We do a lot of talk about foreclosure and assume everyone knows what it's all about. This blog will explain the actual process.

The when--various lenders will let mortgage get in arrears for various lengths of time. Some begin the foreclosure filing after three or four months, some wait much longer. The "going rate" right now seems to be when the loan payments are none months past due.

A mortgage loan has two parts--the promisorry note and the trust deed. The note is the promise to pay and the trust deed describes features and "trigger events" in the note, such as a due on sale clause, an interest rate adjustment after a certain amount of time, etc.

The trust deed has three parties--the beneficiary (the lender), the trustor (the borrower) and the trustee (the title company handling the transaction. The foreclosure rights are in the trust deed and the trustee is empowered to perform them at the beneficiary's request.

When it decides to foreclose, the beneficiary instructs the trustee to file a Notice of Default. The trustee then has an attorney prepare the paperwork and send the notice to the borrower.  The Notice will show all past due amounts, late charges and fees, including attorney's fees. The borrower has 120 days from the time the Notice of Default is filed until the property goes up for public auction.

If the trustee does not stay (delay) the process, the property will be sold at auction. The borrower has the right to redeem (pay all back payments, late charges an all fees) the note until five days before the auction.

Sometimes the trustee, at the request of the lender, will stay the procedure. The lender will allow this action if it thinks the property owner might sell the property, either normally or with a short sale. The stays are in 30 day increments.