How Long Does Foreclosure Take?
For some homeowners, foreclosure is an unfortunate reality. It is usually one that’s entirely outside of their control. But how long does foreclosure take? It will actually vary depending on any number of circumstances. Here’s what you should know about what to expect from the foreclosure process.
The length of time it takes from the 1st late payment to a home being sold at a foreclosure auction depends on many factors. Every state is different, but in Utah the entire process takes at least 7 months and often times longer. And believe it or not, there may be options available that can help diminish its long-term effects.
“What many people don’t realize is that the stipulations of a foreclosure are different from state to state,” explains Rob Lantz, a real estate attorney from Provo. “Also how you purchased your home, as well as any personal relationship with a lender, can influence the effects of reducing or stopping foreclosure in Utah”.
The Foreclosure Timeline
As mentioned, in Utah, the foreclosure process takes about 7 months from your 1st missed house payment to the sale of your property at auction. You first need to be 90 days late in your payments before a notice of default is recorded. That notice of default recording is serving a 3 month notice before a sale date will be issued. And finally, a 3 week notice is given that a home will be sold at auction. So, the fastest the process can happen is about 7 months once you stop making payments, but it can also drag out longer.
There are ways to slow down or stop foreclosure such as bankruptcy, loan modification or working with an investor. So, how long does foreclosure take can be determined by haw fast or slow your mortgage company and the attorney they use pushes things along.
What To Expect From The Process Of Foreclosure
The foreclosure process legally begins after the issuance of a notice of default; and in many cases, this occurs after missing your third monthly mortgage payment. A notice of default demands that you pay the missed payments in full within a specified amount of time. Typically, 90 or more days from when the Notice of Default was issued. This period is known as “pre foreclosure.”
Once the notice of default has been recorded for at least 90 days, a notice of foreclosure sale can be issued. This notice is typically for 3 to 4 weeks. The notice also gives you a date that the house will be sold at auction.
Although there are some instances where arrangements can be made with a lender under extenuating circumstances—a prolonged family illness, for instance—more often than not, you’ll be hard pressed to find a sympathetic ear from your bank.
“When you enter into a mortgage you’re entering into a legally binding contract,” says Lantz. “And there’s not always a lot of legroom when it comes to financial constraints and the law. But if you’re providing evidence that you’ve taken every imaginable step to meet your obligations, your ability to negotiate may be a little stronger.”
Does Utah Have a Right of Redemption?
Utah law maintains a grace period known as the “right of redemption,” which can allow you the to purchase property back during instances of judicial foreclosure (where proceedings occur through the courts). This means you have the option to purchase the property back within a certain time period after the foreclosure sale. Payment would be made in full of the sum of the unpaid loan, plus additional costs. The courts can extend the redemption period, in some cases up to two years. However, it’s important to keep in mind this only occurs under a judicial foreclosure.
A nonjudicial foreclosure is when the foreclosure process takes place outside of the court system. Most foreclosures are nonjudicial in Utah which means you will not have a right of redemption. Instead, notice is given to both borrowers and the public, and is commonly called “sale of trust property by public auction.”
During a nonjudicial foreclosure you will receive:
- A notice of default
- A notice of intent to sell
- A combined notice of default and intent to sell
- A notice by publication in a newspaper stating your property will sell publicly on a specified date
Legally, however, you are not required to vacate your property upon receiving a notice to sell. Depending on the timing of the required notices and previous negotiations with your lender, it can take approximately 120 days to complete a nonjudicial foreclosure. The foreclosure process can be delayed if you contest the action in court, seek postponement of sale, or file for bankruptcy.
Mortgage and Deed of Trust
Most lenders tend to encourage the purchase of homes to be legally established where the property title serves as a deed of trust; and in Utah, this is how the vast majority of transactions are conducted. The chief reason for this is to avoid lengthy judicial proceedings, and can sometimes be as beneficial to a homeowner as it is to a lender. For one, the amount of legal fees you incur as a result can make current financial constraints even worse. But on the other hand, it also usually contains a provision known as a “power of sale clause”; which means the trustee (in this case, the lender or their attorneys) can be obligated to sell your property to satisfy the agreements of the loan.
Is There A Solution?
If you’ve failed to find an understanding with your lender, the easiest solution during the preforeclosure period is, quite honestly, to sell your home. Not only can it diminish your chances of a black mark on your credit, it can bring you peace of mind.
But for many people, the process of finding an adequate realtor (to speak nothing but a potential buyer) is never guaranteed; especially in no more that 1 – 2 months time.
One way around this is to speak to a reputable home buying company. Typically, they can almost always guarantee the purchase of your home—in cash, and frequently in no more than 3 to 5 days. They can also offer rent-back and buy-back options if you want to stay in your house.
As stated, the entire foreclosure process in Utah takes about 7 months to complete. You first need to be 90 days late in your payments before a notice of default is recorded. That recording is serving another 3 month notice. And finally, a 3 week notice is given that a home will be sold at auction.
The process can also take much longer. The mortgage company may not record a notice of default until you are 6 months late with your mortgage payment or a chapter 13 bankruptcy can be used to slow the process down.
As we said, facing a formal notice of foreclosure is never easy. It places as much a stress on your finances as it does your emotional well-being. But it’s important to realize that even in the bleakest times, there are always options that can help you shoulder the burden. Here is more on how long does foreclosure take and how it affects your credit.