When it comes to foreclosures there are a couple of things that might happen depending on the laws of your state. In some states, the whole process must go through the court – this is called Judicial foreclosure. In many states, however, there is another process – non-judicial foreclosure by which the court does not need to be involved.
In a non-judicial foreclosure the homeowner is mailed a letter of default after he has missed a certain amount of payments. The homeowner is given a certain amount of time to bring the mortgage current. This could be one month or even six months depending on the laws of the state. If they fail to do so the bank will issue a Notice Of Sale which is mailed to the homeowner, published in the legal section of the paper in certain public places and also recorded at the county level.
The notice of sale will state the specifics of the property, sometimes along with a picture, and the date of the sale which is held an auction format. This usually goes up on public notice weeks before the actual sale and the homeowner can actually bring the mortgage current up until a few days before the sale. If he does this, then the auction is canceled and the homeowner gets to remain in the house.
Anyone is allowed to come to the auction and you’ll typically see real estate investors who specialize in buying foreclosures at these types of sales. Unlike a regular real estate sale, you usually I’m allowed to view the inside of the home just what you can see from the outside although the rules may be different in different states for this.
Come the day the auction, the bidding is held right there in the open and the property is sold to the highest bidder barring any reserve from the lender. The high bidder usually has to have a significant deposit that he hands over right after the auction and must come up with the remainder of the funds in a short period of time.
If you having trouble paying a mortgage and think that your house may be foreclosed upon is important to learn all the laws of foreclosure in your state and the ins and outs of both judicial and non-judicial foreclosure so that you know what you are facing. Being prepared for this tough time will help you come through it a little bit easier.
