What Happens During a Foreclosure?

There are two prominent phases within the foreclosure process; Pre-Foreclosure and Formal Foreclosure.

During the Pre-Foreclosure phase, the homeowner misses several mortgage payments and the bank replies with late notices, phone calls, and eventually a notice of default. If arrangements can’t be made to pay the delinquent payments along with, accrued interest, late fees and legal fees, the lender escalates the situation to the Formal Foreclosure phase.

The Formal Foreclosure phase is where the lender files a foreclosure action in court. The court holds a hearing and issues a foreclosure order which gives the bank the right to sell the house. A legal notice is published in the local papers and the house is sold to the highest bidder at auction or the bank takes possession of the home.

Eventually, after a redemption period, the original homeowner is evicted from the home and notified of any outstanding debt still owed on the property. The lender can still come after the original homeowner for any outstanding debt still owed on the property in the form of a deficiency judgment.

If you are facing home foreclosure or have an adjustable rate mortgage that may adjust in the near future there are options that can help you avoid foreclosure, save your home, and secure your financial future. The most viable option, in most cases, is a mortgage modification.

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