Basics of the Foreclosure Process

The foreclosure process is different in different states as every state has different foreclosure laws. But there are general proceedings of every process and so is of foreclosure.

Whenever homeowner is unable to pay the due loan amount then the lenders usually give them a grace period for paying the missed installment with additional fee. But after so many missed installments the lender begins the foreclosure process.

The foreclosure process is of two types that include both power of sale and judicial sale methods. The judicial method is prevalent in all the states but power of sale method is restricted in some states. The loan papers have the clause of using power of sale method in the states where it is permissible.

Judicial sale:
The judicial foreclosure process is started by the mortgage lender who files suit against the borrower in the court. Then the borrower receives the notice of default from the trustee that asks the borrower for immediate payment of all the dues to the lender. Mostly within 30 days the borrower should respond to the letter so as to avoid the foreclosure. But if no arrangements are made by the borrower in the given time period then the lender can request the court for giving a decision in his favor and a notice of sale is recorded at the county recorder's office which is also published in local newspapers of the county for three weeks. Then the sale of the property is done through the auction which is carried by the sheriff office and the property is sold. The sheriff office also helps in eviction of the house by serving a notice to the borrower for vacating the house. At the auction the opening bid is set by the lender which is usually equal to total amount of loan balance, interest and other additional fees and attorney fees. If there is no bid higher than the opening bid the foreclosed property is purchased by the attorney who is conducting the sale.


The Power of sale method is faster then the judicial method as it is entirely carried out by the mortgage lender. In the power of sale method the mortgage lender sends the documents to the borrower demanding the due loan amount. Then after some waiting period the deed of trust is temporarily transferred to a trustee who will sell the foreclosed house for the lender in a sale auction. The lender posts a notice of house sale in the auction. These foreclosures are subjected for judicial review so as to assure that the proceedings of the process were legal.

There is another type of foreclosure process that is called as strict foreclosure in which the property automatically transfers to the mortgage lender when a judgment is made on the lawsuit.
The money from the auction is firstly used to clear the real estate taxes, then mortgages and thereafter given to other creditors and liens. Then if any money is left then it will be given to the borrower. There is also a provision of property redemption by which the borrower can buy back his property even after the sale auction by paying back the due amount to the lender.

Search foreclosures by state or learn more about foreclosures at ForeclosureListings.com.

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Kevin Simpson, GM Sales & Marketing, ForeclosureListings.com