Foreclosure: An Overview

If your financial situation has changed for the worse, you may be worried that you might be at risk of foreclosure.  Have your finances changed due to a mortgage payment increase, loss of job, divorce, medical expenses, increase in taxes or other reasons? Is your credit card debt becoming unmanageable? Are you using your credit cards to buy groceries? Is it becoming difficult to pay all your monthly bills on time? If you are afraid of missing a mortgage payment, you may need to evaluate whether you are at risk of foreclosure. 

What happens when you miss your first mortgage payment?

Foreclosure processes vary by state.  However, typically, after you miss your first month missed payment, your lender will contact you by letter or phone. A housing counselor may be able to help.

What happens when you miss your second mortgage payment?

After missing your second month of mortgage payments, if you haven't already been contacted by your lender, your lender will likely begin calling you to discuss why you have not made your payments. It is important that you take their phone calls. Talk to your lender and explain your situation and what you are trying to do to resolve it. At this time, you still may be able to make one payment to prevent yourself from falling three months behind. A housing counselor can help.

What happens when you miss your third mortgage payment?

If you've missed three months of mortgage payments, you will likely receive a letter from you lender stating the amount you are delinquent, and that you have 30 days to bring your mortgage current. This is called a "Demand Letter" or "Notice to Accelerate." If you do not pay the specified amount or make some type of arrangements by the given date, the lender may begin foreclosure proceedings. They are unlikely to accept less than the total due without arrangements being made if you receive this letter. You still have time to work something out with your lender. A housing counselor can still help.

What happens after a fourth month of missed mortgage payments?

After missing four months of mortgage payments, you are likely nearing the end of time specified in your lender's Demand or Notice to Accelerate Letter. When the 30 day cure period ends, if you have not paid the full amount or worked our arrangements you will probably be referred to your lender's attorneys. You will incur all attorney fees as part of your delinquency.

What is the Redemption Period?

The Redemption Period is a period of time after the property is sold.  It is available in some states.  If available, you will be notified of the time frame during which you may be able to redeem, or buy back, your foreclosed property. 

What happens at a Sherrif's or Public Trustee's Sale during foreclosure?

A Sheriff's or Public Trustee's Sale is the actual day of foreclosure. You may be notified of the date by mail, a notice is taped to your door, and the sale may be advertised in a local paper. The time between the Demand or Notice to Accelerate Letter and the actual Sale varies by state. In some states it can be as quick as 2-3 months. This is not the move-out date, but the end is near. You have until the date of sale to make arrangements with your lender, or pay the total amount owed, including attorney fees.

The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.

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