Foreclosure Time Line

Foreclosure is a legal process that is initiated when a homeowner does not pay the mortgage loan payments as agreed. Foreclosure can be initiated when payments are not made on the primary mortgage or on second mortgages or home equity loans. Unpaid property taxes can also lead to foreclosure. In a foreclosure, the lender or other creditor takes a homeowner’s property in order to satisfy the debt. A foreclosure removes the homeowner’s rights to the property.

The following steps are part of the foreclosure time line:

Delinquent

If your mortgage payment is not made by the due date it is considered delinquent. A late fee is usually assessed if the payment is not made by the 15th day after the due date. Homeowners may get a late notice in the mail and a phone call from the lender requesting payment.

Default

A mortgage is considered in default when it is 30 days late. At this time the default will probably be reported to credit reporting agencies and impact your credit score. A second late notice will be sent to the homeowner.

Demand or Breach Letter

A formal letter indicating that the terms of the mortgage have been violated is sent to the homeowner if a payment is not made by 45 to 60 days after the due date.

Pre-foreclosure or Acceleration

Once a loan is 60 days late, the lender or servicer will send you a letter indicating that they are about to start the foreclosure process. At this point, it is likely that the lender will not accept any partial payments and will demand that the homeowner bring the loan current by paying all missed payments including late fees and other fees.

Foreclosure Proceedings

Foreclosure proceedings are usually initiated once the loan is 90 days late but may start any time after the acceleration letter is sent. The servicer or lender will initiate the foreclosure proceeding with an attorney or other company. Attorney fees will be added to the amount that the homeowner is required to pay in order to stop the proceedings. Foreclosure proceedings differ depending on the state where the home is located. Talk to a local HUD-certified housing counselor for specifics in your state.

Foreclosure Notice

Depending on the state foreclosure process, the foreclosure will be filed in court and a notice of the foreclosure will be posted formally at a courthouse or published in the local newspaper. If you abandon your home during the foreclosure process, your home may be reposed by the lender.

House Sold at Sale or Auction

The regulations in your state will determine the timeline for actual foreclosure, which can be as soon as 5 months to over 13 months after the first late payment. State regulations also determine the type of foreclosure proceedings: judicial or “by advertisement” – also called a sheriff’s sale.

Foreclosure by Advertisement or Sheriff's Sale

In a sheriff’s sale, the home is sold at auction to the highest bidder which is usually the lender. The sale date is posted in a local newspaper for four weeks prior to the sale date. The sale date can be adjourned and a notice of such will also be posted. If a home is sold at auction, there will be a redemption period noted on the deed; this is a period of time in which the mortgagor can still redeem the property by bringing the mortgage current and paying associated fees.

Judicial Foreclosure

This type of foreclosure requires the lender to go through the court system to take over the property title and therefore takes a longer period of time to complete.