Foreclosure is a process with few absolutes, including no absolute start-to-finish time frame.
Consider your own pre-foreclosure timeline. You may have agonized for months over how to make each mortgage payment, possibly underpaying a bit, and finally choosing food or medical care over the mortgage.
Your lending company typically won’t jump to foreclose after your first missed payment. Most lenders don’t begin proceedings until the borrower falls 3 – 6 months behind in payments. (Missing even a single payment may legally constitute default depending on the terms of the loan documents.)
Neither are lenders eager to engage in a foreclosure. It is a costly and time-consuming process and the lender rarely benefits in any financially significant way. Lenders typically begin the foreclosure process with a series of letters and phone calls in an effort to prod you into paying.
Types of Foreclosure
The process and timing of foreclosure depend on state law. In general, there are two types of jurisdictions for foreclosure:
• Power of Sale Jurisdiction: aka “non-judicial foreclosure, this type of foreclosure means that the trustee holding your deed (your mortgage lender) has the legal power to sell your home at auction. The court does not oversee the process. (NOTE: Power of Sale Jurisdiction is not allowed in all states.) The trustee must give notice of a public foreclosure sale and will sell the property to the highest bidder.
o The time frame from start of foreclosure proceedings to sale can be very brief – around two to three months. In many states with this jurisdiction, there is a considerable backlog of foreclosures that significantly slows the foreclosure-to-sale process (potentially extending it to a year or more).
• Judicial Foreclosure: this process is required in many states and available in all 50 states. The court oversees the foreclosure process and the foreclosing lender must file a complaint similar to that of a standard civil lawsuit.
o You have the right to fight against foreclosure and can seek an injunction preventing a foreclosure sale “if irregularities are found or the lender’s right to foreclose is in question.”
o The time frame for a Judicial Foreclosure can be considerably longer than with a Power of Sale Jurisdiction. If you choose to fight the foreclosure, the case could take a year or more to be resolved.
o Whether or not you challenge the foreclosure, you still must be provided notice of the foreclosure sale.
Declare Bankruptcy?
Usually a last resort, filing bankruptcy can stop the foreclosure process because of its “automatic stay” that halts all creditor-related collection actions at the moment a bankruptcy case is filed. You may be able to stay in your home as you work to catch up on mortgage payments. But if you have executed a deed of trust with your lender, and are in a Power of Sale jurisdiction, foreclosure can be completed in months’ time.
Seek Counsel
Don’t try to sift through foreclosure and/or bankruptcy alone. Seek counsel to identify your legal obligations and the ramifications of both foreclosure and bankruptcy.
Seek financial counsel to:
• Help you address immediate financial problems.
• Establish a new budget and/or financial program as you exit foreclosure or bankruptcy.
Question: the Time Frame Is…
Answer: potentially unknown. Foreclosure could be completed in a matter of months, or take a year or more. It depends on the type of jurisdiction that controls your foreclosure situation. It depends on the backlog of foreclosures your lender and state are working through. And it depends on you and how well you stay on top of each step.
