How The Foreclosure Process Works

In a recent article I talked about how to stop foreclosure on your home.  In this article I want to dig a little deeper and discuss how the actual foreclosure process actually works.  Knowing how this works can be a huge advantage to you to help prevent a lender from foreclosing on your home.

What Process Do They Use

The first thing you need to understand is that every state has a different way of handle the foreclosure process. For example, Ohio uses will use the judicial process, this is were the court will give the borrower a specific time period to payback what he owes.  If the borrower cannot satisfy the loan the clerk of courts will advertise the property in the local paper as a foreclosure.

They will do this from anywhere from 3 to 4 weeks depending on the state you live in.  On top of that three different parties must appraise the property to asses the value.  The property will then be sold on the steps of the courthouse at no less than two thirds the value of the property.

The judicial process can vary from state to state as well.  For example, in Alabama if their is no power of sale, usually the lender or a representative of the lender is not present they will usually file a lawsuit to sell the property.

Their is also a nonjudicial process the state can use.  However their are only 29 states that use this process.  In this process the power of sale is present and will be in charge of selling the property not the judicial court systems.  This system is very similar in that most properties will be sold on the steps of the courthouse to the highest bidder.

What Kind Of Time line Does Your State Have

The next thing is each state will have is a time line that they follow.  For example, the state of Ohio’s foreclosure time line will usually last around a 150 days.  On the other hand Alabama’s will last only around 30 to 60 days.

A lot of this has to do with the process that they are using.  In my research it has shown the judicial process takes longer and the nonjudicial process does not take as long.  For example Florida and Illinois  time line go from 180 days to 210 days because they only use the judicial method to foreclosure.  On the other hand Michigan and Arizona also use nonjudicial process and their foreclosure process will only last around 60 to 90 days.

Is Their A Right To Redemption

Next, some states will also allow the right to redemption in the mortgage foreclosure process.  This were the current owner is allowed a chance to payback the debt owed within a specific amount of time before the foreclosure process will actually take place.

States like Ohio will allow this were some states such as Arizona and Delaware do not and other states like Alaska will allow it depending on the process they are using.

Do They Allow Deficiency Judgments

Finally, the last thing you need to know in the home foreclosure process is does your state allow deficiency judgments.  If your state allows a deficiency judgment it means that if your home is sold in foreclosure for less than the amount that you owe on it you will owe the lender the remaining balance.

For example, if you bought a home for $150,000 and still owed $120,000 on the home and when the home sold in foreclosure it only brought $90,000 you would still owe the lender $30,000 for the remaining balance.

Learn More About Your States Foreclosure Process

To close this article if you would like to learn more about your states foreclosure process check out foreclosure process.org This site will cover the foreclosure process for all 50 states.  They also offer a great definition resource as well if your having trouble understanding a term or two.

In the end knowing more about your states process of foreclosure can help if you do end up falling into this trap.