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6 Six Phases

Property Foreclosure What is Foreclosure Simply put, the property foreclosure process allows the lender （ bank ） to recover the outstanding amount of a defaulted loan by selling or taking possession of the property. According to a U.S. foreclosure market report by RealtyTrac a foreclosure property information website, as of 2020 year 5 month 29 29 , "some stage of foreclosure" in the United States （ Default, auction, or bank owned ）" with 330,105 properties in default, auction, or bank owned ", which is not unusual.

If you （ or someone close to you ） are facing foreclosure, we encourage you not to panic but to understand the process. There are usually 6 phases to the foreclosure process, although each state is different. Also, since I am in California, I will focus briefly on California law. Home foreclosures in California are usually done in a non-judicial (Non judicail^) . This means that the foreclosure is done outside of the state court system, i.e., without going through the courts.

Phase 1 ： Payment Default Day 1

A payment default occurs when a borrower misses at least 1 mortgage payment. Typically, the lender will send a notice of non-payment to the borrower indicating that it has not yet received that month's payment.

Usually, mortgage payments are due 1 day each month, and many banks offer a grace period until 15 days of that month. days of the month. Thereafter, the lender may add late fees and send another notice of non-payment.

After two missed payments, the lender will send a Demand Letter （ ） by letter or e mail. This Demand Letter is a formality frequently used in business before a victim takes legal action against a recipient, written by an attorney, with more serious implications than a regular payment recommendation letter. However, it does not involve taking the recipient to court. At this point, the lender may still have a special program in place to catch up with the borrower and payments. The borrower usually has 30 days from receipt of the letter to remit the late payment.

Phase 2 ： Notice Of Default Notice Of Default Day 120

Notice Of Default （ NOD ） is sent after 90 days of missed payments. In some states, notices are posted on the door of the house. At the same time the borrower is notified that the notice will become a public record .

The lender usually gives the borrower 90 days as a recovery period to restore the loan. This is called the "recovery period" （ Reinstatement period ）.

Phase 3 ： Notice of Trustee Sale Notice of Trustee's Sale Day 150

Within 90 days after notice of default If the loan is not caught up and recovered, notice of the Trustee sale will be recorded in the county where the property is located. （ The ）

lender will also generally give notice in the local newspaper 3 weeks, indicating that the property will be available for public sale. The names of all owners will be printed in the notice and in the newspaper, along with a legal description of the property, the address, and when and where the sale will take place.

Phase 4 ： The Trustee Sale Trustee's Sale Day 200

Property is sold at public auction. The property will be sold to the highest bidder who meets all necessary requirements. Lenders will be calculated and allocated based on the outstanding loan balance, outstanding taxes, and costs associated with the sale.

Upon completion of the sale, the trustee's deed （ ） will be provided to the successful bidder. At that point, the property is entitled to the immediate possession of the purchaser.

phase 5 ： property owned REO

If the property is not sold during the public offering, the lender （ Bank ） becomes the owner and through a broker or with the assistance of an asset management company that owns the property （ REO ） to sell the property. These are what are known as "bank foreclosure properties". These properties are often "bank owned," and the lender may require some of the other liens and other fees to be cleared first in order to further encourage the sale of the property.

Phase 6 ： Eviction Eviction

The borrower may remain in the home until it is sold through public auction or as an asset of REO . However, they will be required to vacate the premises as soon as an eviction notice is sent. Residents may also be offered a few days to remove their personal belongings, usually by the local sheriff. The belongings will be placed in storage and will be collected at a later date for a fee.

Conclusion

Throughout the foreclosure process, many banks have programs to help borrowers avoid foreclosure. programs, but the problem is that if a borrower cannot meet one payment, it is increasingly difficult to catch up on multiple payments. However, if there is a possibility of catching up on payments, such as just starting a new job after a period of temporary unemployment, it is worth talking to the lender. If there is no recourse and foreclosure is inevitable, knowing the entire process will help you prepare for the phases of what is happening and what will happen next.

How to Stop Foreclosure

There are actually 2 There are only two. You can either pay the amount to catch up on the loan or file bankruptcy.

If you can raise cash to cover repayments, interest, and other costs and fees, you can stop the foreclosure process. You can also stop foreclosure by filing bankruptcy. Bankruptcy includes a powerful legal tool called the "automatic stay" (Automatic stay), which stops all collection actions against you, including garnishments, collection actions, and repossessions. The bank will not be able to touch your home while you are in the bankruptcy process.

Harms of Bankruptcy Proceedings

Filing bankruptcy allows you to extend the auction process so you can temporarily be in your current home. You can stop, but you should consider that there are always harmful effects. First, by filing bankruptcy you will be obligated to repay your creditors, which means you will eventually have to give up your house, car, and other possessions. Second, it will leave a big mark on your credit history and will keep a record of your "bankruptcy" on your credit history for at least 8 years, so even if your financial situation improves, it will be difficult to get a loan to buy your next house on good terms. Even if your financial situation improves, it will be difficult to get a loan to purchase your next home on good terms. （ It doesn't mean you can't borrow ）

What you can do outside of bankruptcy proceedings ？

Loan modification- Without having to reorganize the current loan, the terms （ payment period and interest rate ） can be changed to make the loan more payable. terms.

Loan forbearance- Loan forbearance is when the bank allows you to make temporarily lower mortgage payments or permit the borrower to temporarily suspend payments. The borrower is later required to repay the reduced or suspended payments.

Short sale- A sale in which the amount owed is greater than the sale price of the property and the bank cannot be repaid with the proceeds of the sale, and the bank is negotiated to discount the amount owed. It is called a short sale because the amount returned is short to the bank.

Loan reinstatement- Borrower can stop Trustee sale by paying the arrears so far

Refinance- If the interest on the current loan is lower than the interest on the loan being borrowed, the current loan can be modified to pay the arrears and continue making future payments The company can continue to make future payments. However, this is often difficult in situations where the loan is delinquent, as the conditions （ for refinancing a loan ） such as income, price to loan ratio, and credit score must be passed.

Standard sale- General sale of property, but it is difficult to sell a property in its best condition under delinquent loan circumstances, so we usually The only way to sell is to sell it quickly at a price lower than the market price. However, we are lucky if we can sell out of it and pay off the outstanding loan, and usually the amount owed is more than the sale price, so we sell out of it at the short sale mentioned above.

Creative sale- （ The proposal is based on each situation ）

J1 Real Estate Group can

J1 Real Estate Group is a real estate professional with the ability and resources to make recommendations that best suit your needs and situation.

In addition to general property sales, we offer special free consultations for those who have received a NOD and can assist in bank negotiations if necessary. Please feel free to contact us for confidentiality.

(*Note: ） These contents are opinions of J1 Real Estate Group. It is not intended to provide legal advice. We recommend that legal advice be sought from an attorney.