Understanding Pre-Foreclosure

Foreclosures begin with a notice of default (NOD) which marks the beginning of the pre-foreclosure process. After several missed payments, borrowers will receive an NOD and will then have a period of time, usually 3 months, to bring the loan current before further legal action is taken by the lender. This gives the borrower time to make the missed payments or to sell the property. State laws, as well as lender practices, will affect the length of the pre-foreclosure process, as will the type of foreclosure.

Judicial Foreclosures

In states using a judicial foreclosure process, the pre-foreclosure process tends to last longer than in other states. That is because the court becomes involved early on, with the lender filing a notice of intent to foreclose with the court at the time the NOD is issued. Courts may grant the borrower additional time for response before setting a court date.

Non-Judicial Foreclosures

This type of foreclosure usually moves quickly. The process is outlined in the loan agreement. When a borrower defaults on their loan obligations, the lender proceeds according to the loan agreement and begins foreclosure proceedings. This process can take as little as 2 months, though that is not typical. In either type of foreclosure state, it should be noted that lenders and banks prefer not to foreclose and begin the pre-foreclosure process. They lender should be contacted for advice as soon as payments begin to fall behind.