What is Foreclosure?
Foreclosure is the legal proceeding when a lender obtains a court order giving the lender the right to resell the property. This normally takes place when an owner buys a property and takes out a loan, or mortgage, to pay for the piece of property. If the property owner misses one or more payments, the foreclosure process may begin with an official notice or call from the lender demanding payment.
Who is affected by Foreclosure?
Foreclosure is affecting more people now than any time in US History. Foreclosures nationwide increased 225% from 2006 to 2008, with 1 in 54 homeowners receiving foreclosure notices in 2008. Final numbers for 2009 are expected to be as high, or higher, than those in 2009. The states that have been hardest hit by foreclosures were the same ones that that recorded record high housing price increases in the late 90s to around 2005. These states included California, Nevada, Florida & Arizona.
It is expected that 8.1 million homeownders, or 16% of all homeowners, will fall into foreclosure by 2012.
While it used to be true that Foreclosure affected only lower income individuals, this trend has not been the case in recent years. The rise in exotic mortgages in the late 90s and early 2000s coupled with the steep decline in housing prices in the last few years has made foreclosure a reality for nearly all segements of our society.
How does the Foreclosure process work?
Foreclosure processes vary from state to state but they do generally follow the same general process. The information in this section refers to California procedure but may be used a general guide for other states. You should review the official website of your state to look for state specific processes and information.
As is mentioned in the first section above (“What is Foreclosure?”), your first indication of a pending foreclosure is a demand for payment from the lender after one or more missed payments. If you do not respond to this demand or can’t come to an agreement with your lender, a Notice of Default is filed with with the county Recorder’s Office. The home owner will also be served with the Notice of Default.
Once the Notice of Default is filed, the 90 day Reinstatement Waiting Period begins. This waiting period is designed to give the home owner the time to pull together enough money to bring the debt current and pay off overdue payments.
After the 90 day waiting period, a Notice of Sale of the property can be issued and the home owner must be served with the notice. The Notice of Sale must be published once per week for a period of a least 20 days.
When the 20 day publication period is up, the auction for sale of the home can be held.
Altogether the minimum time that between the filing of the Notice of Default and the home auction is 111 days.