The Foreclosure Process Step by Step
Foreclosure usually unfolds over months. After missed payments, the servicer contacts the borrower and sends a demand or default notice. Under federal Regulation X, a servicer generally can't make the first foreclosure notice or filing until the loan is more than 120 days delinquent, and a complete loss mitigation application can pause the process. What happens next depends on the state: in judicial states such as New Jersey, the lender files a court case that ends in a judgment and sheriff's sale; in non-judicial states such as Washington, a trustee follows notice-and-sale steps set by statute without a court case. State law also controls redemption rights, surplus and deficiency, and removal of occupants after the sale.
What the law says
- Months 1 and 2: HUD says the lender will contact you by letter or phone after the first missed payment and will likely start calling in the second month; you may still be able to make one payment to avoid falling three months behind. HUD, Avoiding Foreclosure
- Months 3 and 4: HUD says you may receive a "Demand Letter" or "Notice to Accelerate" stating the amount past due and giving you 30 days to bring the mortgage current. If you don't pay or make arrangements, the lender refers the loan to its attorneys, and HUD warns you will incur the attorney fees. HUD, Avoiding Foreclosure
- The federal 120-day rule: under Regulation X, a servicer may not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure unless the loan is more than 120 days delinquent, the foreclosure is based on a due-on-sale clause violation, or the servicer is joining another lienholder's foreclosure action. CFPB, Regulation X, 12 CFR 1024.41 (Loss mitigation procedures)
- Loss mitigation before referral: if a borrower submits a complete loss mitigation application during the pre-foreclosure review period, or before the first notice or filing, the servicer generally may not start foreclosure unless the borrower is found ineligible (and any appeal is over), rejects all offered options, or fails to perform under a loss mitigation agreement. CFPB, Regulation X, 12 CFR 1024.41 (Loss mitigation procedures)
- Judicial example (New Jersey): the lender must send a Notice of Intent to Foreclose, giving the borrower 30 days to pay or make arrangements. The lender then files a complaint with the Office of Foreclosure and serves the borrower, who has 35 days to answer. If the borrower contests, a Superior Court judge is assigned; if not, the case stays with the Office of Foreclosure. New Jersey Courts, Foreclosure Self-Help
- New Jersey judgment and sale: if the debt isn't cured, the court enters final judgment and issues a writ of execution directing the sheriff to sell the property at public auction. The sheriff has 150 days from the writ to hold the sale, and the borrower and lender may each request two stays. New Jersey Courts, Foreclosure Self-Help
- Non-judicial example (Washington): Washington is a non-judicial foreclosure state, meaning a trustee, not a court, carries out the foreclosure. Homeowners who receive a Notice of Default may be eligible for mediation, which must be requested through a housing counselor or attorney no later than 90 days before the sale date in the Notice of Trustee Sale. Washington State Department of Commerce, Foreclosure Fairness Program
- Washington's statute requires the notice of trustee's sale to be recorded and mailed at least 90 days before the sale (120 days when a pre-foreclosure letter under RCW 61.24.031 is required), and the sale cannot occur less than 190 days from the date of default. The trustee sells at public auction to the highest bidder, on a Friday. Revised Code of Washington 61.24.040 (Washington State Legislature)
- Sale day: HUD says you can make arrangements or pay the full amount owed, including attorney fees, up until the sheriff's or public trustee's sale date, and that a redemption period may follow the sale. HUD, Avoiding Foreclosure
- After the sale (New Jersey example): the borrower has 10 days to redeem the property. If sale proceeds exceed the mortgage payoff, the remainder goes back to the debtor; if they are less than what is owed, the lender can sue for the shortfall. New Jersey Courts, Foreclosure Self-Help
FAQ
Can a foreclosure sale go forward while my loss mitigation application is pending?
Under Regulation X, if a complete application is submitted after foreclosure starts but more than 37 days before a sale, the servicer may not move for judgment or an order of sale, or conduct the sale, unless the borrower is found ineligible, rejects all options, or fails to perform under an agreement.
Is foreclosure mediation free?
It depends on the state. New Jersey's courts offer free foreclosure mediation, though lenders can continue the case during mediation.
What does it cost to respond to a foreclosure case in New Jersey?
New Jersey's courts list a $175 fee for an answer or first appearance and a $50 fee for motions; a fee waiver request can be submitted to the General Equity Judge in the county where the property is located.
When do I have to move out after a foreclosure sale?
State law controls this. In New Jersey, renters sometimes learn of a foreclosure only when the lender obtains a writ of possession, and residential tenants may be protected under the state's Anti-Eviction statute.
Who can request mediation in Washington?
Homeowners cannot self-refer; only a housing counselor or an attorney can refer a homeowner to the Department of Commerce for mediation. The homeowner and lender each pay half of the mediation fee, and housing counseling is free.
Should I pay a company that promises to stop my foreclosure?
HUD warns about companies that charge fees, often two or three months' mortgage payments, for services that lenders or HUD-approved counselors provide free, and cautions that signing their documents may mean signing over the title to your property.
Related
- Buying a Foreclosed Home: What to Know
- What Is a Deed in Lieu of Foreclosure?
- How Long Does a Foreclosure Stay on Your Credit Report?
- Foreclosure Surplus Funds: Who Gets the Money Left Over?
- How to Stop or Avoid Foreclosure
- What Is Foreclosure? (Including Pre-Foreclosure and REO)
- Foreclosure & Homeowner Law by state
General legal information, not legal advice. Laws change and local rules can differ; check the linked official source or talk to a lawyer about your situation.