For many homeowners, foreclosure is an unfortunate reality; and 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.
It’s never easy to see your dreams of owning a home shattered by foreclosure. And it’s even worse to see what it can do to your credit score.
The length of foreclosure time is actually relatively flexible. 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.
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 in Utah. A notice of default demands that you pay 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.”
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.”
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.
As mentioned previously, Utah is a state that primarily operates under nonjudicial foreclosure laws, which means no court action is required (although the law does permit mortgages to serve as liens against property and can be legally executed by courts.) 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.
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; as in the case of mortgages serving as property liens.) Payment is made in full of the sum of the unpaid loan, plus additional costs. Courts can extend the redemption period, in some cases up to two years; but it’s important to keep in mind this only occurs under judicial foreclosure, which is less common in Utah.
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 – 5 days.
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.