What Does "In Foreclosure" Really Mean?
Confused by this question? I don't blame you at all. This confuses everybody including real estate agents. Mostly because the banks depending on where they are in the country seem to like to use different terms for the same things.
When you see the terms pre-foreclosure or in foreclosure, they can both mean the same thing.In order to understand this, we have to look at the process of a foreclosure. I want to state that this is separate from a short sale which can also be tangled up in the middle of all of this. But for now, let's just stick with the foreclosure process.
When a homeowner falls behind with their payments, the bank will typically send them out a letter. The timeframe for this varies from bank to bank, some will send out a letter within 60 days others may wait longer. But for this example let's go with 60 days. The homeowner is two months behind on their mortgage and the bank sends him a note that says, you need to pay up within 45 days or we will start foreclosure proceedings on you.
If the homeowner fails to pay what they owe and get back in good standing with the bank after that 45 days. The bank will then hire an attorney to serve foreclosure paperwork to them. At that point a sheriff sale. That can be anywhere from 45 days to 90 days out from that second letter. Some people believe that at this point the home is in foreclosure but technically it's not.
Once the sheriff sale happens at the county, the homeowner has six months to redeem this property, at least in the state of Minnesota. The time during that six-month period, the homeowner can pay everything that's owed including attorneys fees and any other fees that have been attached to the foreclosure and keep their home. During this six-month period, the home is in foreclosure but has not been foreclosed on yet.
Once the six-month period is up if the owner has not paid what is owed to get back to even the home automatically goes to the bank. In some cases, the homeowner has not moved out so, at that point, the bank has to then start eviction. At this point when the bank is taking possession of the home, you can truly say the home has been foreclosed. Before that, it's in the process but it doesn't mean for sure that it will end up being foreclosed.
To learn more about this particular subject and the understand the impact of short sales, please look for more information on my website.
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