Real Estate
A Beginner’s Guide to Foreclosure

Foreclosure amounts eclipsed almost 10,000 homes per month during certain portions of 2020. That rate is unsurprising given the difficulty of working caused by government regulations related to COVID-19.
If you’re among those that are facing down foreclosure, the number one thing you can do right now is get informed, so you know what steps you need to take to save your home. And let’s be clear, with proper legal advice, quality communication, and a little bit of money, you can save your house.
In this post, we break down all the basics regarding foreclosure including what to expect during each stage of the process and how you may be able to best maneuver.
Keep reading to discover tips that could prove to be your house’s saving grace.
What Is Foreclosure?
To discuss foreclosure, the first thing we need to do is define it. So, foreclosure is a legal process that lenders initiate in order to legally remove you from your home. This process takes place almost exclusively when a dweller falls behind on their mortgage payments for an extended period of time.
When a home is successfully foreclosed on, dwellers will have to legally leave their houses and banks will look to resell the property to another buyer, usually at a cut-rate.
What Happens Before Foreclosure Is Initiated?
There are a few things you can expect before your home is entered into the legal foreclosure process. First off, you can expect that your lack of making payments will draw ire from your lender.
After a month or two of missed payments, you’ll get letters or electronic notices reminding you of your payment obligations. If no communication comes from those notices, you’ll receive a legal notice from the bank threatening to enter the foreclosure process.
This note will describe how far behind you are on your payments and what you need to pay to reinstate your mortgage (catch-up on payments) or redeem it (pay it off). It’ll also share a timeline in which those payments need to come in to defer further action.
When Foreclosure Is Initiated
Roughly 3 months after your first payment on your home is missed, assuming no subsequent payments or arrangements are made, your bank will start pulling your home into foreclosure. This process starts with banks filing a petition to foreclose.
Petition filings are intensive in that your bank needs to take several steps to confirm that your debt exists, that you’re responsible for it, and to get buy-in from a judge that they have the right to seek legal action against you or anybody else that may be your guarantor.
Once the petition to initiate foreclosure is complete, documents will be “served” to you, so courts know you’re aware of the action that’s being taken. To serve paperwork, you’ll encounter a hired process server that will attempt to find you at your home, place of work, or out on the street.
Don’t Run
While a lot of people think they can avoid foreclosure by declining to accept paperwork from process servers, this isn’t an action we recommend.
If your lender can prove that fair attempts have been made to serve your documents and that you’ve been avoiding them, judges may allow lenders to bypass the serving process. Even worse, judges may enter a default judgment against you.
Accept paperwork and respond within 21 days.
What Can You Do to Get Out of Foreclosure?
While your options are limited when you’re at this stage in the foreclosure process, you still have options. We recommend exploring the following:
Talk to an Attorney
Your best friend when you’re going through a foreclosure is an attorney. Not your friend that knows a thing or two about the law or blog posts that provide general legal advice.
Attorneys can opine on your specific situation and will be able to offer you clear advice on how to achieve whatever ends you’re seeking.
Short-Sell Your Home
If you can learn more about it and sell your home quickly (below what you owe) and then pay off the remainder to your bank out of pocket, that’ll make your lender happy. Why? Because you’ve taken the pressure off the bank to continue managing legal proceedings and to have to sell your house themselves.
While this still ends with you losing your home, it will keep a foreclosure off your credit history. That’s huge since foreclosures make it so people have trouble getting credit lines, renting apartments, and more.
Talk to Your Bank
While the perception may be at this point that your bank is evil, believe us when we say that they almost certainly don’t want to foreclose on your home. They would much prefer to continue receiving payments and eventually get what they were promised.
To that end, talk to your bank to see if you can work out an arrangement. It may be that they’re willing to lower your monthly payments, extend your loan, and get you back on track.
Comply and Let the Process Play Out
While this is the least proactive option, you could choose to simply comply with foreclosure proceedings and allow yourself to be foreclosed on. In this scenario, you’ll lose your house and get a black eye on your credit history.
If you can avoid one or both of those things, we recommend doing so.
Quality Legal Advice and Communication Can Save Your Home
Rather than getting down when you’re facing foreclosure, get proactive. We’ve seen time and again that quality legal advice and communication with lenders save people’s homes or at the very least, save their credit.
Attaining a better foreclosure outcome is within your reach. We hope we’ve helped you get to that point and welcome you to explore more content on our blog if you need additional guidance.

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