Demystifying the mortgage foreclosure process

I want to take a moment here to demystify the foreclosure process. I work with many people who don’t understand how it works and think that if they miss one payment the bank has the right to come and seize their house. That’s not true.

Foreclosure actually has a number of stages and the process is not all that hard to understand. During those stages the homeowner has a number of opportunities to bring the loan current and avoid foreclosure.

The first thing you should know is that it takes more than one missed payment for a lender to take any action against a homeowner. A borrower actually has to miss three payments or go 90 days without making a payment. 

After they have missed three payments, they receive a Notice of Default (NOD). The borrower doesn’t actually have to pay the NOD upfront, they have three months (90 days) to “cure” or pay the default.

After 90 days have passed with no “cure” for the NOD, a Notice of Sale (NOS) is filed and the home can be sold on the steps of a courthouse within 21 days. The NOS is recorded at the County Recorder's Office in the county where the property is located. The final step of the process before any potential sale is the NOS is posted in a local or community newspaper.

By the time the house is even eligible to be sold because of a lack of payment, almost seven months have passed. Also, the sale of the home can easily be postponed, sometimes up to a year, by filing a Temporary Restraining Order (TRO) or a bankruptcy.

Whether you have been taken advantage of with a predatory loan by Countrywide or Bank of America or any other bank or not, there are options out there that allow you to lower your payments. Many of these options do not require you to risk being thrown out of your home. All you need to do is know the law and you are already two steps ahead of the general public and a step ahead of your lender.

Times have changed and it’s time everyone out there started changing with them instead of playing by the old rules and watching as the banks and billionaires skate by us and asking what happened.

is host of the syndicated radio show, “Let’s Talk Real Estate with Mike Andrews.” He is a published author, real estate expert, entrepreneur and investment advisor. Follow him on Twitter Twitter.com/RealEstateMikeA.