will be recorded shortly after the expiration of the 90 days. The Notice of Sale (NOS) marks the end of the Pre-Foreclosure phase and the commencement of the actual foreclosure process.

Notice of Sale
When the Notice of Sale is recorded, the next step in the foreclosure process is to advertise the foreclosure auction on a local newspaper (Constructive Notice). So long as you are not actively involved in a home loan refinance or home loan modification and do not hire an attorney to intervene in the process, chances are that your property will be sold at an auction on the date, time and place stipulated on the NOS document. Even if the NOS does not reach you, the auction ad published in the paper is presumed read.

Listen closely...
The next few steps will depend on rather if your state calls for a Judicial or Non-Judicial foreclosure. The bottom line however is the same regardless of the type of foreclosure implemented: your property will be sold at an auction and more often than not, the proceeds from the sale will not meet the amount necessary to satisfy your loan. Make sure you do not get to this stage of the game unaware if the lender is able to come after you (Deficiency Judgment) for the remaining balance of the loan due to a Recourse Clause on your Promissory Note (loan contract that states a promise to repay the loan).

Post Foreclosure
Then comes the post foreclosure period, which exist only in states where Deed of Trust is the security document utilized in a Real Estate sale. If you reside in a state were the Right of Redemption is recognized as law, you, as a homeowner, have the right to buy back your property from the new owner usually for the same price he or she paid for the property at auction, along applicable fees and taxes. Again, for the Right of Redemption to exist and to be enforceable there must be a specific law in your state providing for it. Investors and buyers should be aware of the "Right of Redemption" and its various lengths when purchasing a foreclosed home, as the sale does not become final until the redemption period is over.