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Foreclosure is a situation in which a homeowner is unable to make payments on his or her mortgage, so the lender, be it a bank or building society, seize and sell the property as stipulated in the terms of the mortgage contract.
It is important that homeowners understand the foreclosure process. This is to ensure that we know our rights as home owners and know the lender’s rights too. Ignorance is no defense, and being armed with this information will go a long way in reducing the stress if we find ourselves in the situation.
Depending on the contract entered into by the homeowner and the lender, foreclosure commences once the homeowner defaults on three to six installments. When this happens, the lender records a notice of default with the County Recorder’s Office. This is a notice to the homeowner that they are facing foreclosure if they do not make good their loan. Once the notice of default is given to the homeowner, the reinstatement period begins. The reinstatement period usually lapses five days to the day of the property being auctioned.
The loan must be brought to current within three months from the date the notice of default is recorded at the County Recorder’s Office. Failure of the loan being brought to current, the homeowner is then issued with a notice of sale. The notice of sale is then posted on the said property, and also with the County Recorder’s Office where the property is located. This notice is then published in the local dailies of the County where the property is standing for a period of three weeks.
The property is then auctioned at the Courthouse of the County where it is located. This is sold to the highest bidder and the sale sealed by a cash deposit and the remaining balance is settled within the next twenty four hours. Note that the lender usually sets the opening bid for the foreclosure.
In a case where there is no bidder who meets the lender’s opening bid, the attorney conducting the sale for the lender purchases the property. Therefore, as a homeowner, the reprieve you have is to make good your loan within the three month period when you receive a notice of default. Basically, this is what a foreclosure process entails.
