by Kathleen Couch

Created on: February 12, 2007   Last Updated: June 26, 2008

Foreclosures are the financial epidemic of our time. There are many reasons that cause people to go into pre foreclosure. To name a few: divorce, layoffs, or change in income, illness, or death in the family. But, the one main reason for foreclosures today is because of creative lending programs. The banks and lending institutions have caused this. Many times the loans require little or nothing down, and have low teaser rates with an adjustable mortgage, and rates that shoot skyward after the initial period. There are already too many foreclosures, but this year promises to bring many more. The adjustable rates that were very low are now going up. What was viewed as a win/win situation by the bank and homeowner is now a lose/lose situation for both.

The first stage of foreclosure is pre foreclosure. Pre foreclosure is officially defined as the period from which the bank has notified the homeowner(s) that they are in default, until the moment the home is sold at auction. However, even before the bank has notified the owner of default, there has probably been some problem with making the payments on time. This period of time also is a pre foreclosure period. A smart homeowner will look into all available options at that time.

The length of time the homeowner has in this pre foreclosure period depends on the lending institution, and the laws of the state. The lending institution may decide it is time to act after two months of late payments, or maybe six months. Two to three months seems to be typical. The time length that the homeowner has in the pre foreclosure period is also dependent on the laws of the state the property is in. There are judicial foreclosure states, and non-judicial foreclosure states. To find out which type of state you are in, call the real estate department at your county court house. If you live in a non judicial foreclosure state, you can expect an average of about two months from the notice of default to the auction sale. Also a notice of sale is sent. This is often about the same time as the default notice. If the mail is misdirected or delayed, even if the lending institute failed to mail it at the proper time, the process still continues. In a non judicial state, the lender's file on the homeowner's mortgage goes to a foreclosure lawyer, hired by the lender. At that time additional fees, which are the attorney fees are added to the amount in arrears.

In a judicial state, the length of time a person can expect to be in the pre foreclosure

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