As borrowers fall behind in their payments, they can expect lenders to react in specific ways at specific times. Here's a look at the timeline from late payment to foreclosure.
It's the first of the month, and the mortgage payment is due. The borrower misses the payment.
A late charge is assessed on payment. The company that processes borrower's payments (called the mortgage servicer) starts attempting to make contact to find out what happened.
The servicer sends "demand" or "breach" letter to the borrower pointing out that terms of the mortgage have been violated. The borrower is given 30 days to resolve the situation by paying the delinquent amount.
The servicer refers the loan to its foreclosure department and hires a local attorney or other firm to initiate foreclosure proceedings. Depending on the state where the home is located, the servicer's representative may record a formal notice of foreclosure at the local courthouse, publish details of the debt in the local newspaper, attend hearings on the case and make appropriate court filings.
The house is sold at foreclosure sale or auction. The wide time range is due to different state requirements. Borrowers in states with judicial foreclosures, or those in which lenders have to retake property titles via the court system, can get almost a year to straighten out their affairs before the sale. Those in nonjudicial states have as little as two months.
After the sale, some states grant borrowers a "redemption period" in which they can still repurchase the property if they have the money. Others force consumers out immediately following the auction.