Bank's Role in the Foreclosure Process

Bank’s Role in the Foreclosure
Process

Understanding bank foreclosures
and how to deal with mortgage
institutions

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Home Financing


• Most homes and properties are
obtained by borrowing money from
a lending institution
• The bank holds the deed to the
property as collateral against
payment in full
• If mortgage payments fall into
arrears, the bank can retrieve full
ownership of the property through
the foreclosure process

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Reasons Homeowners Face
Foreclosure

• Increase in an adjustable
interest rate

• Excessive debt

• Medical emergency, illness,
or death in the family

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Reasons Homeowners Face
Foreclosure
• Job loss, reduction in work
hours or pay, or unexpected
promotion denial

• Divorce and/or the loss of a
second income

• Unexpected major home
repairs

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Initiating the Foreclosure Process
• A bank can begin the foreclosure
process after only one delinquent
payment

• Most mortgage companies will
present delinquent homeowners
with several warnings before
actually filing with the court in order
to avoid foreclosures

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Notice to Accelerate

• After the payment is sixty days past
due, a Notice to Accelerate will be
issued by the bank

• A date will be set to pay the
delinquent balance and strong
warnings will be made concerning
actual foreclosure

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Demand Letter
• If payment is not made by the due
date set in the Notice to Accelerate,
the bank will hire an attorney who
will issue a Demand Letter

• This is the final warning from the
bank to pay the amount due before
a formal foreclosure request is
presented to the court

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Notice of Default
• The homeowner does not respond
to the Demand Letter, they will
receive a Notice of Default stating a
notice of foreclosure has been
issued with the court

• In most cases, the homeowner will
have a month or less to respond to
this judgment

• This is the last chance to settle the
delinquent amount before actual
foreclosure

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Notice of Sale
• If the homeowner does not
respond to the Notice of Default
within 20 to 30 days, they will
receive a Notice of Sale
• This step normally occurs when
payments are in arrears three or
more months
• A Notice of Sale provides the
actual date whereby the property
will be sold at a Sheriff’s auction

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Communication is Key

• In order to avoid foreclosure,
communication with the bank is
essential
• Open communication with the lending
institution should begin as early as
possible, even before missing the first
payment
• Most mortgage holders will work with
homeowners who make an effort in
order to avoid foreclosures

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