When Does a Bank Begin Foreclosure?

The foreclosure process varies by state and each lender has its own rules and regulations. In general, though, the foreclosure process follows roughly the same course of events in all areas, with the specifics varying by region.

The process generally begins with a notice of late payment, something your bank gives you when you fail to make a payment on time. Different lenders have different rules, and some have grace periods. After the grace period ends – usually a week to 30 days after the due date – the bank sends you the late payment notice.

After the late payment notice is sent, you have time to pay the late amount. This varies but on average, you have 30-60 days to make amends. If not, you are officially considered in default and the lender will send you a notice of default. (Please note that this timetable does vary from state to state and lender to lender). The notice of default will be preceded by a demand letter, demanding that you pay the amount or face foreclosure.

Should you not be able to pay the past due amount, plus any late fees or legal fees, the bank has the option of placing your home in foreclosure and moving to sell your home. Should they pursue this option, they will send you a notice of sale, typically 20-30 days after the notice of default. This is their intent to sell your home at a foreclosure auction, typically a few weeks to a few months after the notice of sale is delivered.

So, generally speaking, the bank begins foreclosure formally when it files the notice of sale to a county court. The time frame varies; you could receive such a notice as soon as 30 days past your last payment due date, or as late as 2-3 months after your payment is late. If you are working with the bank or going through a loan modification program, the time frame may be longer.