How Long Does It Take A Bank To Foreclose?
See My Comments About The Market In Newsday – June 29, 2010
So you want to know how long does it take a bank to foreclose on a home (perhaps your home). Well let me first say that if you’re in this position you should consult the services of an attorney.
For the purposes of this article, I’ll provide some basic information about the process of foreclosure along with some current data.
The Process Of Foreclosure
Rather than give you the boring information you can get anywhere if you just google “process of foreclosure”, I’m going to give you the reality of the process starting with 90 days late. And remember, before I proceed with this article any further, please consult a qualified attorney if you are falling behind on your mortgage payments.
Now, 90 days late is a big turning point in the process. Once you’ve fallen behind 90 days on your mortgage payments, normally…and again I stress “normally”, your bank(s) will file what’s called a lis pendens with the county clerk. This is the first part of the process where the bank begins the legal process of making it known publicly that you are in default of your mortgage obligations.
Due to the current economic conditions of the country, many banks are behind on this process. How far behind? We’ll get to that in the current data portion of the article.
Now your bank will continually attempt to allow you, the borrower, to “cure” your mortgage default. This “cure” is usually a full payment of all monies owed the bank that you are behind on. The more you fall behind, the more fees will be piled on top of what you owe, as the bank incurs further legal expenses and investment losses on the lack of collection from your mortgage.
Because banks are so far behind on much of their paperwork, it is my belief, that many homeowners in this situation do not pay much attention to the process. But sooner or later, you will be served a notice to appear in court regarding the matter. This is when most borrowers start to pay attention.
Even during the short sale process, the bank doesn’t stop with these other proceedings. Even when you’ve decided to call me and list your home as a short sale, the bank will continue the process of foreclosure because they have to. A short sale process doesn’t stop the bank from pursuing foreclosure against you. This is important to remember.
One of the final processes of foreclosure is an auction sale of your home that must be publicly advertised. Once this occurs, you could still be living in the home. You still have rights to remain in the home and in many cases, you can continue living in the home for many months. Again, consult a qualified attorney to represent you in these matters.
What’s The Deal With The Banks?
Under “normal” conditions, banks have a streamline process by which they keep track of default loans and process a foreclosure. Fortunately for homeowners in default and unfortunately for the banks, the current conditions of the economy and housing market are so out of line with tradition that this process of foreclosure is not so cut and dry.
According to recent statistics featured in this slide, the average time it takes a homeowner in default to lose their property to foreclosure has increased 75% since 2008. That is a staggering statistic that’s costing banks and loan servicing companies millions of dollars and perhaps the industry billions of dollars a year.
On average, borrowers in default can maintain living in their home nearly 438 days before a bank forecloses and I don’t believe this statistic includes the amount of time after the bank repossess the home, that the borrower (now occupant of the residence) remains in the home before actually leaving.
So if you’re asking how long it takes a bank to foreclose, there isn’t any real clear-cut answer. But one thing is for sure, and I want to make this very clear, sooner or later, there will be yellow signs on your home that say “Bank Owned” and all the neighbors will know what’s going on. Foreclosure is very public whereas a short sale is much more discreet.
By Thomas McGiveron, LSA