The 4-Step Foreclosure Process

These are the four steps that can lead to a foreclosure, starting with the first missed payments and going to the auction date.

No matter where you are in this process, Toucan Homes can help. We can stop the foreclosure process and help keep your credit up.

Step 1: Missed payments for minimum of 3 months before starting the legal process of foreclosure.

The homeowner must miss 3 consecutive mortgage payments before the bank will issue a Notice to Default to begin the foreclosure process.  This Notice is reversible if the homeowner knows what steps to take in order to save their home. Some of the options include catching up on payments, either in one payment or in smaller payments that can be paid over time, a loan modification or a short sale.

Step 2: Notice of Default (NOD) recorded. The the homeowner will have a minimum of 90 days before the Notice of Trustee Sale can be filed.

Once the NOD is recorded (after 3 months of missed payments), the homeowner will have an additional 90 days to set up a plan of either catching up on missed payments, short selling their house or finding an investor to buy the property from the bank, keeping a foreclosure off of the homeowners record.

Step 3: Notice of Trustee Sale recorded. The Homeowner is given the required 21 day minimum notice that the house will be sold at auction.

Once the NOTS is recorded, the bank will assign the house an auction date at least 21 days in advance. The homeowner can continue paying off missed payments with the agreement that the auction date will continue to be pushed back an additional 21 days after each payment is received.  If the homeowner decides to sell the house, it must be sold before the auction date to keep a foreclosure off of the homeowners record.  This can be done through a Real Estate agent who will list the property on the MLS and show it to prospective buyers in hopes that someone will put in an offer, or it can be done privately with an investor who will buy the property from the bank.

Step 4: The house is sold at auction to the highest bidder or the lender (usually the bank) takes ownership of the property. Homeowner must vacate the property.

If the house is sold at auction, there will be a new homeowner for that residence and the previous homeowner must vacate the property. If the lender takes ownership of the property, it is considered “bank owned” and the homeowner must vacate the property. It will be sold as soon as possible so that the lender can regain some of the money that they have lost on that property.


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