What Stage of Foreclosure

In most states the start of foreclosure is when the homeowner is 90 day late or past due. This will trigger the bank to file a Notice of Default (NOD) on your home. The (NOD) will be mailed to you and recorded with the county recorders office. This is the beginning of the foreclosure process, also called pre-foreclosure.

You will receive another certified letter informing you of the imminent foreclosure and will also provide you with a Redemption Amount that you can pay that will stop the foreclosure process entirely. This is called your Right of Redemption.

The lender will then allow paying off the entire mortgage balance and with an amount it would take to keep the home and the mortgage. The redemption amount will include all the past due mortgage payments, your next mortgage payments plus all accrued legal fees incurred by the banks attorneys.

At this point in the foreclosure process, the lender will set the date in which the property will be sold at auction. Two weeks before the sale date, the official notice of the date of sale will be publicly posted and recorded.

Five days before the sale, the borrowers have lost all possibilities of re-instating the loan. On the date of sale, the lender will review the bids at the auction and has the ability to select one of the bids or deny them, retaining the property as well as the outstanding mortgage.

This process is called a non-judicial foreclosure, meaning it did not go to court in front of a judge. A judicial foreclosure process works in a similar manner but has a few differences.

A judicial foreclosure means the lender's original note did not grant "power of sale" authority to the lender. A power of sale clause allows the lender to foreclose on the property without going in front of a judge. Absent the power of sale clause, the lender must go in front of a judge, prove that the mortgage foreclosure process has been legal and the judge will award the lender the home and the mortgage.

Another key difference between a judicial and non-judicial foreclosure process involves deficiency judgments. A lender may not seek to obtain a deficiency judgment when a home is foreclosed upon by way of non-judicial foreclosure.

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