The term "foreclosure" has been heard by most everyone these days, but despite the frequency with which it is used, many people do not really know what a foreclosure is. This post will help explain that.
A foreclosure is a legal process by which a mortgage company, mortgage servicer, or mortgage investor seeks to take possession of your home. A foreclosure cannot be started against a homeowner until the owner has "defaulted" on his mortgage.
How Far Behind Do I Have To Be Before Foreclosure?
Being in "default" means that the homeowner has failed to pay his monthly payment on time. Contrary to popular belief, a homeowner does not have to be three months late before a foreclosure can start. In fact, a foreclosure can begin the day after you miss your payment. Now, that almost never happens, but it is legally possible.
In most cases of foreclosure the homeowner is at least three to four months delinquent. Approximately 30 days before the foreclosure is filed with the court, the owner will receive a "notice of default" letter. Sometimes this letter is referred to as an "intent to accelerate" letter. It tells the owner that unless he pays the back-due amount by a certain date, foreclosure proceedings will begin against him.
Will I Be Notified When The Foreclosure Is Filed?
Assuming that the owner is unable to pay the money demanded in the Notice of Default letter, the mortgage company will file a foreclosure complaint in the Court of Common Pleas for the county in which your home sits. So, if your home is in Wood County, Ohio, the case will be filed in the Wood County Court of Common Pleas. When the foreclosure complaint is filed, a copy is then sent to every person who has an interest in the property. That means that the person who signed the mortgage will receive the complaint, the spouse of that person, the County Treasurer (this is required by law), and any other person or entity that might have an interest. (Other entities who might have an interest are entities who may have sued you before and have a judgment lien against your home.)
What Should I Do When I Get The Foreclosure Complaint?
When you receive this letter from the Court, it is incredibly important that you OPEN the letter, READ the letter, and RESPOND to the letter. (Many people have seen their homes taken from them because they refused to respond to letters from the Court.) The letter from the Court will tell you that you have 28 days to respond to the foreclosure complaint. This response can take the form of a Motion to Dismiss (if the mortgage company is improperly bring the lawsuit), an "Answer", or an extension (which asks for more time to answer the complaint).
An answer is simply a response to the allegations contained in the complaint. The answer tells the court that either the allegations in the complaint are true, false, or that you aren't sure if they are true or false.
What Happens If I Don't Respond To The Complaint?
If you fail to answer the complaint by the due date, the mortgage company will ask for a "default judgment" against you. This is essentially where the company tells the court that you have not objected to their complaint, so the court should enter judgment for the company. In other words, they win and you lose. Failing to answer actually speeds up the foreclosure process.
Assuming you answer, the most likely next event is that the mortgage company will file a "motion for summary judgment." This is where the company tells the court that, while you did answer, you have no legal defense to the foreclosure and so the court should enter judgment in the company's favor. In other words, they win and you lose. Now, in many cases, this is inevitable. Most people have no legal defense to the foreclosure. So the issue is whether the company takes your home within 3-4 months, or 6-8 months.
What Happens After The Bank Wins
Once a judgment is entered against you, the company will ask the court to order a sheriff's sale. The sheriff's sale is where the sheriff of your county will actually auction off your property to the highest bidder. It is important to note that the homeowner, nor any family or close friends, can bid on the property unless they pay the full amount you owe.
After the sheriff's sale, the court will "confirm" the sale. After the confirmation, the company (or whoever bought your house at the auction) may ask for a "writ of possession" if you haven't already moved out of the property. If the court grants this writ of possession, the new owner can show up at the house with a sheriff's deputy and boxes and forcibly remove you from the property. This is where the foreclosure process completely ends.
The entire process is not a fast process. However, depending on where you live in Ohio, and how busy your court is, the process can take anywhere from 4 to 18 months to complete.