The Start Of The Foreclosure Process
You hear the word 'foreclosure' all the time in the news of the past few years, and you know that foreclosure means that you lose your house because of not paying the mortgage. But do you actually know what happens during the foreclosure process?
The foreclosure will actually be the last step of a long process where the lender will try to get their money back. The foreclosure process starts with pre-foreclosure.
Once a person misses the first mortgage payment, the lender will send a late payment notice. If the homeowner chooses to ignore this notice and misses another payment without contacting the lender, then another payment request will be made. If the homeowner still fails to contact the lender, the lender may then make a demand for payment in full. This type of process is stipulated in your mortgage under the acceleration clause, which is in most standard mortgage contracts. Not only will you owe the balance of the mortgage, but also late payments, legal fees and late fee penalties. Once the acceleration clause has been evoked, the bank will not accept anything other than full payment and the barely then the formal foreclosure process begins.
The lender will now send a certified letter of foreclosure to you, the homeowner. The letter may be served by a processor or by the local sheriff. The lender will then publish a legal notice in the local paper of the pending foreclosure. At this time, a home owner can try to work with the lender, but unless the homeowner has full payment ready, the lender may not work with them at all. A court date will be set, at which time the homeowner, lender and any other party with financial interest in the property will attend. The courts will issue the foreclosure to the lender and the lender then publishes the note of foreclosure and lists a date for the auction in the paper.