Foreclosures, explained first tuesday Journal

Foreclosures is a situation in which a homeowner is unable to make full principal and interest repayments on his/her mortgage, which allows the lender to seize the property, evict the homeowner and sell the home, as specified in the mortgage contract. One month after the homeowner misses a mortgage loan payment, he/she is in default and will be notified by the lender. Three to six months after the homeowner misses a mortgage payment, presuming the mortgage is still delinquent, and the homeowner has not comprised the missed payments within a specified grace period, the financial institution will get started to foreclose. Typically the farther behind the customer falls, the more difficult it becomes to capture up since lenders add fees for payments that are 10 to 15 days overdue.

Each state has the own foreclosure laws covering the notices the lender must post publicly and/or with the homeowner, the homeowner's choices for bringing the loan current and avoiding foreclosure, and the method for marketing the property. In twenty two states – including Fl, Illinois, and Ny : judicial foreclosure is the norm, meaning the lender must go through the courts to get authorization to foreclose by showing the borrower is late.

If the foreclosure qualifies, the local sheriff auctions the property to the highest bidder to try to recoup what the bank is due, or the bank becomes the owner and markets the property through the traditional route to recoup their loss. The entire contencioso foreclosure process, from the borrower's first, missed transaction through the lender's sale for the home, usually will take 480 to 700 days, in line with the Mortgage Bankers Association of America.

The other 28 states – including Arizona, California, Georgia and Texas – mainly use non-judicial foreclosure, also referred to as the power of sale, which is often faster and really does not go through the courts unless the home owner sues the lender.

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