In some instances, panicked homeowners move out after missing just a few mortgage payments or once a foreclosure starts. But you have the legal right to remain in your home until the process is completed. Foreclosure procedures can take a few months or, in some cases, as much as a year or longer. And during this time, you probably don't have to make any payments.
You don't have to leave your home simply because you miss a couple of mortgage payments. If you miss one or two payments, your lender or loan servicer will most likely send you a few letters reminding you to get caught up. After your payment is around 90 days overdue, the lender or servicer will probably send you a notice informing you that your loan is in default and that you need to bring it current. Most mortgages and deeds of trust contain a clause that requires the lender to send this notice before formally starting the foreclosure. The notice is often referred to as a "breach letter." The letter will inform you that foreclosure proceedings will begin if you don't cure the default by paying the amount specified in the letter by a specific time, usually within 30 days.
If you don't cure the default by paying the amount specified in the breach letter, the servicer will officially start the foreclosure process.
Depending on your state and your circumstances, the foreclosure will be either judicial or nonjudicial. With both judicial and nonjudicial foreclosures, you'll have some time between notification of the foreclosure and the actual sale. You may remain in the property during this time, which is typically a couple of months to a year—sometimes more—depending on the state and whether the foreclosure is judicial or nonjudicial. Judicial foreclosures usually take longer.
Judicial foreclosures go through the state court system. You'll receive a complaint and summons informing you that a foreclosure lawsuit has been filed against you. You will have a certain number of days, frequently 20 or 30, to respond. If you don't file an answer to the lawsuit, you'll automatically lose the case, and the court will issue the lender a default judgment permitting it to proceed with a foreclosure sale.
With judicial foreclosures, a court is involved in all parts of the foreclosure. Judges' schedules, hearings, and required paperwork all contribute to a lengthy process. In some states, judicial foreclosures can take several years to complete.
In a nonjudicial foreclosure, the lender doesn't have to go through court to foreclose. In a nonjudicial foreclosure, you'll receive (depending on state law):
Nonjudicial foreclosures are generally much shorter than judicial ones.
While the servicer is working its way through the judicial or nonjudicial foreclosure process, you can remain in the property.
You own your property until the title goes to a new owner, usually the foreclosing lender, as a result of a foreclosure sale. You generally may remain in the home until then. In some states, you may stay in the property through the expiration of a post-sale redemption period (if state law provides one) or until some other action, such as ratification of the sale, occurs. To find out exactly when you have to leave your home during the foreclosure process in your state and get advice specific to your circumstances, talk to a local lawyer.
Also, keep in mind that you might be able to delay the sale and extend the amount of time that you can remain in your home by:
You might also have the option to reinstate the loan and stop the sale altogether.
Once your legal right to stay in the home ends, if you don't vacate the property, the new owner (again, often the lender) will start eviction proceedings to remove you from the property. Depending on your state's law and the circumstances of your case, the lender might have the option of initiating the eviction as part of the foreclosure action. Other times it might have to file a separate eviction action with the court.
In certain states and circumstances, the lender must send you a notice prior to commencing the eviction. Commonly called a "Notice to Quit," this notice will give you a certain amount of time, like three days, to vacate the property. Generally, it's best to leave the property prior to the expiration of this time period, before the formal eviction action is started.
For specific information about foreclosure timelines, procedures, and eviction in your state and in your particular situation, talk to a local foreclosure attorney.