Going through the foreclosure process can be difficult to follow and understand. Banks are rarely cooperative these days, and it can be hard to keep track of all the paperwork that shows up. Fortunately, there are a few general steps that every foreclosure goes through.
In general, foreclosure proceedings are allowed to start in most states after a borrower is thirty days overdue on a payment. In some states, this period of time is as long as 90 days, and most banks tend to wait 90 days before starting the process. This gives the borrower enough time to make the payments and/or find a different way to finance the loan. In some cases, a borrower can also use this time to arrange a short sale with the bank.
Ever thirty days, the bank will send a borrower a letter informing him or her of the amount of due and the date on which the foreclosure will start. Note that it is not uncommon for a bank to give a borrower more time than this. Foreclosure paperwork can take a long time to process and many banks have been reporting delays recently. A delay is not something that a delinquent borrower should count on, however.
After filling an intent to foreclose on a property, a certified letter will be sent to the borrower. At this point, the borrower usually has thirty days to contest the foreclosure. Depending on the state, contesting the foreclosure will be done in or outside of court. Non-judicial states will allow a borrower to file paperwork showing why he or she believes the foreclosure is in error. By not filing, the foreclosure will proceed within the timeline outlined by the bank on their documents. Judicial states require the bank and the borrower to meet in front of a judge. At this meeting, the bank must prove that they have the legal right to foreclose on the property, and a property owner has the right to defend him or herself.
Typically, foreclosures take a lot longer in judicial states than they do in non-judicial states. At the height of the foreclosure crisis, some judicial states were reporting delays of up to a year or more, although this is rarely the case today. In non-judicial states, a foreclosure can occur as little as thirty days after the borrower receives notice.
Once the foreclosure is complete, the borrower has up to thirty days to vacate the property.