As the global economy melts under the heat of a worldwide financial
upheaval, Americans are fighting to maintain their financial status too. Most
people are thinking about ways to deal with the sudden and daunting changes in
their lives. As the rate of unemployment and industrial slowdown goes up, it’s
becoming harder than ever for people to maintain a sound financial position.
Many of them are failing to arrange the funds to pay the bills, insurance
premiums and make mortgage payments. If you are worried about a possible
foreclosure, it is important to know what it’s all about, especially the steps
involved in foreclosure.
Basically, foreclosure steps can be classified as
those given below:
Step #1: Defaults in
Payments
if you are facing foreclosure, you have probably not made one or more of the
mortgage payments. That’s a common reason why many people get under the
foreclosure net. While some may not be able to make mortgage payments due to
illness, family problems and job loss, others are missing payments in response
to the resetting of adjustable rate mortgages.
Step #2: Notice of
Default
when you fail to make mortgage payments, the lender sends the Notice of Default.
It is their way of reminding debtors that they are missing out on payments,
starting a legal process. The Notice of Default stage is the right time to try
and avoid protection foreclosure.
In other words, there’s still time to repair the damage.
Step #3: Clear the Debt
depending on the sate where you reside, you may have about 45-180 days to clear
your debt. This can be done in several ways. You can sell the house,
renegotiate the terms of loan, make the debt payment or turn over the house to
the bank.
Step #4: Foreclosure
always remember that foreclosure is the legal process wherein the bank takes
formal possession of your house. Before anything gets resolved, specific action
is required from your side. In simple terms, there are specific steps that need
to be taken by you before the home is taken by the bank under legal foreclosure.
If you cannot get rid of the debt through your own resources or the bank’s
help, you can explore options like a short sale, selling the house, or a Deed
in Lieu of Foreclosure. Only when these alternatives have been explored will
the bank initiate the foreclosure. Sometimes you can fight the foreclosure and
seek legal remedy.
Step #5: Sheriff's Sale
once the foreclosure of your home takes place; it is sold at a Sheriff’s Sale.
In this process, anyone can bid on the house but it is common for the bank to
buy the house for $1 over the deficiency.
Step #6: Redemption Period
the redemption period gives you a final opportunity to claim your house back
from the foreclosure. To do so, you must come up with the money to pay off the
amount for which the house was sold at the Sheriff’s Sale. A short period of
time is given for the same after the sale of the house.
