It’s a scary feeling to miss payments on your mortgage. It’s even scarier to think about the prospect of foreclosure and the bank repossessing your home. The first step is to get educated about the process, and know how much time you have before different steps in the process kick in. Here’s a general timeline of how the foreclosure process plays out:
Stage 1 - Missed payments and delinquency - First 90 days
This stage comprises the first 60 days. You miss your payment, and your bank will start to attempt to contact you to find out what has happened with your payments. Usually, a late charge is assessed on your payment during the first or second months.
Your bank will send you a “demand” or “breach” letter warning you that you have broken the terms of the loan. From that point, you’ll usually have 30 days to repay the amount plus late fees to get back on track.
Stage 2 - Foreclosure process begins - The next 15 days
After sending you the breach warning, if you haven’t complied within 30 days, the bank will begin the foreclosure process. They will initiate a legal process whereby your home is publicly recorded as forclosed and the details of the debt record are published in a local newspaper. Why they need to go out of their way to embarrass you like this is beyond me, but it’s the way they do it. As this process completes, your home is legally foreclosed.
Stage 3 - Foreclosure sale - The following 1-12 months
After you home is legally foreclosed, the bank will sell it at a foreclosure sale or auction. How long this process takes varies wildly from state to state, which each have different legal requirements and processes. The real difference comes between states which have judicial foreclosures vs. those that process foreclosures outside of the court system. Non-judicial foreclosures can sell and process within 2 months, while judicial processes can take up to 12 months.
Stage 4 - Redemption period
Even after your home is sold at auction, some states will give you the opportunity to come up with the funds to repurchase the property. Here’s a helpful list of foreclosure laws by state including redemption period / availability.
