The foreclosure process is actually a very simple one. If a homeowner fails to rectify overdue payments, the bank will put his or her house up for auction. The reality is murkier: the glut of foreclosed homes on the market make it impossible and unrealistic for banks to exhaust their foreclosure rights and push tenants out. Still, if you are in danger of foreclosure, this is how it typically goes:
The notice to accelerate
This is a fancy way of saying, “Hurry up and pay now!” The homeowner will be expected to get current on his or her debt by paying off fees, penalties, and interest. Failure to do so will cause the bank to ‘accelerate’ the due date of the loan. This means they are forcing the issue of foreclosure.
The demand letter
As if they were playing nice before, banks are suddenly getting serious—very serious this time. A demand letter may sound silly, but banks are pushing the issue of foreclosure into the courts. This means the homeowner is officially on notice to pay back the outstanding, delinquent debt or he or she will be legally foreclosed on.
And, finally, the notice of sale
Finally, failure to respond with payment, in full, to the demand letter after 30 days will result in a notice of sale. The house no longer belongs to homeowner, as he or she defaulted on the conditions of the mortgage, and the bank will now put it up for auction.