Foreclosure Timeline

A basic illustration and timeline of the foreclosure process might look something like this:

1. After the homeowner misses their first mortgage payment, phone calls from Lender begin and the credit bureaus are notified.
2. After two missed payments, calls from the Lender increase. Depending on the state, a Notice of Trustee Sale is recorded and a 60-day delinquent status is reported to the credit bureaus.
3. After 3 missed payments, the account is transferred to the Lender’s loss mitigation department and a Notice of Default is sent to the homeowner from the county courthouse.
4. After 4 missed payments, the property is auctioned and sold to the highest bidder at the county courthouse and the homeowner is evicted from the property.

In today’s environment, the foreclosure process can often take much longer to complete, but the results are the same. While many states share similarities, the foreclosure process can vary state-by-state.

Foreclosure can end in one of four ways:

1. The borrower reinstates the loan by paying off the defaulted amount during a grace period determined by state law. This is known as pre-foreclosure.
2. The borrower sells the property to a 3rd party during the pre-foreclosure period. The sale allows the borrower to pay off the loan and avoid having a foreclosure on their credit history. This is what is known as the short sale process.
3. A 3rd party purchases the property at a public auction at the end of the pre-foreclosure period and the homeowner is evicted.
4. The lender takes ownership of the property at the auction, usually with the intent to resell it on the open market as Real Estate Owned, or “REO” for short.