Explanation of a Home Foreclosure
Foreclosure is a legal procedure in which property securing a defaulted loan is sold by the lender. This is done to repay a borrower's loan. The amount paid by a buyer at the foreclosure may not cover the full outstanding loan amount, which means the borrower may continue to owe the lender the difference.
When it comes to foreclosures, there are primarily two types: judicial and non-judicial. The difference is that the judicial foreclosure requires a lawsuit to be filed in court. A Non-judicial bypasses the process of court. Most states allow both procedures.
The Basic Outline for Non-Judicial Government Foreclosure
Initial Steps:
A. The note, deed of trust and information on the default are forwarded to the trustee.
B. The notice of default and other necessary documents are prepared.
C. The notice of default is then recorded and the foreclosure time line begins.
Default Period
A. A trustee sale guaranty (TSG) is ordered from a title company.
B. The required legal mailings are sent to the borrower and the junior lien holders.
C. If the loan has not been reinstated or paid off within the default period, the lender then authorizes the next step in the foreclosure proceedings.
Publication Period and Trustee's Sale
A. The trustee will prepare, record and arrange to post the notice of trustee’s sale.
B. The notice of trustee's sale must be published once a week for three consecutive weeks in a newspaper of general circulation near the property location.
C. The borrower or junior lien holder may reinstate the loan at any time up to five business days before the sale date.
D. If the loan has not been reinstated, prior to five business days before the sale, the beneficiary may demand that the entire unpaid obligation be paid in full during that five-day period.
Please note: Some states may vary in their legal definitions, time frames, notice periods, requirements, and process of foreclosure.