With foreclosure being such a buzz word, this is a good time to clarify some important definitions and the foreclosure process.
Pre-foreclosure. Pre-foreclosure means you have missed payments on your mortgage, and by definition are in default. For example, a borrower could be $9,000 behind in payments. During this time, borrowers usually work out an agreement with their lender to remedy that default and avoid the foreclosure process. Being in pre-foreclosure, does not mean you have entered the official foreclosure process until you have received a Notice of Default.
Notice of Default. Usually after a borrower has missed two payments, an official Notice of Default is sent to the borrower and the foreclosure process starts ticking. In Washington, the foreclosure process is approximately a 135 day process.
The official Notice of Default is mailed by the lender via certified mail to the borrower and their attorney, if they have one. The notice must also be posted on the subject property or personally served to the borrower.
Notice of Trustee Sale. About 30 days later, the borrower enters the next step, when the Notice of Trustee Sale is posted and mailed. The notice will be sent to the borrower and posted in the same manner as Notice of Default letter, but will also be recorded with the county auditor. The notice will include info about the time and location of the sale. Thirty days before the sale is to take place, information on the sale is posted in an approved local newspaper for legal notices.
Borrowers then, generally have about two months until the public sale to make good on their default or work out a plan with their lender.
The sale or auction. Foreclosure sales must take place between 9AM and 4PM on a Friday, unless the Friday is a legal holiday, then the sale will occur the following Monday. Sales must occur within 190 days after the date of first default but may be extended up to 120 days at the trustee’s discretion. In the event of a bankruptcy, a sale may be reinstated no more than 45 days from the dismissal of the bankruptcy or lifting of the automatic stay.
Note: In Washington, the lenders can also go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. If the deed of trust does not contain the power of sale language, the lender must seek judicial foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.
For more information on avoiding a foreclosure visit the HUD website. However, please be aware that every state has different foreclosure laws, so also visit the Washington State Department of Financial Institution website for Washington specific information.
This entry is for educational purposes only. If you are facing a foreclosure situation contact a real estate attorney or take advantage of resources on the above websites.