Published: Sunday, August 15, 2010
How the foreclosure process works
Question: Would you please write an article on real estate foreclosure, what happens to lead up to it and also what happens during the process? There are so many foreclosures recently, it might be of interest to the general public.
Answer: We have a record high number of foreclosures across the country and here in the Puget Sound region. The foreclosure rate in this area is lower than the national average, but it is still much higher than the historical average for this region.
Here's how the foreclosure process works if you find yourself behind in your mortgage payments.
If you are 30 days late on your mortgage payment, the lender can start the process. However, realistically, most lenders wait until you are at least three months behind before they take action because the foreclosure process is expensive.
Once a lender decides to foreclose, they send you a notice of default at least 30 days before they start the sale process. The default notice will say that you have breached the deed of trust which is the security document recorded against your property that gives the lender the right to seize your property and sell it at an auction to repay your mortgage. The notice will be mailed and posted on your home and you may also be personally served.
At least 30 days later and at least 90 days prior to the scheduled sale, you will receive a notice of trustee's sale specifying the date, time and place of the auction. Like the default notice, the document will be mailed to you and posted on your property. Foreclosure specialists call this mail and nail.
The trustee sale notice will state the amount of your unpaid mortgage balance, plus accrued interest and penalties and the cost of the foreclosure. It will also give the name and address of the trustee conducting the auction on behalf of the lender.
The trustee is typically a title insurance company or a company that specializes in handling foreclosures.
You may cure the default at any time up to 11 days prior to the sale by bringing your mortgage payments current and paying all the fees. About 60 to 70 percent of foreclosures are cured before they get to the sale usually by the homeowner selling the home or refinancing the mortgage.
If you are unable to cure the default, you may ask the trustee to delay the sale or you may be able to negotiate a settlement within the last 11 days before the sale. The difference is that the lender must let you cure the default if you can pay everything off more than 11 days before sale, but it has the choice of striking a different deal with you after that.
If your home goes all the way to the auction, it is usually held in the lobby of the county courthouse, typically on a Friday morning. If there is any equity left in your home, investors will gather to bid on the property. The winner must pay cash on the spot. In many cases, the balance owed on the property is more than it's worth. In that case, the lender may be willing to accept bids below what's owed.
That's a quick overview of the foreclosure process. I hope that you never find yourself in that unfortunate situation.
Mail your real estate questions to Steve Tytler, The Herald, P.O. Box, Everett, WA 98206, or e-mail him at economy@heraldnet.com.
Answer: We have a record high number of foreclosures across the country and here in the Puget Sound region. The foreclosure rate in this area is lower than the national average, but it is still much higher than the historical average for this region.
Here's how the foreclosure process works if you find yourself behind in your mortgage payments.
If you are 30 days late on your mortgage payment, the lender can start the process. However, realistically, most lenders wait until you are at least three months behind before they take action because the foreclosure process is expensive.
Once a lender decides to foreclose, they send you a notice of default at least 30 days before they start the sale process. The default notice will say that you have breached the deed of trust which is the security document recorded against your property that gives the lender the right to seize your property and sell it at an auction to repay your mortgage. The notice will be mailed and posted on your home and you may also be personally served.
At least 30 days later and at least 90 days prior to the scheduled sale, you will receive a notice of trustee's sale specifying the date, time and place of the auction. Like the default notice, the document will be mailed to you and posted on your property. Foreclosure specialists call this mail and nail.
The trustee sale notice will state the amount of your unpaid mortgage balance, plus accrued interest and penalties and the cost of the foreclosure. It will also give the name and address of the trustee conducting the auction on behalf of the lender.
The trustee is typically a title insurance company or a company that specializes in handling foreclosures.
You may cure the default at any time up to 11 days prior to the sale by bringing your mortgage payments current and paying all the fees. About 60 to 70 percent of foreclosures are cured before they get to the sale usually by the homeowner selling the home or refinancing the mortgage.
If you are unable to cure the default, you may ask the trustee to delay the sale or you may be able to negotiate a settlement within the last 11 days before the sale. The difference is that the lender must let you cure the default if you can pay everything off more than 11 days before sale, but it has the choice of striking a different deal with you after that.
If your home goes all the way to the auction, it is usually held in the lobby of the county courthouse, typically on a Friday morning. If there is any equity left in your home, investors will gather to bid on the property. The winner must pay cash on the spot. In many cases, the balance owed on the property is more than it's worth. In that case, the lender may be willing to accept bids below what's owed.
That's a quick overview of the foreclosure process. I hope that you never find yourself in that unfortunate situation.
Mail your real estate questions to Steve Tytler, The Herald, P.O. Box, Everett, WA 98206, or e-mail him at economy@heraldnet.com.
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