Foreclosure Process

The following is a generalized breakdown of the foreclosure process, as each State has specific laws associated with it (contact your State’s Government Housing Office). The information contained within these pages should not be considered legal advice. You should consult an attorney for advice regarding your individual situation.

It is important to understand the Foreclosure process. Knowing your legal rights and seeking foreclosure assistance can be the difference between keeping or losing your home. Stay in communication with your bank and do not ignore them. Banks do not want your home, and are not in the business of buying and selling property. They are in the business of financing your home and want you to stay in your home. They may be willing to work with you to accept partial payments right up front until you've caught up, as long as you keep in communication with them.

Pre-foreclosure Stage

1. Once you are a few months past due, you will get what is called a Notice to Accelerate letter. At this point, you will need to pay the past amount plus any late fees they assess you to stop the foreclosure process. You may also receive a letter saying that they may accelerate the due date of the loan and start the foreclosure process if you do not pay by a certain date.

2. The bank will hire an attorney and will forward you a Demand Letter if you do not respond by paying the full amount due on the date the bank has established in their Notice to Accelerate letter. The Demand Letter officially notifies you that if you don't bring your mortgage current, the foreclosure process is going to start in the court system. You will also be responsible for any attorney fees added to the delinquent amount, unpaid interest and late charges that are added to the loan, which will make it more expensive to stop foreclosure later on.

Foreclosure Lawsuit Stage

3. In the second stage of taking the Foreclosure process, if you do not respond to the previous Demand Letter by paying the full amount due plus any attorney fees, unpaid interest and late charges, the bank will then file a foreclosure lawsuit or the Notice of Default (NOD) with the county recorder or clerk. In general, you have about twenty to thirty days to respond to this judgment, and then a hearing will be set with the county courthouse. In most cases, banks are able to get default judgments against you if you don’t make an appearance to fight the foreclosure or file an answer. This makes it easier for banks to proceed through the rest of the Foreclosure process. But if you do not stand up for their foreclosure rights at this point, the lender can obtain an easy victory in the courts.

Notice of Sale Stage

4. If you have not previously responded to the Demand Letter or the Notice of Default, you will be given a Notice of Sale after 20 to 30 days, sometime more, depending on how busy your bank is with other foreclosure files. This is when a property is auctioned by the local court system at a sheriff sale, typically at the court house steps. If there are no takers (investors who typically pay upfront with a money order), then it goes back to the bank as the owner. Once the auction has gone through, the new owner will get a sheriff's deed or other temporary proof of ownership, which will allow them to take possession of the house once the auction has been confirmed. In most states, once the house is auctioned, there is no point of return and the eviction of tenants starts if you haven’t moved out by then, typically a 2 to 4 weeks process after the sale.

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National Mortgage Assistance Center

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The National Mortgage Assistance Center (NMAC) educates the general public and refers your contact information, at no cost to you, to foreclosure prevention law firms to evaluate qualifications for a mortgage payment reduction. NMAC is not a non-profit organization and not affiliated or approved with any government program. By applying with NMAC does not guarantee a loan modification or foreclosure prevention, and the lender may not approve to change your loan. Do not transfer or surrender property titles at a below-market price to anyone.

Do not bypass the lender and make payments directly anyone else. It is not necessary to pay a third party to arrange for a loan modification or other form of forbearance from your mortgage lender or servicer. You may call your lender directly to ask for a change in your loan terms. Nonprofit housing counseling agencies also offer these and other forms of borrower assistance free of charge. A list of nonprofit housing counseling agencies approved by the United States Department of Housing and Urban Development (HUD) is available from your local HUD office or by visiting www.hud.gov.
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