6 Important Things to Know When Going Through a Foreclosure


Foreclosure can be very difficult to deal with, especially if you have a family. If you aren’t familiar with the term, then it refers to the process by which creditors (mortgage lenders usually), reclaim a property that they have issued a loan on. When a house goes into foreclosure, it is taken back by the lender, and therefore, no longer belongs to the person that has been living there. Foreclosure can be very stressful, resulting in serious mental anguish and distress. This article will simplify foreclosures for you, explaining what your legal rights are, what you need to know:

Buying Another Property

If you are going through a foreclosure but want to buy property in the future, then you needn’t worry. It is possible, though it takes a lot of work. Unless you are paying cash, you won’t be buying a house while going through a foreclosure, but you can buy another in the future, once your credit score has recovered. A foreclosure is a severe credit incident, that will impact your score for many years. You need to work on improving your score, which you can do by repaying debts, paying bills on time, and taking out credit builder cards. Once the foreclosure’s default has been removed from your report, all of the things that you have been doing to build your score will pay off, and your score will shoot up. Patience, determination, and motivation will help you to buy another property in the future.

Pandemic Foreclosure

If you are unable to pay your mortgage and are worried that your property’s lender will foreclose on you, then you might have options available to you under schemes started to prevent financial difficulty during the pandemic. The schemes that you may be entitled to depend upon where you live in the world. Countries such as the United Kingdom have started schemes for people that have government-backed mortgages. In the United States, some lenders and financial institutions introduced schemes to help people to avoid foreclosure. If there aren’t any schemes or programs available to you, then you should approach your lender and explain to them that you are having financial difficulty. If you approach them early, they may be able to sort out a repayment plan for you, so that your monthly mortgage payments briefly decrease.

Starting Foreclosure

Before you face foreclosure, you will likely have to go through a number of different stages and steps. Your lender won’t suddenly phone you one day and say that you are facing foreclosure. Foreclosure occurs when you break your agreement with your lender, meaning that you have missed payments and haven’t been in touch to explain why. Alternative arrangements for repayment are preferred by lenders, instead of foreclosing. A foreclosure is very costly for lenders. The cost associated with foreclosure is amplified for lenders if you refuse to leave because they will then have to begin eviction proceedings. In some countries, lenders are not legally allowed to physically enter a property and remove people.

Foreclosure Timeline

The timeline of foreclosure is very straightforward. It is as follows:

  • First missed payment. The first stage of any foreclosure has to begin with a missed payment. Most mortgage lenders will give you a period of time to make the missed payment. If you do not repay it and miss subsequent payments, then you will default on your mortgage.
  • Default. Defaults occur when you have missed payments and haven’t made repayment arrangements. The timeline of when you ‘officially’ default depends largely upon the lender.
  • Foreclosure. Following default, your foreclosure will begin. There are two types of foreclosure, judicial and non-judicial. A judicial foreclosure takes place when a mortgage agreement has no power of sale clause. A non-judicial foreclosure takes place when this is a power of sale and is faster and cheaper for the lender.
  • Notice of default. A notice of default follows the foreclosure. If you do not respond to the notice of default, then a default judgement will be issued. This can go on for some time. However, this only happens in a judicial foreclosure. In a non-judicial foreclosure, the lender will issue an immediate notice of default by mail. This will tell you how much is owed, how much is late, and any additional service costs.
  • Pre-foreclosure. Pre-foreclosure is the process between the notice of default and the property’s foreclosure. During this process, you can save your property and repay any money that is owed. You may be able to arrange a payment plan.
  • Sale notice. As you probably know, a sale notice (or notice of sale) occurs when the lender has made arrangements to sell the property. The property will usually be listed on a realtor’s website.
  • Eviction. Eviction is the final stage. When the lender has found somebody that wants to buy the property, you have to move out. Some states require you to leave immediately, while others give you a grace period to find somewhere else.


Following on from the last point in the timeline, the last stage is eviction. However, you don’t usually have to move out until the property has been sold. This can take up to a year or more. It depends largely upon the lender and how fast they move. When they need to conduct viewings on the property, you will be expected to allow the agent entry. It’s important that you do not try to obstruct viewings because this could result in you being evicted sooner. You may still have to pay for the time that you are there, in addition to processing and service charges.

Foreclosure Profits

If your home sells and profit is made, then the lender must surrender this to you. They cannot tack on extra charges and fees so that they can keep all of the money that the property has sold for. If your lender does do this, you are legally entitled to take them to court and sue them for the money. It’s very unlikely that they should try to do this, however.

If your property is being foreclosed on (or you are worried that it is going to be), then it’s very important that you act fast. You may still be able to save your property if you begin making repayments quickly. If you delay or take time, then you might not be able to save your home.