A loan modification didn’t work and the darn Realtor handling your short sale didn’t really sell much of anything. So, now you are left holding the raft, with no paddle in a fast moving crappy creek and all you want to know is, ” How long can I live in my house after foreclosure?”
Well, that depends on 50 different factors. It’s actually not really hard to figure out once you understand the process and your state’s foreclosure laws. You don’t have to become and expert but you really should get an idea on how long you can legally remain in your home before you have to vacate.
In some cases you can negotiate after the sale of your property by the bank to stay in your home for a period of a few days and sometimes as long as a couple months. More on that later in the post.
My website LoanSafe.org has a forum listing with most states laws and foreclosure time-lines. You can view those here if you like. What you really need is to understand the complete process from start to finish to get a more exact date on when you have to bail.
So, let me give you a brief run down on dates, missed payments and what you can expect during the process.
Day 1 – Borrower misses first payment by a day. No penalties assessed at this time
Day 16-30 – A late charge is assessed to the borrower’s payment.
The lender or mortgage servicer will attempt to make contact with the borrower for an explanation.
Most mortgage notes usually carry a grace period, 15 days is typical but some are as short as 10 days.
On day 16 a late fee is assessed. At this point there are no ramifications beyond that late fee and maybe a “friendly reminder” call from the lender’s customer service department. On Day 30 that changes. At that point the borrower is in default and things quickly turn serious and the foreclosure process speeds up.
Starting on day 16, additional debt is incurred in the form of the mortgage late fee – usually a percentage of the principal balance; three percent is typical which, on a $300,000 mortgage is plus or minus a $100 penalty and, if the next payment and the next are also missed, the cost of bringing the mortgage current grows pretty fast.
Past day 30, some lenders will allow a borrower to make a partial payment of the past due amount; others will insist that everything be brought current; lenders may even return a check if it does not cover both the current and the past due payments and maybe the late charges as well.
Day 45-60– The servicer sends “demand” or “breach” letter to the borrower stating the mortgage terms that have been. The borrower is given only 30 days to resolve the delinquent amount.
By day 45 the phone calls from the mortgage collectors will be coming pretty regularly. Most states have rules regarding collection activities and telephone calls including their frequency during this phase of the foreclosure process, content (no threats are permitted), and timing (early morning and late night calls are generally off limits,) but the calls, within legal boundaries, will be unremitting and the tone can vary from “gee, we just want to help” to aggressively demanding.
Day 90-105-The servicer refers the loan to its loss mitigation department / foreclosure department and retains an attorney or other firm to handle the foreclosure proceedings. Depending on the state where the home is located, the servicer’s representative may record a notice of default at the local courthouse and it will be published in the local newspaper.
Day 150-415– A notice of trustee Sale is filed and the home is scheduled to be sold at foreclosure sale or auction. This time range varies due to individual state laws and requirements.
IMPORTANT TIP:As mentioned above, sometimes you can negotiate after the foreclosure sale of your property to stay in your home for a period of a few days to as long as a couple months. However, make sure you CALL BEFORE THE SALE OF YOUR HOME! Preferably weeks before your scheduled date to start the line of communication going with the lenders attorney.
All you have to do is simply call the attorney handling the sale of your home and let them know that you and your family will just need a little bit more time to vacate the premises. The key is “let” them know, don’t ask. But do it nicely. Some people have thrown a little white lie in there to spice it up. That’s up to you!
I know it may seem like there is no way in hell this is going to happen, but it does and I have personally witnessed homeowners get an additional week, month to 3 months in one case. Some even got cash ( up to $5,000) to leave right away. A thing they call cash for keys in the industry.
Remember, homeowners can get “extra” time after the sale of their home in “some” cases.
Factors like the lawyers mood, your tone on the phone (serious, you may not even get though the secretary who decides she holds the gate keys if you cross her 🙁 ), the lender and other factors will come into play
But as with anything, cocommunication is key and making those calls can get you far during this process and life.
States with judicial foreclosures / where foreclosures are done via the court system, can sometimes extend this period to a year or more.
A foreclosure is a legal event and there are benchmarks that must be met. Once the case is turned over to attorneys, the impending foreclosure must be advertised, usually in both the local papers and in the largest and closest metropolitan daily. The entire process can take a very long time from initial default to the actual public auction of the property. If a member of the military is an owner of the property, there are additional safeguards required by federal and in some cases state laws From the beginning of the process, however, the meter is running. The longer the foreclosure takes, the greater the debt that accrues and the larger the liability the homeowner has, something that will become critical down the road.
The law in most states gives the homeowner every opportunity to stop the process leading to foreclosure, right up to the minute that the auctioneer’s gavel comes down and sometimes even beyond. In some states there is a period after the foreclosure during which the homeowner can redeem the property (right of redemption.).
Redemption Rights: The rights of redemption, as specified in Internal Revenue Code Section 6337, are quoted as follows:
Sec. 6337. Redemption of Property. (a) Before Sale. – Any person whose property has been levied upon shall have the right to pay the amount due, together with the expenses of the proceeding, if any, to the Secretary at any time prior to the sale thereof, and upon such payment the Secretary shall restore such property to him, and all further proceedings in connection with the levy on such property shall cease from the time of such payment.
(b) Redemption of Real Estate After Sale.
(1) Period. – The owners of any real property sold as provided in Section 6335, their heirs, executors, or administrators, or any person having any interest therein, or a lien thereon, or any person in their behalf, shall be permitted to redeem the property sold, or any particular tract of such property at any time within 180 days after the sale thereof. (2) Price. – Such property or tract of property shall be permitted to be redeemed upon payment to the purchaser, or in case he cannot be found in the county in which the property to be redeemed is situated, then to the Secretary, for the use of the purchaser, his heirs, or assigns, the amount paid by such purchaser and interest thereon at the rate of 20 percent per annum.
It is important to know this because less than ethical lenders and servicing companies will tell borrowers that, once default has occurred, the acceleration clause of the mortgage is invoked and the entire mortgage balance is due and payable – in other words, if a borrower misses his $1,200 payment for several months and now owes $3,600 plus late fees and legal expenses, he must come up with the entire $150,000 mortgage balance in order to stop the foreclosure.
This may be technically true but it is rarely invoked in practice.
Nonjudicial foreclosure states can foreclose in as little as two months.
LEGAL DISCLAIMER – The comments, posts, threads and material on this websites are NOT to be taken as legal advice and we highly recommend that anyone facing foreclosure should seek the counsel of an attorney and or an accountant. ALWAYS obtain a second and third opinion on your particular situation from a trusted source.