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Foreclosure FAQ
By Susan Willets | June 11, 2008
Foreclosure FAQ
What is foreclosure? Foreclosure is the legal proceeding in which a mortgagee, usually a lender, obtains a court ordered termination of a mortgagor’s equitable right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan.
How long does the foreclosure process take? The timeline of foreclosure is determined by the laws of your state. Each state has a specific process that the banks/lenders must follow. The process can take anywhere from a couple of months to over a year. To learn more about your state’s foreclosure laws, see our page on state laws.
What determines a default? Default occurs when the borrower does not make the required mortgage or lien payments as agreed to. Once your mortgage is 3 months behind, you are in danger of receiving a Notice of Default, which begins the foreclosure process.
I just received a Notice of Default, can I still save my home? Yes! You can still save your home, but you will need to act quickly. The Notice of Default is an official warning that they are beginning the foreclosure process. See our loss mitigation pages for more information about your options.
What is a short sale? A short sale is when the bank agrees to accept less than the total amount owed. This typically occurs in situations where the market value has dropped and the homeowner is unable to sell their home to pay off the entire amount owed. Beware! There can be serious tax consequences from choosing a short sale.
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