We know it is never in the minds of the borrower that they may foreclose at some point but it does happen. Ã‚Â A life changing financial event suddenly occurs such as medical bills, eroding property, divorce, etc., which significantly changes the nature of the borrowerÃ¢â‚¬â„¢s ability to pay his/her mortgage payments. Borrowers become trapped in something called the foreclosure spiral. This spiral starts when your loan payment is 16 days overdue.
Here is the foreclosure timeline:
Day 1: Mortgage payment is due and the borrower misses it.
Day 16-30: The mortgage servicer applies a late charge and tries to get in contact with the borrower.
Day 45-60: The terms of the mortgage have officially been violated and a demand or breach letter is sent.
Day 90-105: Mortgage servicer sends the loan to the foreclosure department and hires a local attorney to start the foreclosure proceedings.
Day 150-415: House is sold at foreclosure sale or auction. If lenders need to retake the property through court system, the borrower could have as much as a year to prevent the sale. However, if the court system is not involved the borrower may have as little as two months.
Day 150-415+: Depending on the location of the foreclosure, the borrower may have a chance to buy back the property if they have the money.