Foreclosure processes are different in every state. If you are worried about making your mortgage payments, then you should learn about your state's foreclosure laws and processes.

 

Overview

Foreclosure processes are different in every state. If you are worried about making your mortgage payments, then you should learn about your state's foreclosure laws and processes. Differences among states range from the notices that must be posted or mailed, redemption periods, and the scheduling and notices issued regarding the auctioning of the property. However, a general understanding of what to expect can be found on our Foreclosure Timeline.

In general, mortgage companies start foreclosure processes about 3-6 months after the first missed mortgage payment. Late fees are charged after 10-15 days, however most mortgage companies recognize that homeowners may be facing short-term financial hardships. It is extremely important you stay in contact with your lender within the first month after missing a payment.

After 30 days, the borrower is in default, and the foreclosure processes begin to accelerate. If you do not call the bank and ignore the calls of your lender, then the foreclosure process will begin much earlier. At any time during the process, talk to your lender or a housing counselor about the different alternatives and solutions that may exist.

Types of Foreclosure

Three types of foreclosures may be initiated at this time: judicial, power of sale, and strict foreclosure. All types of foreclosure require public notices to be issued and all parties to be notified regarding the proceedings. Once properties are sold through an auction, families have a small amount of time to find a new place to live and move out before the sheriff issues an eviction.

  • Judicial Foreclosure. All states allow this type of foreclosure, and some require it. The lender files suit with the judicial system, and the borrower will receive a note in the mail demanding payment. The borrower then has only 30 days to respond with a payment in order to avoid foreclosure. If a payment is not made after a certain time period, the mortgaged property then is sold through an auction to the highest bidder, carried out by a local court or sheriff's office.

  • Non-Judicial Foreclosure. Some states (listed below) do NOT require lenders to go to court in order to foreclosure on  your home. Non-judicial foreclosures often proceed much faster, though they may be subject to judicial review to ensure the legality of the proceedings. If your your property is in one of these states, you most likely signed two central documents when you bought or refinanced your home: a promissory note and a deed of trust. The deed of trust turns the promissory note into a debt secured by a lien (legal claim) on your home. The deed of trust authorizes the lender to foreclose on the property if you default. The deed of trust typically allows the foreclosure to proceed outside of court, under state law.

  • Power of Sale. This type of foreclosure, also known as statutory foreclosure, is allowed by many states if the mortgage includes a power of sale clause. After a homeowner has defaulted on mortgage payments, the lender sends out notices demanding payments. Once an established waiting period has passed, the mortgage company rather than local courts or sheriff's office carries out a public auction. Non-judicial foreclosure auctions are often more expedient, though they may be subject to judicial review to ensure the legality of the proceedings.

  • Strict Foreclosure. A small number of states allow this type of foreclosure. In strict foreclosure proceedings, the lender files a lawsuit on homeowner that has defaulted. If the borrower cannot pay the mortgage within a specific timeline ordered by the court, the property goes directly back to the mortgage holder. Generally, strict foreclosures take place only when the debt amount is greater than the value of the property.

Foreclosure Timeline

Few people think they will lose their home, they think they have more time. Here's how it happens. Note: Timeline varies by state.

  • First month missed payment – your lender will contact you by letter or phone. A housing counselor can help.
     
  • Second month missed payment – your lender is likely to begin calling you to discuss why you have not made your payments. It is important that you take their phone calls. Talk to your lender and explain your situation and what you are trying to do to resolve it. At this time, you still may be able to make one payment to prevent yourself from falling three months behind. A housing counselor can help.
     
  • Third month missed payment – after the third payment is missed, you will receive a letter from you lender stating the amount you are delinquent, and that you have 30 days to bring your mortgage current. This is called a "Demand Letter" or "Notice to Accelerate". If you do not pay the specified amount or make some type of arrangements by the given date, the lender may begin foreclosure proceedings. They are unlikely to accept less than the total due without arrangements being made if you receive this letter. You still have time to work something out with your lender. A housing counselor can still help.
     
  • Fourth month missed payment – now you are nearing the end of time allowed in your Demand or Notice to Accelerate Letter. When the 30 days ends, if you have not paid the full amount or worked our arrangements you will be referred to your lender's attorneys. You will incur all attorney fees as part of your delinquency. A housing counselor can still help you.
     
  • Sheriff's or Public Trustee's Sale – the attorney will schedule a Sale. This is the actual day of foreclosure. You may be notified of the date by mail, a notice is taped to your door, and the sale may be advertised in a local paper. The time between the Demand or Notice to Accelerate Letter and the actual Sale varies by state. In some states it can be as quick as 2-3 months. This is not the move-out date, but the end is near. You have until the date of sale to make arrangements with your lender, or pay the total amount owed, including attorney fees.
     
  • Redemption Period – after the sale date, you may enter a redemption period. You will be notified of your time frame on the same notice that your state uses for your Sheriff's or Public Trustee's Sale

Important: Stay in contact with your lender and get assistance as early as possible. All dates are estimated, and vary according to your state and your mortgage company.

 

States Using Judicial Foreclosure

  • Arizona
  • Delaware
  • Florida
  • Hawaii
  • Illionois
  • Indiana
  • Iowa
  • Kansas
  • Louisiana
  • Nebraska
  • New Jersey
  • New Mexico
  • New York
  • North Dakota
  • Ohio
  • Oklahoma
  • Pennsylvania
  • South Carolina
  • Vermont
  • Maine
  • Wisconsin
  • West Virginia
     

 States Using Non-Judicial Foreclosure
 

  • Alabama
  • Alaska
  • Arizona (occasionally)
  • Arkansas
  • California
  • District of Columbia
  • Georgia
  • Idaho
  • Maryland
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nevada
  • New Hampshire
  • New Mexico (occasionally)
  • North Carolina
  • Oklahoma (homeowner can request a judicial foreclosure)
  • Oregon
  • Rhode Island
  • South Dakota (homeowner can request a judicial foreclosure)
  • Tennessee
  • Texas
  • Utah
  • Vermont (occasionally)
  • Virginia
  • West Virginia (occasionally)
  • Wyoming

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