What is the difference in being in default and the beginning of foreclosure proceedings?
Question:
Answer:
Where I work, default is being 30 days past due on your loan. You are sent a Notice of Default and given about 30 more days to "cure" the default. If nothing is done at that time, a foreclosure may begin. This involves sending a request to an attorney to begin legal proceedings against you. If you have a loan that allows reinstatement, you can bring your loan current at any time, including paying all amounts due, such as attorney's fees, and then your loan will be normal again. If you do not have that type of clause in your loan documents, once the house is sent to the attorney, you're done.
Once your loan is sent to the attorney, the bank will seek a judgment against you. Once that is granted, you may be given "x" number of months to bring your account current. If you do not, then the home may be sold at auction or Sheriff's Sale. Once the house is sold, you will be forced out of the home, and one of two things can happen. Either you are done dealing with the whole thing, except for your damaged credit report, or, if the bank sought a deficiency judgment against you, you may be sued for any loss the bank takes on the property. If the bank wishes to pursue the deficiency, they must declare that at the time the loan is first sent to the attorney.
Also note, some loans may not have to give you the normal 30 days to cure the account. You'd have to look at the loan documents to see what you can do about your late payments.
Default is when your loan is past due by more than 30 days. You can be in default by 3 months, 6 months, 2 years, etc., without ever being in foreclosure, if the bank does not put your loan into foreclosure.
Foreclosure is the legal process by which a bank attempts to sell your home to satisfy the defaulted loan. They have to go through the courts or follow the state's foreclosure laws to be able to sell the home at a sheriff sale. The bank hires local attorneys to pursue the foreclosure process.
Default is when you're behind. Foreclosure is when the bank sells your house to pay back the loan that you're behind on.
Hope that helps, good luck.
ForeclosureFish
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