Phases of a typical foreclosure process
Foreclosure Procedure: How Does It Work?
Here’s how the foreclosure operation works:
- Homeowner cannot make installment payments. The mortgage loan becomes delinquent.
- Lending institution’s attorney orders a title search to determine if there are other lien holders or judgments against the property.
- Attorney files a “Foreclosure Complaint” with the clerk of the county court.
- Attorney files lis pendens with the court. This makes it known to the general public that the foreclosure process has begun.
- Attorney notifies Sheriff to serve the owner and other lien/judgment holders with summons and complaint.
- Homeowner is given a statutory time period to respond.
- If homeowner does not contest, then, a judgment is filed against him/her.
- Superior court validates the judgment.
- Attorney applies for Final Judgment papers and Writ of Execution.
- Attorney sends Writ of Execution to Sheriff.
- Sheriff advertises the sale in the newspaper. That’s when general public knows about the foreclosure action.
- The foreclosed real estate property is sold.
- New owner demands that old homeowner vacate the premises in 30 days.
- Eviction is enforced if previous owner does not vacate the foreclosure home in 30 days.
Are You in Mortgage or Deed of Trust State?
Every state has a different rule on right of redemption (buy-back) granted to those whose properties are foreclosed.
Most states use mortgages that enable the desperate borrower to exercise a right called “right of redemption.” Right of redemption entitles the owner of the foreclosed home to reclaim his/her property after the sale is concluded. However, there is a statutory time limit to exercise this right. Right of redemption allows previous owner to get the title back when he/she brings the loan current by paying all accumulated installment payments plus late payment penalties and any other applicable fees.
Lenders have a stronger position in deed of trust states and keep the deed of trust as collateral for their loans. Lending institutions can initiate judicial foreclosure procedures by requesting sale of the property.
You need to check the rules in your state, and take the necessary precautionary measures where needed.