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Foreclosure Defense

Home Foreclosure: What Is It and How Does It Work?

By June 25, 2020August 15th, 2023No Comments

Foreclosure” can be a scary word for homeowners.

Although recent reports show that the foreclosure rate currently hovers around 1% in the United States, it is a reality for many Americans. Unfortunately, many homeowners are not familiar with the details or processes that accompany foreclosure, and for those struggling to make mortgage payments, this can be a real cause for concern.

While not being able to make monthly mortgage payments may seem like an unthinkable circumstance, knowing what a foreclosure is and how it works is important for any homeowner. In this article, we discuss what you need to know surrounding the basics of foreclosure. We also provide some insight into the foreclosure process, and what you can expect if you find yourself facing foreclosure.

What is Foreclosure?

Foreclosure derives its legal basis from a mortgage or deed of trust contract. When a borrower fails to pay their mortgage payments — either because they are not able to make the payments or choose not to make them — the borrower’s lender or mortgage investor may take possession of the home.

Unfortunately, foreclosure can have some pretty devastating consequences to your personal credit and lending history, as well. A foreclosure will go on your credit report and can drop your credit score by as much as 300 points or more. Moreover, foreclosures remain on your credit report for up to seven years.

In most cases, the foreclosure process will commence after three to six months of missed payments, and it can take a while to complete. According to RealtyTrac’s U.S. Foreclosure Market Report, the average nationwide foreclosure time is 883 days. But the timeline does vary. For example, in New Jersey, it can take upwards of 1,300 days – the longest in the country.

The extensive foreclosure time frames are generally due to the steps that lenders must go through before a property officially enters foreclosure, as well as what happens afterward. This is all part of the foreclosure process.

The Foreclosure Process in McHenry, Illinois


As noted above, when a property officially enters foreclosure due to lack of payment, the lender will repossess the house. However, before this begins, there is something called a “pre-foreclosure”. This is generally good news for homeowners who may be a few days late on their mortgage payments.

Most mortgage contracts have a 15-day grace period, with a late fee of 5% on payments made after this period.

But homeowners should start to worry once they become delinquent on their payments after 90 days. At this point, the lender will issue a “Notice of Default” with the County Recorder’s Office, and the borrower will be notified that they have defaulted on the mortgage loan.

During this stage, the home is in pre-foreclosure which means that:

  • Borrowers can still make up missed payments
  • Borrowers may have to take into consideration interest and lender fees
  • Borrowers may still be able to keep possession of their home

Once the property enters foreclosure, however, homeowners will receive a “Notice to Vacate”. This timeframe can vary from state to state. In Illinois, homeowners have 30 days to leave the property before the eviction is filed.

Foreclosure Auction 

Homeowners will then receive a “Notice of Sale,” which gives them the following information:

  • When the property will be sold at auction
  • Where the auction will take place
  • At what time the auction will take place

Lenders are also required to publish the Notice of Sale in local newspapers for three consecutive weeks prior to the auction.

At the public auction, the home will be sold to the highest bidder, and they will receive the property deed once the sale is complete. Unlike traditional home sales, where sellers use comparable properties to determine the price, mortgage lenders use a different formula to calculate the sale price, considering:

  • The balance of the unpaid loan,
  • Interest, and
  • Fees and costs associated with the foreclosure process.

If the home is not sold at auction, the lender will take title to the property and it is considered bank-owned property.

Contact Adam Diamond Law today

Foreclosure can be a stressful and unpleasant situation for homeowners. Adding to the pressure of losing your home comes the daunting foreclosure process itself, and seeing your house go to the highest bidder. That’s why it’s important to get in touch with an experienced and qualified foreclosure attorney. Contact Adam Diamond Law today to make sure you are in the best possible position throughout your foreclosure process.

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