How Long Is It Take a House to Come Out of Pre Foreclosure

When the homeowner meets foreclosure, the most common question is how long it takes a house to come out of pre-foreclosure. But the answer depends on the situation. It can take months before the foreclosure process is over and the house comes down to the lowest value possible. 

There are different methods to try to prevent this from happening. If you are looking for a way to get your house out of foreclosure then you read this article. Once you find the best way to avoid a house in pre-foreclosure then you will have saved yourself a lot of time and money in the long run.

Period Of Foreclosure

In most states, the period of foreclosure is determined as per the laws of the state where the mortgage is originated. Whereas in other states the date of sale is decided as per the laws of the N.W.T. Even if the mortgagee fails to repay the loan on the stipulated due date, i.e., the borrower fails to repay the mortgage after the period of foreclosure has elapsed, then the borrower may submit an application to the courts for a direct foreclosure. 

However, in this case, the mortgagor is in default of payment even before the date of direct foreclosure has passed. The borrower may also submit an application to the court for a summary of foreclosure. The summary shall include a statement of the person owing money and the person's present possession of the home. The period of foreclosure fixed by the courts shall be published by them and shall run for one year.

Judicial Sales and Pre-Foreclosure Periods

When it comes to judicial pre-foreclosure periods, there are three very different types that will be addressed here. But on a yearly basis, there is a new one called tax lien foreclosure. In which the owners of the property will be able to buy back the home during the tax lien period and avoid going through a judicial foreclosure. Depending on the decision, it can take longer for a house to come out of pre-foreclosure.
In the first two categories above, the first type of foreclosure occurs when a homeowners' loan becomes delinquent, while the second occurs when the loan goes into foreclosure. But with a judicial pre-foreclosure period, both types take place at the same time. And when it comes to tax lien foreclosure and judicial foreclosure, there are some key differences between them that make each process slightly different than what you would expect.

Which Type of Periods You Can Meet

The main difference between these two methods is that with tax lien foreclosure, a redemption period occurs. It is the time in which the bank can sell the property to recoup their investment. During this time, the original homeowner is protected from losing their home and being forced out due to the delinquent mortgage. However, in the event that the homeowners do not make payment arrangements with the lender and the tax lien is eventually sold by the lender. Then the homeowner loses all rights to the property under the terms of the loan contract. Then the lender is able to pursue the homeowners for the remaining amount owed on the loan. Depending on the state and county in question, the homeowner may have additional rights to redeem the property at any point during the redemption period. Which will increase the period of a house to come out of pre-foreclosure as well.
With judicial sales, on the other hand, there is no redemption period. Therefore, once the homeowner makes late payments or fails to come up with the money owed, they are generally stuck in the pre-foreclosure period. During this time, the property is used as collateral for various debt obligations of the homeowner. The lender is also empowered to sue the borrower for the outstanding balance of the mortgage. The balance is a higher interest rate than the market value of the property at the time of the foreclosure sale.

Difference Between Judicial Foreclosure and Nonjudicial Foreclosure

In foreclosure proceedings, there are two types of actions that a bank can take to commence the sale of a home. These methods are:

1.  Deed in Lieu of Foreclosure (when a homeowner defaults on a loan agreement or fails to make required payments on the property, the bank can initiate it).

2. Power of Sale (when a homeowner attempts to sell the house but is unsuccessful.)

An important difference between these two methods of foreclosure is that a lender can continue to pursue homeowners even after the sale date. It is important for homeowners to understand what the bank's pursuit of foreclosure means. After the sale date, the bank will have the full right to foreclose on the property. If the homeowners do not have the funds to pay off the mortgage (through a deed in lieu of foreclosure), the lender has the right to take over the home and resell it through an auction. In addition, at the conclusion of the auction, the losing bidder will owe the bank all monies paid to them.

Many lenders opt for nonjudicial foreclosure because they believe that borrowers are more likely to be able to work out an agreement to avoid foreclosure rather than opt for the lengthy process of a trial. Unfortunately, many homeowners are not aware that this option exists. Some states, such as Texas, even allow lenders to pursue nonjudicial foreclosure through court systems if a homeowner attempts to challenge the foreclosure. To know exactly how long it will take a house to come out of pre-foreclosure, contact an attorney.