The laws that regulate foreclosure mostly protect borrowers during the process.
In D.C., a notice of foreclosure is not the end. However, the process is complex and requires fast action. You should start with a basic knowledge of what happens during foreclosure.
Preforeclosure refers to the period before you receive the official foreclosure paperwork. During this time, the loan provider may charge late fees or bill you for inspection. They also must warn you about the upcoming foreclosure using a breach letter.
A breach letter must notify the homeowner of:
- The loan default
- What they can do to take care of the default and avoid foreclosure
- A minimum 30-day notice to handle the issue
To avoid foreclosure, you can make the loan current before the 30 days close, but it depends on the method used to start the process.
Judicial vs. non-judicial foreclosure
There are two processes of foreclosure:
- Judicial foreclosure occurs when the loan agent files a lawsuit requesting the sale of the property if you do not respond to the summons.
- Non-judicial foreclosure occurs when the loan agent sends you a letter detailing the problem with your loan and requesting mediation. You have 30 days to respond to a mediation request.
The non-judicial process is typically easier and less costly.
There are three common ways to stop a foreclosure. First, you have until five days before the sale to reinstate the loan. You may redeem the property by paying off the loan before the sale, or you can file for bankruptcy.
Foreclosures are scary, but you can take advantage of the time you have before the sale to save your home or make other plans.