What Happens in a Foreclosure

'Foreclosure? Oh, this is never going to happen to us!' This is one statement that most of the loan seekers have when they think about applying for a mortgage loan against their home. However, poor long term financial planning, living a life more than you can afford and even a financial debacle in your personal life can lead to you missing your monthly repayments. This is where the inevitable question, 'what happens in a foreclosure' comes into picture.

Your home is one place that you cherish the most. One has many memories attached to one's home and letting it go is a nightmare. However, with some kind of financial crisis, home owners face foreclosure and lose one's home. In today's time, interest rates have become an all time low and payment of the mortgage has become slightly easy to handle. Money lenders are not after your home. They are profited more when you have your home, rather than repossess the property you call home.

What Happens in a Foreclosure?
If at all, someone misses three consecutive repayments to money lenders, the bank will send them a late notice. If the borrower misses the additional payments as well, the bank or money lenders will contact the borrower through phone or writing. If the customer does not give any response and continues to miss the payments or evade the lenders, then bank or money lenders will demand the payment on an accelerated note. This means, you need to pay the entire amount borrowed plus the late charges and legal fees all at once. This means you need to pay much more than you had bargained for. At this stage the bank will not accept any arrangements put forth by the borrower.

Many money lenders and banks understand there are situations that cause one to miss the payments. In this case, they try and work out a plan, that is beneficial to both borrower and lender. This helps in avoiding the process of foreclosure. However, if the customer continues to miss the payments, the lenders have no choice but to order a foreclosure process. Let us see the various steps of foreclosure to understand what happens during a foreclosure.

Process of Foreclosure
Even after lenders offering a repayment plan and other options for getting their monthly payments back on track, homeowners miss their repayments, the ball for foreclosure gets rolling.

Notice to Defaulting Borrowers
The bank or money lender will send a notice of default to the borrower. After receiving the notice, if the borrower manages to pay up, all is well. However, if one cannot pay back their dues, the lenders will take no action till the 35 day default notice period before foreclosure procedures is completed.

Beginning of Foreclosure Process
After the waiting period, the lenders file a legal request in the court to terminate the defaulting home owners right on the house. The bank may send a Notice of Intent of Foreclosure through the Sheriff or certified mail. They will publish legal notices in local papers regarding the process of foreclosure for the said home. During this period, the lenders do not make any settlement or payments with the lender. The court will take up the case for hearing regarding the claims made by the bank or money lenders. If the court rules in favor of the bank or lender, a legal notice will be advertised in the local papers regarding the actual foreclosure sale. The house will be sold off to the highest bidder.

Period of Foreclosure Process
Process of foreclosure from the first missed repayment to the final sale may take about 6 or more months. In some states of United States, the period may be even longer or much shorter. The actual period depends on the mortgagor, that is, how passively or aggressively does he pursue a foreclosure.

What Happens After Foreclosure?
After the process of foreclosure, once the house is sold off to the highest bidder, a borrower can buy back their house. This depends on the state that offers a redemption period. The home owner can buy the house from the highest bidder at the auction price within 3 days to up to a year in some states. There are states that offer redemption periods that helps home owners losing their houses to foreclosure. This may help them buy back the home by raising the money. Some states also allow the homeowners to continue living in the home for the redemption period. The states offering redemption period are given below.

State	Redemption Period
Alabama	1 year
Alaska	1 year
Missouri	1 year
Arkansas	1 year
California	1 year
Idah	1 year
Kansas	1 year
Kentucky	1 year
Wisconsin	1 year
North Dakota	6 months to 1 year
Vermont	6 months to 1 year
Minnesota	6 months
Oregon	6 months
Illinois	3 months
South Dakota	30 days or more
Maine	90 days
Michigan	30-36 days
Wyoming	30 days (or more depending on court decree and situation)
New Mexico	30 days
Mississippi	30 days
Iowa	20 days
New Jersey	10 days

You may be wondering about what happens after foreclosure in a state that does not offer a redemption period. Well, one won't be thrown out of the house the minute the bidding is closed. Many purchasers tend to offer 'key money' to the homeowners to evict the house as soon as possible without causing any destruction within the house. This is because some homeowners who are disappointed with the situation, tend to destroy the house before leaving. The 'key money' safeguards the house and the purchaser a lot of trouble.

If one does not leave, they are served with an eviction notice. The occupant needs to leave the house within 3 days after being served with the eviction notice. If one gets an eviction notice on their records, it will make it very difficult to get a house on rent. Therefore, one should leave before the situation of eviction arises.

You need to make sure you repay all your loans in time to avoid process of foreclosure. If not, work out some repayment option with the bank or lenders to stop foreclosure. Speak to an attorney to safeguard your rights, in case one is served with a notice of foreclosure.