I am going to TRY and take you through the process of foreclosures the best that I can. I'm also going to try and explain them in the way that I wish I would have been told. Why does everyone need to be so complex? So, let's start from the beginning and see if we can cover some ground.
Okay, so I don't know if I should, but I am going to assume that everyone reading this understands how the home buying process works. So we know that when you apply for the loan to purchase the home, the mortgage, the property we purchased has just become the collateral. This is the main reason for an appraisal, to evaluate how much the property is worth and how much the bank/mortgage lender is going to loan/mortgage the property for.
Alright, the unthinkable happens and you can't pay your mortgage anymore. You try, but times are trying and you just can't make it work. What do you do? You call a Realtor and try to sell your home. No one calls, no one is interested. Uh Oh! Ok, now what? You lower the price in hopes of grabbing attention from possible buyers. Still no luck. Why is this happening to you? Ok, let's call the Bank/Mortgage Company - can we do a Short Sale (See my blog about Short Sales)? Great, they are willing to take less and hopefully not come after you for the difference. Remember, while all of this is happening, you are still only paying a portion of your mortgage payment, and now there is interest, penalties, etc. that are piling up making it harder for you to continue making payments at all.
So what happens when you are so behind, you can't come up with money to pay the bank, you can't borrow the money and you can't sell your home? Foreclosure. That means that the bank has taken possession of the property for non-or-deficient payment. Now, unfortunately, you probably have 30 days to vacate the property and find somewhere to go.
The next step. The bank will post a notice in the newspaper for a bank/trustees sale. It is not guaranteed that there will be any bids on the property, in which the bank keeps possession and more than likely will list the property for sale with a Realtor.
Foreclosure affects the entire family. Sometimes it cannot be avoided, most of the time it can. It is a very sad situation for everyone involved. As a Realtor, it is hard for me to show foreclosed homes. When I walk in, the first thing that I imagine was a family in their cozy home, decorated just perfect....and then the looks on their faces when it was all gone.
For more information on foreclosures and foreclosure assistance, please follow the links below:
My advice? Don't let it get this far. Call your Bank/Mortgage Lender NOW and ask what can be done. As I said in my Short Sales Blog - ask if they will do a Loan Modification. It doesn't hurt to ask and you will never know how far they will go to help you if you don't.
Good luck and stay positive!