The Foreclosure Process simply outlines the stages of foreclosure from owning a piece real estate to having it repossessed from a lender. The process can be summarized in five stages that are relatively straight forward and consistent from state to state. Individual must realize and make up missed payments. Although during stage two this can still be done, but competition becomes keener and more “foreclosure buyers” are calling owners. Stage two is when a notice of default is recorded and is available to the general public in general public in various periodicals and newspapers.
Stage # 1
The first stage is when the owner cannot for some reason continue to make his or her mortgage payments. Usually at least three payments are missed before any further steps are taken unless there is a previous history of default on other mortgages the owner may have had. A VA mortgage is usually six or more payments must be missed before further action is taken.
Stage # 2
After the owner has missed enough mortgage payments to justify the process to continue, a notice of default is recorded. Once this notice is recorded, a default service information sheet is triggered and become available to the public. This stage begins the three month period during which the owner can catch-up missed payment and save his or her property
Stage # 3
This stage marks the end of the three month period above mentioned in stage two and terminates the owner’s right to simply catch-up the missed payments. At this time a notice or trustees sale is recorded. After this notice has been recorded, the owner must pay off the whole mortgage within the following 21 days if he or she is to save the property. This notice announces the date on which the property will be auctioned by the lender.
Stage # 4
At this stage the property is auctioned off at a trustee’s sale. The sale is an all cash sale and you are required to lay the cash on the table right then and there.
Stage # 5
If the property is not auctioned off as above mentioned in Stage #4, the property is held as R.E.O (Real Estate Owned) by the lender. The lender takes title to the property and wipes out all interests of lenders who loaned money after his loan was made, wipes out all judgments and erases all ownership rights of the owner if no bids were received for more than the amount of the loan plus missed payments and charges. This is a non producing asset for a lender and thus it will reflect badly on his financial statement
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