Foreclosure 101

Questions and comments swirl in the media, coffee shops and living rooms across America regarding short sales, foreclosures and how they work. You hear of folks living in their homes months, sometimes years after not making a payment. You hear of others who miss one payment and are never able to rebound. So what is the skinny on the foreclosure process?

*Missing one payment does not constitute foreclosure. It can take months or years from the first missed payment for the bank to repossess the home and make the borrower leave.

*According to the NC Commissioner of Banks, over half of foreclosure proceedings that start, actually are foreclosure sales.

*When a buyer misses a payment, the bank starts by sending threatening and ominous letters. These letters include notions of accelerating the loan balance, phone numbers of credit counselors, information for military service, etc.

*Sometime around the 90 day mark, the bank contacts a trustee. This trustee is supposed to make sure that everyone receives proper notice of the pending foreclosure and the proceedings to follow.

*Once notice is given, a date is set to establish a hearing. This usually takes place at the "courthouse"--most of the time in the Clerk of Courts office.

*Proof must be given at the hearing that there is a debt to collect and that all outlets have followed the proper guidelines to get to this point.

*Once the home is foreclosed on actual eviction can occur forcing the borrower to vacate the property. More and more often, borrowers are leaving their homes well before this process occurs.

*Because there are more "strategic defaults" (folks walking away from their homes because continuing to make payments doesn't make financial sense) we are finding more of these foreclosures in better condition than in times past.

*Foreclosed homes that are in good condition are becoming competitive with homes that are owner occupied listings, thus driving prices down and resulting in a vicious cycle of depreciating values.