Learn the Foreclosure

 

Note: The following is a generalized breakdown of the foreclosure process. If you're interested in finding out about foreclosure laws in your state, please see bellow foreclosure laws for all 50 states

Foreclosure Defined

A foreclosure occurs when a property owner cannot make principal and/or interest payments on his/her loan, typically leading to the property being seized and sold.

Stages of Foreclosure

The foreclosure process is not very difficult to understand. There are several stages during which the homeowner has an opportunity to bring the loan current and avoid foreclosure.

After about three to six months of missed payments, the lender orders a trustee to record a Notice of Default (NOD). At the County Recorder's Office. This puts the borrower on notice that he or she is facing foreclosure and starts a reinstatement period that typically runs until five days before the home is auctioned off.

If the default isn't corrected (the loan must be brought current) within three months, a foreclosure sale date is established. The homeowner will receive a Notice of Sale, and this notice will also be posted on the property. In addition, the Notice of Sale is recorded at the County Recorder's Office in the county where the property is located. Finally, this Notice of Sale is also published in newspapers local to the county in question over a three-week period.

The foreclosure Trustee Sale typically occurs on the steps of the county courthouse in which the property is located. The time and location of this sale are designated in the Notice of Sale. At the Trustee Sale, the property is auctioned in public to the highest bidder, who must pay the high bid price in cash, typically with a deposit up front and the remainder within 24 hours. The winner of the auction will then receive the trustee's deed to the property.

Foreclosure Auction

At auction, an opening bid on the property is set by the foreclosing lender. This opening bid is usually equal to the outstanding loan balance, interest accrued, and any additional fees and attorney fees associated with the Trustee Sale. If there are no bids higher than the opening bid, the property will be purchased by the attorney conducting the sale, for the lender.

If this occurs, and the opening bid is not met, the property is deemed a REO or Real Estate Owned. This typically occurs because many of the properties up for sale at foreclosure auctions are worth less than the total amount owed to the bank or lender.

When you purchase property at a foreclosure sale, all junior liens other than property taxes are wiped out. Priority of liens is determined by the date of recording. When you purchase a REO aka. Bank REO, you will typically receive the property with a clean title.

Foreclosure laws for Your state

State Judicial Non-Judicial Foreclosure Timeline Redemption Period Deficient Judgement State Law
Alabama Yes Yes 1 - 3 Months Up to 12 Months Yes (Judicial) More info
Alaska Yes Yes 3 - 4 Months None Yes (Judicial) More info
Arizona Yes Yes 3 - 4 Months Up to 6 Months Yes (Judicial) More info
Arkansas Yes Yes 4 - 5 Months Up to 12 Months Yes More info
California Yes Yes 3 - 5 Months Not Likely Yes (Judicial) More info
Colorado Yes Yes 2 - 5 Months None Yes More info
Connecticut Yes No 5 - 6 Months Court Determined Yes More info
Delaware Yes No 3 - 7 Months None Yes More info
District of Columbia No Yes 2 - 4 Months None Yes More info
Florida Yes No 4 - 6 Months Yes Yes More info
Georgia Yes Yes 2 - 3 Months None Yes More info
Hawaii Yes Yes 3 - 4 Months None Yes More info
Idaho Yes Yes 5 - 6 Months None Yes More info
Illinois Yes No 7 - 10 Months Yes 3 - 7 Months Yes More info
Indiana Yes No 5 - 7 Months None Yes More info
Iowa Yes Yes 5 - 6 Months 12 Months Yes More info
Kansas Yes No 3 - 5 Months Up to 12 Months Yes More info
Kentucky Yes No 5 - 6 Months Up to 12 Months Yes More info
Louisiana Yes No 2 - 6 Months None Yes More info
Maine Yes No 6 - 10 Months 90 Days Yes More info
Maryland Yes No 2 - 3 Months Court Determined Yes More info
Massachusetts Yes No 3 - 4 Months None Yes More info
Michigan No Yes 2 - 3 Months Up to 12 Months Yes More info
Minnesota Yes Yes 2 - 3 Months 6 Months Yes (Judicial) More info
Mississippi Yes Yes 2 - 3 Months None Yes More info
Missouri Yes Yes 2 - 3 Months Up to 12 Months Yes More info
Montana Yes Yes 4 - 6 Months 12 Months Yes (Judicial) More info
Nebraska Yes No 5 - 6 Months None Yes More info
Nevada Yes Yes 3 - 5 Months None Yes More info
New Hampshire No Yes 2 - 3 Months None Yes More info
New Jersey Yes No 3 - 10 Months 6 Months Yes More info
New Mexico Yes No 4 - 6 Months 9 Months Yes More info
New York Yes No 4 - 8 Months None Yes More info
North Carolina Yes Yes 2 - 4 Months 10 Days Yes (Judicial) More info
North Dakota Yes No 3 - 5 Months 60 Days No More info
Ohio Yes No 5 - 7 Months Until Confirmation Yes More info
Oklahoma Yes Yes 4 - 7 Months Until Confirmation Yes More info
Oregon Yes Yes 4 - 6 Months None No More info
Pennsylvania Yes No 3 - 9 Months None Yes More info
Rhode Island Yes Yes 2 - 3 Months Up to 3 Years Yes More info
South Carolina Yes No 4 - 7 Months None Yes More info
South Dakota Yes Yes 6 - 9 Months Up to 12 Months Yes More info
Tennessee No Yes 2 - 3 Months Up to 2 Years Yes More info
Texas Yes Yes 2 - 3 Months None Yes More info
Utah No No 4 - 5 Months 180 Days Yes More info
Vermont Yes No 7- 10 Months Up to 6 Months Yes More info
Virginia Yes Yes 2 - 3 Months None Yes More info
Washington Yes Yes 4 - 5 Months None Yes (Judicial) More info
West Virginia No Yes 2 - 3 Months None Yes More info
Wisconsin Yes Yes 6 - 10 Months None Yes More info
Wyoming Yes Yes 2 - 3 Months 3 Months Yes More info