One of the most frequently asked questions we receive from our clients is “How long does a foreclosure take?” or “How long does the process last?”. The foreclosure timeline differs state to state as we must follow the statutory guidelines. However, these timelines do not consider the things that can keep the foreclosure from moving forward and going to sale. In a perfect world, as we tell our clients, the process can take a few short months from the time of the default, to going to sale and setting a bid for public auction. We all know we do not live in a perfect world so we have listed a few of the many reasons a foreclosure may be delayed.
Incomplete or incorrect information on intake documents
When we begin a new file, there are certain documents that need to be completed by the beneficiary or servicer. These documents include, but are not limited to, the Substitution of Trustee, the Declaration of Compliance, and the Declaration of Default. These documents must be properly executed so we are able to move forward and creating the first legal notice which, once recorded,begins the foreclosure. While we are not in charge of verifying the information provided, if anything is incomplete or missing signatures, TLS cannot move forward until it has been fixed or updated.
Not having the bidding instructions in time.
If the borrower has not paid their loan or brought it current in the allotted time, then the property will be put up for public auction. It is at this point that the lender must provide bidding instructions to the trustee facilitating the sale. If we have not timely received these instructions, then the sale must be postponed to a later date. Some states have more rigid rules when it comes to providing bidding instructions. In Arizona, for example, you cannot go to sale if the opening bid has not been provided by 9:00 AM the day before the sale. This is why it is best to act as quickly and accurately as possible when providing information.
Active litigation on the property or a temporary restraining order (TRO) has been filed
Occasionally, there may be pending litigation on the property. In this case, it is best to speak with an attorney about moving forward to avoid running afoul of the court. In some cases, a judge may issue a temporary restraining order or preliminary injunction to stop all foreclosure activity on the property until the scheduled court date. At this point, the file would be placed on hold until the matter has been resolved or the case dismissed.
A bankruptcy is filed
In the event, that the borrower or other person with an interest in the property junior to the foreclosing deed of trust, files a bankruptcy, all foreclosure activity must cease immediately. A provision in the bankruptcy law called the automatic stay prevents all collection activity including foreclosures from proceeding. The only action we can take during the pendency of the bankruptcy case is to postpone the sale from time to time. All other activity would violate the automatic stay.
A foreclosure may be delayed for many other reasons as well. Please contact us with any questions you may have at (866) 535-3736 or send an email to email@example.com
Written by Brittany Lokey