Foreclosure & Alternatives Law
What happens when you fall behind on mortgage payments? Below is a brief summary of the foreclosure process. Keep in mind the process can vary by state. Lenders also vary in how they handle late, partial, and missed payments.
Typically, lenders will work with you, at least initially, on a plan to catch up on your payments. Foreclosure can be expensive for lenders, too, so they have some incentive to work with you.
Your lender will contact you directly after several missed or partial payments. You must work with your lender at this stage. If you are struggling financially, it can be tempting to ignore your lender's attempts to contact you. This can be risky, however, at least if you still want to keep your home. There may be alternatives to foreclosure that are worth pursuing. The more time you go without talking to your lender and the higher the amount you owe, the harder it will be to avoid foreclosure.
If you are behind on payments and have not agreed on a payment plan with your lender, they will send you a "Demand Letter" or "Notice to Accelerate." This letter will include the full amount you owe and the date you need to pay it by to avoid foreclosure.
If that date passes without payment or making other arrangements, you will probably be referred to your lender's attorneys, who will begin foreclosure. You do not need to leave your home at this point.
A Sheriff's or Public Trustee's Sale is the actual day of foreclosure, which happens when the lender puts the home up for auction. The sale can be in little as a few months or over a year later, depending on your state and economic circumstances. If you pay the amount you owe in full before the sale date, you stop foreclosure.
Some states also have a redemption period after the sale, where you will have one last chance to buy back your home.