Mortgage Foreclosure Process

Understanding the mortgage foreclosure process helps in understanding how to cope with it. In it's most simple form, the process goes like this: you take out a mortgage and the mortgage company protects their investment by having a hold on your house. You work out an agreement between the two sides where you pay so much money for a certain period of time. Rarely does the mortgage holder break the contract so the problems usually start when the mortgagee (that's you)has a change in circumstances that puts him or her in default.

The mortgage foreclosure process is cut and dried. The mortgage holder has a defined process for proceeding and any changes between procedures would be related to the specifics of the agreement that the mortgage holder has drawn up. The steps are pretty much as follows.

You miss making a payment and the mortgage company reminds you by letter that you missed the payment. You miss another payment and get another letter and perhaps a phone call. You miss another payment and get another letter and a phone call. At this stage the contact from the mortgage company is focused on trying to resolve the situation.

"If you do not get in contact and continue to miss payments, the mortgage holder can make a demand for the payment in full".

To this point all the contact is informal. If you still do not make contact or payments, the process escalates.

The Escalation

The escalation is to the formal mortgage foreclosure process. This begins with a notice of intent to foreclose, usually delivered by certified mail or a process server and the mortgage company sets the process in motion. Legal notices appear in the local newspapers. If no arrangements are made between you and the mortgage holder, the specified waiting periods which will have been detailed in the notices that you have received are reached. There is a court hearing where the mortgage company presents its claim. The court gives the mortgage company permission to foreclose. The legal notice of the sale is published in the local papers. The sale is held and the house is sold. You are evicted.

At any stage, you can still try to make arrangements with the mortgage company and this would be the best thing to do and the early the better.

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