What is the foreclosure process? Before a foreclosure case is filed, the mortgage company sends a foreclosure referral package to their attorney. A title examination is done to identify all individuals and entities that have an interest in the real estate, which can even include spouse’s dower rights. Once that is done, a complaint is filed, with instructions to serve the individuals and entities with an interest in the real estate. Service usually occurs by certified mail or by a sheriff’s deputy. Once the homeowner receives the complaint, he or she has twenty-eight days to formally respond to the complaint. Once the complaint is received, it is important to consult with an attorney to determine if there are any legal defenses that need to raised, as well as any motions that need to be filed prior to answering the complaint. Some claims must be raised before filing a formal answer.
A foreclosure can take four to six months to the sale and confirmation. Failure to defend the foreclosure complaint results in the lender’s attorney filing a motion to default judgment, speeding up the process. Defending the foreclosure usually result in the court referring the case to a number of status or mediation hearings, where forbearance and modification agreement options are considered. Such programs include the “Home Affordable Modification Program” (HAMP).
A foreclosure judgment gives the lender the ability to sell the real estate and to collect on the money judgment against the homeowner. Once a sale is approved, the sheriff appraises the real estate, schedules a sale, and advertises the sale. The sheriff’s sale is a public auction where any adult can submit a bid. The property must sell for at least two-thirds of the appraised value. The sheriff reports the results of the sale to the court. The lender then requests the court to confirm the sale, distribute the proceeds and order a sheriff’s deed. If the homeowner has not yet moved out, the buyer can start the eviction process. Most of the time, the lender buys the real estate. Any mortgage balance not covered by the sale is known as a deficiency balance.