Understanding Foreclosure Basics
Foreclosure is a legal process where banks remove the homeowner’s right to redeem their mortgage due to their inability to continue making mortgage payments. Foreclosure is initiated by the bank when homeowners miss mortgage payments. If the homeowner is unable to bring their mortgage current, the property will be sold at their county’s public auction and they will be evicted.
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Foreclosure Timeline Diagram
The foreclosure process is outlined in an easy-to-follow diagram so that homeowners better understand their situation. Learn More
Banks Stand to Lose More without Alternatives
The Mortgage Bankers Association reports losses in excess of $50,000 to banks on each foreclosed home, or as much as 30 to 60 percent of the outstanding loan balance. Banks are able to save significant amounts of money if they work with homeowners that are willing to participate in a foreclosure alternative. It is important to understand that foreclosure is automatically initiated by the bank when a loan is in default. Foreclosure alternatives must be initiated by the homeowner, not the bank.
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Understanding Foreclosure Alternatives
Banks offer multiple alternatives for homeowners to prevent foreclosure. Understanding each alternative will help you determine the best course of action for your situation. Learn More
Two Different Systems: Judicial and Non-Judicial
| Judicial Process | Non-Judicial Process |
|---|---|
| Use state court system during foreclosure | Use trustee to process foreclosure; courts not required |
| Homeowner carries the deed | Beneficiary (investor) carries the deed |
| Default recorded at county courthouse | Default recorded at county courthouse |
| Bank Investor must go through courts before foreclosure process can be initiated | Bank Investor does not have to go through courts to initiate foreclosure process |
| Court verifies default status; sends homeowner Notice of Default | No Notice of Default required; may send Notice of Trustee Sale notification |
| In most states, homeowner has 60 days at this stage in the process before home is sold at public auction | In most states, homeowner has 22-30 days at this stage in the process before home is sold at public auction |
Some states use both processes, depending on the way the mortgage was written. We encourage you to become familiar with the statutes and procedures for your own state. If you need additional clarification about the information on this page, please contact your SSAA Professional and they will be glad to assist you.
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Interactive Foreclosure Law Map
Click on any state and learn about foreclosure timelines, judicial vs. non-judicial court systems, and a whole lot more. Learn More
