Foreclosure is the process of shutting out or barring a homeowners right to his or her home after defaulting on mortgage payments over a period of time. Upon this shutting-out-process beginning, the homeowner terminates all rights to the home and is forced to vacate the property.
Unfortunately, millions of people have had this process occur in the wake of the weakened economy. If you are in danger of this happening to you, take this opportunity to learn some of the basics of this process.
What is the Process?
If youve fallen behind in your mortgage payments then this act alone begins the process of foreclosure; however, it is up to the lending company to decide how soon after defaulting will they actually take your property back from you. If the company decides the time is right to begin the process, they will normally follow these steps:
- Notice of Default (NOD). The first step in the process is to send you a formal demand for payment in a letter known as the Notice of Default. If you have been 3 months delinquent in your mortgage payments then this is when youll usually receive it.
- Notice of Acceleration. The next step is to send out a Notice of Acceleration that informs you that you must pay the balance in full to prevent foreclosure. At this point, it may be too late to work out a deal, which is why its important to seek assistance on or before receiving the NOD.
- Notice of Sale. This notice lets you know the date and time of the intended sale of your property. At this point, you still own the property and have the right to sell it; however, the close date must fall before the sale date.
- Public Auction. This is the final step in the process as your house is sold at a public auction. Unfortunately, this step may not relieve you of your financial obligation if the person or entity buying the home doesnt cover your loan balance.
Foreclosure is a process that can happen to anyone who fails to make their mortgage payments. So dont let it happen to you. By communicating with your lending company, you may be able to come up with a solution that can help you stay afloat until you get back on your feet.
