Steps of Foreclosure

The steps involved in foreclosure are important information for you to know once a foreclosure law suit is filed against you, or if you are having difficulty making your payments, and there is a chance you might end up in foreclosure.

Knowledge is power! The more information you have now, the more power you will have in the negotiating process and the better your results can be.

This does not mean that you can stay in your home, do nothing, and still be able to keep your home. But this foreclosure time line will let you know when things will happen, so you can plan your future steps accordingly.

• Default on your monthly payments.
• 90 days of workout negotiation opportunities with the bank. If you fail to respond to the workout notices from the bank, then the 90 days can be shortened to 30 days or 60 days. Don't ignore your mail or your phone calls.
• Filing of Foreclosure Suit against you with the court.
• Personal service or filing served by Sheriff or by Publication, right after filing of the suit.
• Foreclosure judgement and order of sale of your home by court.
• Reinstatement period expires in 90 days after personal service.
• Redemption period expires in 7 months after personal service or 3 months after judgement whichever is longer.
• Foreclosure sale (auction), usually a few days after the redemption period expires.
• Foreclosure sale (auction) confirmed by judge, usually a week or two after the foreclosure sale.
• Right to possession expires 30 days after foreclosure sale is confirmed. (Time to get out now). If you have renters in the house, new Illinois law requires that the renters get notice of the foreclosure case, and an additional 3 months to get out. That is not how the law is written, but that is how it is being interpreted and applied as of mid-year 2009.
• Eviction of named parties by Sheriff. (A couple weeks after "right to possession" expires, if you are still there)
• Recording of foreclosure deed.

So now you know what foreclosure is and most importantly what time line it comes with.

Now we can discuss what are your options at this point.

"Redemption" - is a time period during which the borrower can remedy the foreclosure by paying off the entire loan amount plus fees."

In other words, you can pay off your home and STOP foreclosure. You can sell the home in order to raise the money to redeem the mortgage, so long as your home is worth enough money to cover the mortgage. Your mortgage is paid off this way, but your home is gone. You can refinance in order to redeem the mortgage. Lenders are not offering to refinance people in foreclosure as a general rule right now.

"Reinstatement" is a time period during which the borrower can remedy the foreclosure by paying all past due payments and any fees."

In other words, you can catch up with all missed payments plus fees. Banks will usually let you do this even if you are beyond the 90 days within which they are required to let you reinstate.

"Loan modifications" is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford." [Source: www.hud.gov]

In other words, you can try to renegotiate your loan terms with the lender/Bank. The reason I used word "try" is that the renegotiations are not always successful. I had a clients who successfully renegotiated their loan with an amazingly low interest rate and I had clients who got a letter from their Bank/lender stating that they cannot provide a renegotiation condition for their lone.

But please be very careful in hiring a 3rd part renegotiators.

"Short sale" is a sale of a real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold." Source :[Encyclopedia www.wikipedia.org].

Your home is worth less than what you owe, but you sell it anyway, with the bank's permission. Short sale is a great way to avoid a foreclosure record on your credit report plus it normally frees you from the deficiency judgement that might occur otherwise.

For more information on Short Sales please check here Short Sale

"Bankruptcy - The condition of a legal entity that does not have the financial means to pay their incurred debts as they come due. In the U.S. this status is established through legal procedures involving a petition by the bankrupt or by its creditors. [Source: www.teachmefinance.com]"

Note: Please do not rush into Bankruptcy before you discuss your personal situation with an real estate attorney or anyone knowlegeble on this subject person. You should make a plan and then follow it. There is a best time to file a bankruptcy, depending on your situation. Bankruptcy is pretty much the worst mark you can have on your credit report.

Please DO NOT be ashamed of your situation, there are a lot of people around you, who are in the same boat with you.

DO NOT hesitate to ask questions and contact professionals who will work on helping you.

And DO NOT postpone and delay seeking a solution to your problem.

ACT NOW and you will be among those who got out of this situation with grace and dignity and moved on with their lives with clean conscience and better credit.