The foreclosure process Columbus OH

A common misconception of foreclosure is that after the homeowners miss a payment or two, the lender immediately takes possession of the property and then turns around and auctions it off at a foreclosure sale. Actually, the process is more drawn out than that, following the typical scenario presented in this article.

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The following are steps that might be followed in a common foreclosure:

Homeowners stop making mortgage payments.

After about 15 to 30 days, lender sends a payment reminder.

If the homeowners still don’t respond, the lender continues to send notices and call the homeowners.

If the homeowners still don’t contact the lender, the lender turns the matter over to its collection and harassment department, who continues to pester the homeowners with letters and phone calls.

After about three missed monthly payments, the lender transfers the matter over to outside counsel, which is normally handled regionally. The attorney sends an official notice, warning that foreclosure proceedings are about to begin.

Homeowners don’t reply or present a solution that the lender deems unsatisfactory. At this point, the homeowners can usually stop the foreclosure by negotiating a suitable solution with the lender.

The attorney begins the foreclosure process by posting a foreclosure notice in the county’s legal newspaper or in the local newspaper. The homeowners can still reinstate the mortgage at this point by catching up on the payments and paying any additional late fees and penalties, which occurs quite often. (The county legal newspaper serves the public and provides the legal community with an automated system, but these are private, for-profit publications, not freebies that the county publishes.)

The property arrives at the civil division of the sheriff’s office, which is assigned the task of handling the sale. The trustee or attorney handling the foreclosure sets the opening bid and typically advertises it in the foreclosure notice. The opening bid is the balance of the mortgage plus penalties, unpaid interest, attorney fees, and other costs that the lender has incurred during the process.

The sheriff or his representative may visit the house prior to the sale to post a foreclosure notice and inspect the property, because sometimes redemption rights change if the homeowners abandon the property. (Some states have a redemption period, after the sale, during which time the homeowners can buy back the property by paying the full amount of the loan along with taxes, interest, and penalties. This period can last up to a year.)

The day before the auction, the lender may adjust the price up or down, but may not artificially inflate it. Frequently, lenders reduce the opening bid to make the property more appealing to investors and rid themselves of it.

Property goes on the auction block for sale to the highest bidder or is turned over to a trustee to liquidate the property and pay the lender.

An investor purchases the property at auction or from the trustee, or the lender buys the property. If nobody bids higher than the opening bid, which the foreclosing lender submits, control is handed over to the lender, who can then take possession of the property following any redemption period as explained next.

In some states, the high bidder (or lender, if nobody bids more than the opening bid) takes immediate possession of the property. In states with a redemption period, the new “owner” must wait until the redemption period expires and a final court hearing with the homeowners before they can do anything with the property. If the lender takes possession of the property, the lender transfers the property to its REO (Real Estate Owned) department, which prepares it for sale.

Previous owners move out or are evicted.

The foreclosure process is a lose-lose situation for both the homeowners and the lender. The homeowners lose the property, and the lender takes a loss on the loan and often pays additional costs to resell the property to recoup a portion of its loss.

If you or a loved one is ever facing a foreclosure, contact the lender immediately to explore your options. Seek help sooner rather than later. Shame, anger, and denial may discourage you from seeking assistance, but the longer you wait, the fewer your options. Educate yourself and communicate with your lender. Homeowners who panic become very vulnerable to foreclosure rescue schemes. Do your research, know your options, and don’t deal with someone who’s claiming to be your friend. A good place to seek help is Freddie Mac’s Don’t Borrow Trouble Web site at www.dontborrowtrouble.com.

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For Dummies is a registered trademark of Wiley Publishing, Inc. in the United States and other countries. Used here by license.

Featured Local Company

First Horizon Home Loans

614-223-1204
85 E Gay St
Columbus, OH

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