Stages of Foreclosure
The foreclosure process is not very
difficult to understand. There are several stages during
which the homeowner has an opportunity to bring the loan
current and avoid foreclosure.
After about three to six months of missed
payments, the lender orders a trustee to record a Notice
of Default (NOD). At the County Recorder’s Office.
This puts the borrower on notice that he or she is facing
foreclosure and starts a reinstatement period that
typically runs until five days before the home is auctioned
off.
If the default isn't corrected (the loan
must be brought current) within three months, a foreclosure
sale date is established. The homeowner will receive a
Notice of Sale, and this notice will also be posted on
the property. In addition, the Notice of Sale is recorded at
the County Recorder’s Office in the county where the
property is located. Finally, this Notice of Sale is also
published in newspapers local to the county in question over
a three-week period.
The foreclosure Trustee Sale
typically occurs on the steps of the county courthouse in
which the property is located. The time and location of this
sale are designated in the Notice of Sale. At the
Trustee Sale, the property is auctioned in public to the
highest bidder, who must pay the high bid price in cash,
typically with a deposit up front and the remainder within
24 hours. The winner of the auction will then receive the
trustee’s deed to the property.
Foreclosure Auction
At auction, an opening bid on the
property is set by the foreclosing lender. This opening bid
is usually equal to the outstanding loan balance, interest
accrued, and any additional fees and attorney fees
associated with the Trustee Sale. If there are no bids
higher than the opening bid, the property will be purchased
by the attorney conducting the sale, for the lender.
If this occurs, and the opening bid is
not met, the property is deemed a REO or Real
Estate Owned. This typically occurs because many of the
properties up for sale at foreclosure auctions are worth
less than the total amount owed to the bank or lender.
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