How Does Foreclosure Work

“Learn the basics of foreclosure so you understand the situation you are in. Then let me show you how you can fix this situation in as little as 20 minutes...”

 By Harry Faulkner

The foreclosure process is a very simple process and not hard to understand.  So how does foreclosure work? There are several stages throughout the process of a foreclosure.  A foreclosure occurs when the owner of the property fails to make the principal and the interest payments on their home loan.  In return, this leads to the property being seized by the bank and sold to another interested party.

The action that causes a property to go into foreclosure is no action at all.  When you don’t make your payments and respond to the calls from the bank, the foreclosure process begins.  This usually doesn’t begin right away after the first payment is missed.  It usually takes a few missed payments before the bank begins the process of foreclosure.  This usually takes about 6 months of missed payments.  When the bank begins the process, they start a notice of default and record it at the county recorder’s office.   This will put the home owner on notice they are facing foreclosure.

It is said that after the notice of default is filed then the reinstatement period begins.  This can give the home owner up to five days until the home is auctioned off.  The home is not usually auctioned off for several months until after the notice of default has been filed. The home owner will receive a notice in the mail from the bank of the date of the auction sale of the home.  You can also call the bank and find out when the set date of auction is for the home.

When you get the notice for the auction you have until three months prior to the date of the sale to bring the loan up and current on the home to stop it from being sold at the auction.  The homeowner will receive a notice of sale and it will also be posted on the property.  This will also be recorded at the county recorder’s office.  This will also be published in the local newspapers in the county the home is in.

When the foreclosure sale occurs it usually takes place on the front steps of the county courthouse. The time and location of this sale are usually mentioned in the notice of sale, on a posting on the property, and mailed to the homeowner.  The property is usually auctioned to the highest bidder.  This bid must be paid in cash with a deposit up front and the rest of the money within 24 hours of the sale.  Once the money for the bid is paid the highest bidder receives a trustee’s deed to the property.

The foreclosure process occurs within a year of the time you stop making payments of your home.  Some banks can push the sale forward in as little as six months.  The process will result in the bank trying to sell the home in an auction at the end of the period.  Three months prior to this date you do have the option to save your home if you can bring the payments back to current.  If you were asking yourself how does foreclosure work then hopefully now you have the information you need.

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