A foreclosure generally takes about 5 months or longer depending on how backed up the court systems are for a judicial foreclosure and about the same time line for non-judicial private trustee sales.
The timeline of a foreclosure is generally as follows:
- Borrower is at least three months in default on their mortgage payment.
- Lender starts initial foreclosure proceedings by recording notice of default or filing a Lis Pendens (litigation pending).
- Borrower has statutory time in which to respond and defend themselves from foreclosure (varies from state to state) prior to the foreclosure sale.
- Notice of Sale is published in the newspaper of general circulation in the county where the property is located (approximately 3-4 months after the initial proceedings are started by the lender.) Again it varies from state to state.
- Redemption Period. Borrower has statutory redemption period in which to redeem the property, pay all costs and fees and arrearages to bring the mortgage current. Each state has different laws regarding redemption periods.
- Foreclosure auction or Sheriff's Sale is held at the court house steps (judicial foreclosure) or other designated place approximately 5 months or more after initial foreclosure proceedings are instituted by lender.
- If property is not sold at the foreclosure auction or Sheriff's Sale, then it becomes an REO (bank owned real estate) property which is now owed by the bank. The bank lists the property for sale with a Realtor and it is offered in the MLS system to the public for sale. This normally occurs approximately 6 months to year after foreclosure proceedings were started.
Foreclosure Defense Delays Foreclosure
Because there are a record number of foreclosure and distressed properties, the system has been back logged now for more than a year. In some cases, borrowers have remained in their homes as long as a year before the property actually goes to foreclosure without paying any mortgage payments to their lender. Foreclosure defense attorneys have been able to stall the foreclosure proceedings in an attempt to defend the borrowers. If there is any evidence discovered by the attorneys that there has been predatory loan practices conducted by the lender, the loan could be rescinded by the borrower. Although usually the borrower‘s attorney uses this as a defense tactic to get the lender to stop the foreclosure proceedings and negotiate with the borrower.
Lenders Costs and Fees
A typical foreclosure proceeding will cost the lender on average $50,000, so lenders prefer to avoid foreclosure proceedings in the first place. Right now there is a lot of government pressure for lenders and borrowers to work together to prevent or stop the home from going to foreclosure.
Mortgage Modifications and Refinancing
Lenders are trying to work with borrowers to give them the option of a mortgage modification or refinancing. Now with the new government Affordable Home Modification and Affordable Home Refinance programs, this should stop many of the foreclosures and help homeowners stay in their homes.
If you need more legal information or help regarding a Foreclosure, Submit your Case for a Free Review
from a Foreclosure Lawyer in your area to be aware of your options.