Understanding the ins and outs of foreclosure can be difficult. In order to defend against a foreclosure by entry and possession, though, homeowners will have to initiate a lawsuit in court and attempt to obtain a temporary restraining order. If the lender prevails, the court appoints a referee to prepare a report calculating the outstanding balance on the mortgage.
In many states, the borrower has the right of redemption (he can come up with the outstanding cash and stop the foreclosure process) up to the moment the home will be auctioned off. A notice of default is often required by the mortgage. The holder of a mortgage without this clause has only two options: either to wait until all of the payments come due or convince a court to compel a sale of some parts of the property in lieu of the past due payments.
Some lenders will pay moving expenses in order to avoid the time and expense of an eviction proceeding (called cash for keys”). Whether you’re a first-time homebuyer or looking to invest in real estate, the idea of buying property at a bargain is extremely tempting.
It is also often paired with foreclosure by a power of sale, which allows lenders to sell a house at a trustee sale without initiating a lawsuit in court. If a foreclosure sale has been issued on your property, you need to begin negotiations now. If you file bankruptcy and do not make your payments to the bank, the bank can be excused from the bankruptcy proceedings and move forward with the foreclosure.
The government courts and sheriffs department will usually do whatever the banks tell them to do, so that helps explain why a house may be locked up before the foreclosure auction. The trustee will then file a notice in the county records showing that the foreclosure proceeding has ended.