A foreclosure is a long and complicated process that no one enjoys. Neither the homeowner nor the lender wants to deal with a foreclosure. It means losses on both sides. Accordingly, foreclosure is seen as a last resort by all parties.
Some states follow a non judicial foreclosure procedure. Essentially this means that property foreclosures in that state do not involve the court system. In these cases the lender notifies the borrower of their default. The borrower may not have made a payment on their property for several months or perhaps even for a year or more. The initial mortgage paperwork they signed when they purchased their property provided the lender with the ability to begin the process of selling the property immediately upon default. The court system never needs to be involved because both parties signed a binding contract at the outset and understood the terms and conditions of that contract.
In a non judicial foreclosure the process begins quickly. The borrower is given a period of time within which they must either sell the property or find a way to re-negotiate their financial obligations to the lender. If they fail to use either of these solutions, then the lender has the right to auction the home. A Notice of Sale is mailed to the homeowner and is also posted in prominent places to attract potential buyers. The auction is essentially a public affair that anyone may attend. The individual who places the highest bid wins the deed to the property and must record the deed. Most often the sale must be completed immediately with cash or must be completed shortly after the auction.
The process for a non judicial foreclosure varies from state to state, so it is important to know the particular rules that govern your state if you find yourself close to defaulting on your mortgage. This is usually a highly stressful time for the homeowner. Often they have lost a job and are behind on more bills than just the mortgage. Because this process can be begun so swiftly it is important to have adequate legal counsel to advise you. A lawyer may be able to stop or at least slow down the process to give you an opportunity to look for a solution short of foreclosure.
Nobody wants to deal with a non judicial foreclosure and as foreclosure numbers have risen in recent years many lenders have added a loss mitigation department to their office. The workers in loss mitigation may be able to help the homeowner establish a modified mortgage or may allow a forbearance in which missed payments are approved and then simply added on to the end of the mortgage term. Other options may also be available, but these must be discussed and explored with the loss mitigation department of your lender.
Many homeowners choose to refinance in order to avoid foreclosure. In many instances this is a suitable solution, but selling the home may work out even better. Some people have even declared bankruptcy, which can effectively stop the foreclosure process. Any of these solutions may be viable for your particular situation.
The best way to understand your rights and to protect them is by contacting an attorney familiar with the foreclosure laws in your state. A competent attorney acts as your advocate and your counsel in a difficult situation. You may fear the added expense of contacting an attorney, but doing so can actually save you money in the long run and may also save your family home. Only a lawyer can guarantee that your rights are adequately protected.