THE FORECLOSURE PROCESS With more and more foreclosures happening every day the foreclosure process has become a topic of interest to many. Let me begin by telling you what a foreclosure is. A foreclosure is defined as a legal proceeding by which a person´s interest in real property is extinguished by another who is holding a lien against the same real property. The foreclosure laws in each state are different. In Below I have created a short and simple step by step process of what happens when a foreclosure is filed. STEP 1- The mortgagor (borrower) becomes three (3) months delinquent on the mortgage loan payments STEP 2-The bank or lending institution (mortgagee) files a "Les Pendes". This is a legal notice that puts the property and the borrower in to the foreclosure action. At this time, each party with a potential interest in the property must be served. In order for a certificate of title to be valid all parties with interests MUST be notified. If one person of interest in the property is not notified, that person could put a lien on the property A formal lawsuit is filed a few weeks after the Les Pendes if the mortgagor (borrower) does not contact the mortgagee (lender) to payoff the mortgage or set up a repayment program... STEP 3- If the mortgagor (borrower) does not respond .to this notice of foreclosure action in a timely manner the mortgagee (lender) requests a final judgment and a Sheriff Sale date is order by the court. If the mortgagee (borrower protests the default the mortgagee (lender) must convince the court of the mortgagors (borrowers) default. .. STEP 4-If the mortgagee (lender) can prove that the mortgagor (borrower) is truly in default, the court will set a Sheriff Sale date. STEP 6-The property is then sold at public auction (Sheriff Sale) with the mortgagee (lender) starting the bidding at the total debt amount including all legal fees and maintenance costs. Investors continue the bidding, exceeding the original mortgagee starting bid. The property is sold to the highest bidder, who must produce a portion of his or her bid in cash or certified funds at the time of the sale. STEP 7- The sale of the property is confirmed and the title is transferred to the new buyer. A new law just passed in The Foreclosure process can be stopped at any time if the mortgagor (borrower) pays off the loan including all extra legal fees and cost paid by the mortgagee (lender) or by making payment arrangements to reinstate all monies owed the mortgagee (lender). FORECLOSURE TERMS AND DEFINITIONS FIXED RATE MORTGAGE: Loan retains the same interest rate throughout the term of the loan. VARIABLE RATE LOAN OR ARM LOAN (Adjustable Rate Mortgage): The interest rate is fixed for a set amount of time (usually 2 to 3 years). After the set time period has expired the rate begins to change based on an index, such as the Prime Rate and a spread or cap of 2 to 3 percent increase above the prime rate for the term of the loan as stated in the mortgage note. LES PENDIS: The initial foreclosure filing by the Mortgagee, lender) takes place after a payment delinquency of three months by the mortgagor (borrower). MORTGAGOR: Borrower MORTGAGEE: Bank or Lender DEFAULT JUDGEMENT: Amount owed to the mortgagee by the mortgagor including any legal fees or other fees paid by the mortgagee during the foreclosure process. This action puts the property in foreclosure. SHERIFF CONFIRMATION OF THE |