When a homeowner faces foreclosure there is often a lot of anxiety about losing their home and also about the foreclosure process itself. So what exactly happens when a lender considers a property for foreclosure?
- When a mortgage servicer finally decides to consider a property for foreclosure, the homeowner is seriously delinquent on their mortgage, at least about 6 months. The first thing the mortgage servicer does is contact their attorney to determine if there is a probability that the homeowner will be able to repay their delinquent mortgage and become current.
- The attorney will examine the mortgage being considered for foreclosure and if he/she decides that it is in the best interest of the servicer to file foreclosure, he will file what's called a lis pendens or what's known as a pending lawsuit with the court.
- When the lis pendens if filed with the court, it must provide evidence that the foreclosure is valid. The attorney will provide proof that the borrower is on default on their mortgage and that the bank intends to file foreclosure.
- The court will examine the foreclosure filing and determine whether or not the claim is valid. Once the claim is determined to be valid by the court, they will issue a court order for the payment of the remaining balance of the loan and any other additional fees associated with the foreclosure process. At this point, an order will be issued for the sheriff to set a date for the foreclosure sale of the property.
- If the foreclosure sale doesn't produce enough income to cover the mortgage, the court can issue a deficiency judgment requiring the debtor to pay the balance of the loan even though they no longer have possession of the home.