You should always calculate your affordability before taking out a mortgage as your lender can foreclose the property if you cannot make your monthly home loan payments on time. However, lenders usually don’t want foreclosure as the process is difficult as well as expensive; but, at the same time, they may not hesitate to do so when it is the only option available to recover the loan amount, as much as they can.

Steps in a mortgage foreclosure

You should know that the foreclosure laws vary from one state to the other. So, if required, you can take help of an attorney to know about the foreclosure laws in your state. However, there are some basic steps in a mortgage foreclosure that are discussed below.

1. Demand letter – A mortgage lender may send a demand letter when your home loan payment is past due for 2 months. By sending this letter, the lender requests the borrower to pay the required amount and get current on the loan.

2. Notice of Default – If you don’t make the payments after receiving the demand letter, your lender can send you an official and legal Notice of Default, which implies that the foreclosure has started.

3. The payback period – After getting the Notice of Default, you have a definite time period within which you can pay back the required amount to cure the default and get current on the loan. During this time period, you can also sell the house and pay back the outstanding loan amount to the lender. You can also arrange for a short sale or go for a deed in lieu of foreclosure.

4. Filing a foreclosure – If you’re not able to clear the debt within the stipulated period, then your lender can file either a judicial or a non-judicial foreclosure, depending on the mortgage deal and the foreclosure laws in your state.

5. Notice of foreclosure sale – Even after a foreclosure filing, you can pay back the default amount within 90 days. If you fail to do so, the lender will send you a Notice of Sale.

6. Public auction – After sending the Notice of Sale, the mortgage lender can arrange for a public auction within 30 days at which the highest bidder gets the property. The lender can also buy the property if no one bids enough to cover the outstanding debt amount.

At any time during the above process, you can pay back the default amount and the foreclosure costs in order to get current on your mortgage loan. However, you should do it at least 24 hours prior to the public auction in order to save your property from getting sold in a foreclosure auction.

Useful Resources:
BuyBankREO – Search Homes for sale in Massachusetts & Rhode Island, including Bank Owned Homes and Foreclosures.