One of my most popular questions is regarding the foreclosure process and what are the steps leading up to foreclosure. While it is important to understand that timeframes between each step vary from state to state and lender to lender. Some states are judicial and some are non judicial states. GA is a non judicial state meaning the bank does not have to file a lawsuit or go to court in order to foreclosure on the property. It would also be helpful to put a disclaimer right here that states: Always contact an attorney, tax professional or retain a real estate professional for specific advice about your situation.
Now that legalities are out of the way, let’s get started with the steps to foreclosure:
1. DELINQUENCY – A Delinquency occurs when you are up to 30 days late on your payment
2. DEFAULT – The loan goes into default once payments are OVER 30 days late. At this point the lender will contact you to see if this is a short or long term problem and will work accordingly.
3. LOSS MITIGATION – Once the bank realizes that the default is a long term problem (job loss, ARM adjustment, illness, etc) then the lender will offer the homeowner some options to avoid foreclosure to include:
- Loan Modification
- Forbearance (grant a few missed payments)
- Negative Settlement
- Deed in Lieu
- Short Refinance
- Short Sale
4. FORECLOSURE – If Loss Mitigation fails then lender will foreclose, evict borrower and put property up for auction
5. REO (Real Estate Owned) – If the property is not sold at auction then it will revert back to the lender as a REO which is then prepped and sold on the market
