Most people don't understand what to expect when they're facing foreclosure. They don't know how long they have before the bank is going to seize their home. Each state has their own specific timeline, but all foreclosures go through the same steps.
The following foreclosure timeline shows, step-by-step, what happens during the foreclosure process.
The first step in foreclosure is obviously missed payments. Usually, before the bank does anything, one must be late at least one to two months. After you've been late on your mortgage payment about two months, you move into delinquent status.
During delinquent status, you have the ability to reinstate your loan. You can call the bank and ask for a forebearance plan. The bank will arrange a payment plan to catch up your late payments. Usually they divide up the total amount in delinquency and spread it over a period of two to three months. If you owe $2,000.00 in late payments, the bank will divide $2,000.00 by three months, totalling about $666.00. The bank will then arrange for you to pay your monthly mortgage payment of $1000.00 plus $666.00, equaling $1666.00 that you will be required to pay for three months while you're catching up your loan.
If you can't pay the arrangement set forth by the bank and you continue to be late, the bank will send you a "Notice of Default" letter which begins the foreclosure process. Usually, when a Notice of Default (NOD) is issued through certified mail, you have been behind at least three months. Depending on the size of your home mortgage will really depend on when the bank will send out the letter. Standard procedure is generally three months though.
Once a Notice of Default is issued, you have, depending on which state you're in, approximately 21 days all the way up to about 180 days before the bank will take the house to auction (judicial state) or trustees sale (non-judicial state).
During this time, in order to take your home out of foreclosure, you must pay back, in full, the entire delinquent amount, plus show the bank you are able to continue paying your mortgage.
After the home has been taken to auction/trustee's sale, some states offer a redemption period in which you, the homeowner, can buy back your home from the bank - must be in full. If you don't redeem your home, then the bank will move into a bank owned property which is called an REO (Real Estate Owned).
The home no longer belongs to you, regardless of the amount of equity you have in your home, it now belongs to the bank. They have the right to market your home for full market value. (In some cases, you might be able to receive a portion of or all of the proceeds from the sale if the bank sold your house for more than your mortgage amount).
Check with a foreclosure attorney to find out the exact amount of dates your state allows for the pre-foreclosure period and redemption period. In Texas, once a notice of default has been filed, the home will go to auction in 21 days. In Utah, it's 111 days.
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