Cynthia Alfred's Blog

What causes a foreclosure to happen?  Can it be stopped?  Is there anything you can do to prevent it?

For people who have a mortgage, the foreclosure process starts when the homeowner misses a payment.  After missing a payment, the mortgage company will apply a late fee and someone from the mortgage company will try to make contact.  The mortgage company would rather not foreclose on a house.  It is generally a long and expensive process.  The mortgage company will try to find out from the homeowner what is going on.  If the homeowner makes the payment, then the foreclosure machine will stop.  If not, the foreclosure machine shifts into second gear.

If the homeowner ignores the mortgage company and does not make a payment, two to four weeks later the mortgage company will send a letter telling the homeowner that they have breached the mortgage contract.  The homeowner will be given an opportunity to fix the problem but if that does not happen, the foreclosure shifts into the next gear.

What happens next depends on the state.  After missing the third payment, the mortgage company will file a notice of default to let everyone know that a foreclosure has been initiated.  After the appropriate waiting period which is generally 90 days, a sale date is set.  During this waiting period the homeowner is given a chance to solve the problem.

Then, depending on the state, after an appropriate time period, the house is sold.  The homeowner is usually evicted and the new owner takes over.

The money from the sale goes to pay the mortgage company.  If there is any money left, it pays any lien holders.   Any left after that goes to the original homeowner.

If you fall on hard times, HUD offers advise on what to do.  HUD also offers counseling services in most states and your state and county may do the same.  Your mortgage company may have ways to help.  Contact them as well.  Looking for more information, contact me at AlfredTeam.com