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Home Foreclosure Process & How Long Does it Take?

Written By: M. Shayne Arcilla; Updated December 10, 2018


Avoid Foreclosure

A foreclosure occurs when a homeowner defaults on her mortgage payments. The process typically begins after the fourth missed payment with the issuance of a Notice of Default. The length of the entire foreclosure process depends on state law and other factors, including whether negotiations are taking place between the lender and the borrower in an effort to stop the foreclosure. Overall, completing the foreclosure process can take from 6 months to more than a year.

Mortgage vs. Deed-of-Trust

State law determines the method through which homes are purchased. As a result, homes can either be purchased with a mortgage or a deed-of-trust. The lender would benefit from a deed of trust because it allows them to pursue a nonjudicial power of sale, thereby circumventing court procedures. On the other hand, having a mortgage would require that the lender obtain court permission in order to foreclose on the borrower.

Notice of Default

The Notice of Default starts the official foreclosure process. This notice is issued 30 days after the fourth missed monthly payment. From this point onwards, the borrower will have 2 to 3 months, depending on state law, to reinstate the loan and stop the foreclosure process.

Judicial vs. Nonjudicial Foreclosure

The primary difference between a judicial and a nonjudicial foreclosure proceeding is that the former involves court action. The lender would have to file a lawsuit with the court and prove that they have taken the necessary steps to remedy the situation and collect any debts still owed. This process could take between 2 and 3 months after the Notice of Default has been issued.

The nonjudicial foreclosure process is also known as a foreclosure by power of sale. This provision allows the lender to sell the property to recoup any losses without having to obtain court permission. As a result, this process could be faster.

Lender Negotiations

Certain circumstances could delay the foreclosure process. A foreclosure is a significant black mark on ones credit history, and a borrower may try to prevent such a thing from happening by negotiating repayment plans or pursuing a short-sale.

A short sale allows the borrower to negotiate a paid in full status instead on his credit report with the lender. The process could take months to complete, since the borrower first has to list the property on the market for at least 2 months, find a buyer and then get the lender to approve the bid. This process could be delayed significantly, particularly if the lender has a severe backlog.

If a short sale is not possible, the borrower could try to pursue a deed-in-lieu of foreclosure. This process could also take at least 2 months after efforts for a short sale are done. In this process, the borrower voluntarily gives up the property to the lender to avoid foreclosure.

Redemption Period

The redemption period allows homeowners to remain in their property without risk of eviction after the foreclosure has been completed. Furthermore, the redemption period also gives the homeowner an opportunity to buy the property back by at the “redemption price,” which is the price the property sold for at the foreclosure sale. The amount of time allowed is dependent on state law. However, if the property was purchased using a deed-of-trust, the homeowner forfeits this provision; though, in some deed-of-trust sales such as in Wisconsin, a judicial foreclosure is still possible, and through this the redemption period still exists.

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