Foreclosure Timeline

As a homeowner, the list of events that can result in your foreclosure and eviction are especially devastating. To coordinate strategy to either save your home or avoid further damage to your credit standing, it is critical that you become familiar with the foreclosure timeline. The foreclosure timeline begins with mortgage default, before transitioning into the three separate stages of pre-foreclosure, foreclosure auction, and real estate owned (REO).

Mortgage Default

Your full mortgage payment is likely to come due on the first of each month. The payment due date is also attached to one 15-day grace period. The bank will demand that you pay late fees, if it has not received your full mortgage payment by the time the grace period expires. After 30 days of missed payments, your mortgage falls into default and the foreclosure process begins. At that point, the bank will report your default status to the major credit bureaus and move your case to its own internal foreclosure department.

Pre-Foreclosure Stage

In pre-foreclosure, your mortgage has fallen into default, but the home has yet to be seized and auctioned off. The pre-foreclosure stage generally lasts for a total of 150 days. During this time, you can expect an increasing frequency of communications between yourself and the lender. In the mail, you will receive a demand letter and notice of default, which both order you to immediately bring the mortgage back current. Over the telephone, you can expect to field telephone calls from lender representatives who will seek out an explanation for your missed payments. After speaking with lender representatives you will better be able to coordinate strategy to save your home.

Loan Modification

You may negotiate a loan modification through lender representatives to save your home. According to the U.S. Department of Housing and Urban Development, a loan modification is a permanent reduction in your mortgage principal and interest rate that should result in an affordable monthly payment. For affordability, you should target a monthly home loan payment that is less than 30 percent of your monthly gross income. Before securing the loan modification, you must compile a package of documents that proves to the bank that you have exhausted all financial resources available to meet the current terms of the mortgage. You should therefore eliminate discretionary spending from your budget and also liquidate taxable investment accounts to raise cash to make payments, before you attempt to negotiate a loan modification. For example, the bank is not likely to approve of a loan modification, if you recently took a trip to Saint Tropez and own $35,000 worth of General Electric stock.

Pre-Foreclosure Sale

You should also put the home up for sale in the pre-foreclosure stage -- to open up your options. To attract demand and expedite the process, you should offer the home up at a slight discount to comparable real estate. Be advised that a prospective buyer is likely to drive a hard bargain, if the home is in need of minor repairs because you lacked the funds for general upkeep. The pre-foreclosure sale will be complicated further in a negative equity situation, which occurs when you owe more on the home than it is actually worth. You would then be forced into a short sale--where the bank must agree to accept less cash from a buyer than the home's outstanding mortgage balance due.

Foreclosure Auction and Eviction

The bank will publish a notice of sale in the local newspaper, if you cannot arrive at a mortgage settlement within 180 days of missed payments. The notice of sale announces a time and date for your home to be auctioned off. The foreclosure auction generally occurs within 30 days of the notice of default. The bank will reclaim the property as real estate owned (REO), if a buyer does not emerge with a winning bid at the auction. Immediately after the auction, the bank or the home's new private owner can post a 30-day notice to quit and file an eviction lawsuit to have you removed from the premises.

Foreclosure Timeline, Sources:

RealtyTrac: Foreclosure Process and Overview

U.S. Department of Housing and Urban Development: Loan Modification

CNNMoney: The 3 Stages of Forclosure

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