Lender initiates foreclosure: The lender files a lawsuit against the homeowner in court, known as lis pendens, alleging default on the mortgage payments. This typically occurs between three and twelve months after the last payment.
Service of legal documents: The homeowner, any occupants, judgment creditors with a common name, and secondary mortgage holders are served with a summons and complaint, informing them of the foreclosure lawsuit. The lis pendens is attached to the summons and complaint.
Homeowner response: The homeowner or any interested parties have a limited time to respond to the lawsuit, typically around 21 days.
Mediation opportunity: The bank and the homeowner, through the courts and a petition letter, may attempt to mediate in order to work out a payment arrangement for the mortgage.
Appointment of referee: The bank submits paperwork to request the appointment of a referee to compute the amounts owed and eventually oversee the foreclosure sale.
Calculation of costs: The bank must submit all costs to date so the referee can compute the amount owed to the bank, to be included in the final default judgment.
Default judgment: If the homeowner fails to respond, the lender can seek a default judgment from the court. If the homeowner submits an answer, it will delay the process.
Judgment of foreclosure and sale: The court issues a judgment allowing the property to be auctioned off to satisfy the debt.
Setting of foreclosure date: The referee sets a foreclosure sale date, which often gets adjourned.
Public auction: The property is auctioned off to the highest bidder at a public sale, typically held at the local Town Hall.
Bank repossession or sale: If the bank is owed more than the property's value, they may take back the property unless it is sold at a discount. Occasionally, an investor will purchase the property.
Investor purchase and notice to vacate: After an investor makes a down payment and enters into a contract with the referee at the auction, they typically close within 30 to 90 days. The investor must serve a 90-day notice to the occupant to vacate the premises after closing on the property.
Bank repossession and "cash for keys": If the bank repossesses the property, they may send a realtor to negotiate a "cash for keys" deal, which may take anywhere from one month to two years before the realtor arrives. Sometimes, the eviction process begins immediately.
Eviction process: If the homeowner does not vacate voluntarily, the new owner will initiate the eviction process after the 90-day notice has expired. Legal assistance from pro bono services may be available for eviction defense.
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