By Cara O'Neill
Missing a Payment
Most mortgage agreements require you to make a payment each month. If you fail to make that payment, your loan is considered to be in “default.” Just because you are in default, however, does not mean the foreclosure process has begun since any variety of unpredictable factors can affect your lender’s decision to initiate proceedings. To know whether your lender is foreclosing on your home, you must first determine whether you are in a judicial foreclosure state or a non-judicial foreclosure state so that you know what to look for.
In judicial foreclosure states, you will know that your lender has initiated a foreclosure action when you are served with a lawsuit asking the court to sell your home due to your failure to pay your monthly payments. Depending on the time frame determined by your state, the court will hear the case, and if the lender is successful, set the sell date for the home to be sold.
Unlike judicial foreclosure, the courts are not involved in non-judicial foreclosure. Instead of a lawsuit, the foreclosure process is officially triggered when the lender records a “Notice of Default.” After that, the lender must wait a specified period of time before recording a “Notice of Sale.” This is the notice that tells you the date that the home will be sold. In California, for example, the lender must wait 90 days before recording the Notice of Sale. As well, the sale date in the Notice of Sale must be at least 21 days after the day the Notice of Sale was recorded in the recorder’s office.
Voluntarily Leaving or Eviction
Once the home has been sold, the next decision is whether to voluntarily leave or force the new owner to evict you through the court system. While forcing eviction may buy you more time, most evictions happen very quickly, and the additional time period may not be worth the negative impact on your credit report.
California Courts: Foreclosure
HUD.GOV: Foreclosure Process
HUD.GOV: Are You at Risk for Foreclosure and Losing Your Home?
Mortgage Banker's Association: Judicial Versus Non-Judicial Foreclosure