Next comes a notice of sale, which will state that the trustee (the lender) will sell the home at auction within 21 days.Ī notice of sale is also sent via certified letter to the homeowner, but it also must be published weekly in a newspaper in the county where the home is located for three consecutive weeks before the auction date. If the homeowner hasn’t come up with the money within 90 days of the notice of default, the lender may proceed with the foreclosure process. Foreclosure process step 3: Notice of sale You’ll then go back to paying your monthly bill as usual. One option is a mortgage reinstatement, whereby you “reinstate” your mortgage by making up all the missed payments at once, plus interest and lender fees. There’s still time to save your home after a notice of default-if you can find the cash. “This step marks the beginning of the formal and public foreclosure process,” Zuetel says. This form will be sent to the mortgagee in the mail via a certified letter, and it typically gives a homeowner 90 days to pay off the most recent bill. If a borrower can’t come up with the funds to pay what he or she owes, a lender will issue a notice of default. Foreclosure process step 2: Notice of default “It is not uncommon to see homeowners sell their home, pay off the missed mortgage payments plus fees, and then downsize to a more affordable living situation and avoid foreclosure all together,” Blake notes. You can also get foreclosure avoidance counseling at HUD.gov or by calling 888-995-HOPE. Selling the home to cover the mortgage might also be an option at this point, so Blake advises calling a real estate professional during this time to take advantage of all your options. Termed a foreclosure avoidance assessment, this period might include requests for a payment adjustment, interest adjustment, deferral, or other accommodations. In many states, a lender or servicer cannot file a notice of default until 30 days after contacting the homeowner to assess the homeowner’s financial situation and explore options to avoid foreclosure, Zuetel explains. But it’s also the law in many states, says real estate attorney and broker Bryan Zuetel of Esquire Real Estate in Irvine, CA. This is partly because it’s in a lender’s best interest to make things work-after all, the lender wants its money. Lenders usually offer alternatives during this period, including different payment plans to help the homeowner get back on track, keep their home, and keep paying their monthly mortgage bill. That said, banks want their money, so borrowers can expect an influx of emails, letters, and phone calls from their lender or bank trying to collect. “They will usually give the borrower a grace period because they recognize the reality that people face temporary financial hardship at some point in their lives,” explains Lisa Blake, a real estate broker and owner of The Blake Team in Aurora, CO. And it’s rare for lenders to begin the foreclosure process after just one late mortgage payment. A bank can’t just start the foreclose process on a home whenever it wants. Homeowners have to first default on their mortgage, failing to pay their required monthly payments.
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