When you buy a house, you never think that one day, it might not belong to you anymore. Unfortunately, the unexpected and unplanned happens and you may find yourself in that situation. What happens when your house is foreclosed is that you’ve spent a lot of sleepless nights trying to figure out how you can stop the process.
What is foreclosure?
Foreclosure is the process by which a lender takes your home if you default on your mortgage payments. It allows them to turn around then and resell your home in an attempt to try and recoup some of the money they lent you to buy the house.
So, what happens when your house is foreclosed?
First step: You miss payments
A single missed payment isn’t likely to kickstart the foreclosure process. Three to six missed payments in a row, however, will. Sometimes the missed payments are because of personal problems such as job loss, medical expenses, or other things. For some, it’s because they are underwater (owe more than the home is worth) and they give up. After a few months of missed payments, your lender will start the foreclosure process.
Second step: Notice
Announcing default is the lender’s first step in the foreclosure process. They file an official public notice with the County Recorder’s office (or the clerk of the court, depending on where you are), which states that you are in default on your loan. They may also post this notice on the front door of your home. This posting is a legal requirement to let you know that you are in danger of being evicted.
Third step: Pre-foreclosure
Pre-Foreclosure is the stage at which your proceeding is still reversible. You have a short period, about 30 to 120 days depending on where you live, during which you can contact your lender and try to work out some deal to pay what you owe or sell the home. This stage represents your last opportunity to have any control over what happens when your house is foreclosed.
Fourth step: Going, going, gone to auction
If you were unable to work out a deal in the previous step, there will be an auction for your house. The court will set a date, and the sale will occur in one of several locations, including the steps of the local courthouse or the property itself.
The property is sold to the highest bidder for cash. You, as the homeowner, can still come up with the outstanding balance in cash and reclaim your home right up to the moment the house is auctioned off.
It’s at this step where it’s your last chance to sell the house yourself and keep a foreclosure off your credit report.
Fifth step: After the foreclosure
If a third party bought the home for cash at the auction, they are now the owner and can do as they wish with the house.
If a third party did not buy it, it now becomes a bank owned property, also known as an “REO.” Bank owned properties are sold either on a real estate site, or at a liquidation auction.
Ultimately what happens when your house is foreclosed is that you may lose every cent you’ve ever invested in owning your house. It can destroy your credit and reputation.
We have written a separate article that details the California foreclosure process timeline with precisely what you can expect to happen and when in the Golden State.
At House Market Solutions we can help you to stop the process. At any point up until the auction itself we can help to save your credit by purchasing your house and helping you to find a new home. There are many benefits to selling your house to us. Contact us today to set up an appointment.