Given the wake of the recent foreclosure epidemic, I want to take some time to provide a means of knowing if you and your home are at risk. The foreclosure process is long and complicated, but it is possible to minimize your losses and the impact on your credit. The key is to solve the problem as soon as possible. Don't wait around. The further along the process, the harder it is to stop.
There are 3 main stages the homeowners will deal with before the foreclosure process begins. The first stage is you notice it is becoming harder and harder to pay all your bills, feed your family, and make your monthly payments. Next, you realize you won't be able to pay your next mortgage payment. And finally, you miss that payment. As I said above, the best time to solve the problem is before that payment is missed. If you are current on your mortgage, your lender will be likely to work with your to prevent missing a payment.
As soon as you know you will have trouble making your payment, call your lender. Let them know there has been a change in your financial situation. Medical bills, insurance, children, school can all be acceptable reasons for your issues. There is a good chance they can postpone the due date of the payment or allow you to double up on your next payment. The benefit of letting them know beforehand is, you are in good standing with the company and you avoid penalties and late fees.
Now, say you did the above, but you still need help. You will want to contact your lender about a loan modification. If you have not missed a payment, there is a really good chance you are eligible for one of the new government programs. You can also contact a third party mortgage broker to have them act as your negotiator which may get better terms on the modification. Finally, you can consult with a HUD-approved Housing Counselor. Find one at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call (800) 569-4287.
Above is what you do if you know you will, but have not yet missed a payment. If you have already missed one or more payments, solving the problem becomes much harder. After your first missed payment, your lender will begin sending you letters requesting payment or to contact them. It is always a good idea to call them. You do not want your lender to think you are avoiding them. Although, technically, the foreclosure action can start as soon as your first payment is reported delinquent, in California, banks tend to wait for the loan to be 90 days delinquent before they begin the action. Keep in mind, each state has its own laws and practices and I will be mostly concentrating on California.
Ok, so here is a timeline of the foreclosure process in California. Most states are similar but it is always good to check with a real estate attorney or mortgage lender in your state. Remember, California uses Deeds of Trust as security for property loans, so it is a non-judicial foreclosure state. If your state uses mortgages as the security, then it would be a judicial foreclosure state and the timeline will be different. Also, just to clarify terms used in the timeline; the Trustee is the home owner, the Trustor (usually the lending bank) manages the loan for the Beneficiary, who is the owner of the note. The beneficiary can be a bank, private investor or other investor.
90 days (approx.) after missed payment - Lender will request to initiate foreclosure.
Day 1 - Notice of Default (NOD) is recorded with the county and Trustee's Sale (TS) is ordered
Day 2 to 10 - Notice of Default is sent to the owner and the property address (if different).
Within 1 Month - NOD is sent to all interested parties and TS is received and reviewed.
3 Months after recording NOD - TS is prepared and sent to publication
25 Days before Sale - IRS is notified of sale
20 Days before Sale - Begin Publishing sale, Post Notice of Sale on the Property, and mail the Notice to all interested parties (same as NOD).
14 Days before Sale - Notice of Trustee's Sale is Recorded by the County
5 Days before Sale - Buyers right to reinstate the loan expires
Day of Sale - Property is Sold, Sale is postponed or the Property reverts to the Beneficiary.
DISCLAIMER: This timeline is for informational purposes only and should not be considered legal advice or an official description of the judicial or non-judicial process. The timeline is for consumer information only and based on California policies. It is advised all consumers seek professional legal counsel with regard to any default proceeding.
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