The South Carolina Foreclosure Process

South Carolina is a mortgage state, and that means when money is borrowed to purchase a home, the borrower promises to repay the loan by signing a Promissory Note and a lien is placed on the home in the form of a Mortgage.

If the borrower is unable to repay the loan, the lender is required to foreclose through a judicial foreclosure process in order to take ownership of the home. The judicial foreclosure process starts when the lender files a Lis Pendens. Typically, there is a 4-6 month window from when a Lis Pendens is filed to when the home is sold at the county foreclosure auction.

From www.foreclosurelaw.org: “The judicial foreclosure process is one in which the lender must file a complaint against the borrower and obtain a decree of sale from a court having jurisdiction in the county where the property is located before foreclosure proceedings can begin. Generally, if the court finds the borrower in default, they will give them a set period of time to pay the delinquent amount, plus costs. If the borrower does not pay within the set period of time, the court will then order the property to be sold.”

Once the court orders a home to be sold, the home is scheduled to be sold at a county courthouse foreclosure auction. I have been to foreclosure auctions in Charleston and Berkeley Counties, and both processes are different. When I went, Charleston County held the foreclosure auction on the courthouse steps and Berkeley County held their foreclosure auction in a courtroom. Check with your local county Clerk of Courts for their foreclosure auction process.

That is the bare bones description of the legal portion of the foreclosure process in South Carolina; however, a Lis Pendens filing is merely the first legal step in the foreclosure process and not the homeowner's first notification of default or the lender's first attempt to collect the mortgage (This helps you when marketing to homeowners on our Lis Pendens data lists and negotiating with lenders, which is normally a bank).

The lender begins attempting to collect missed payments as soon as the first payment is missed. Collection efforts vary by lender, but they normally include phone calls and letters. Some lenders contact the borrower as little as one week after the first missed payment.

Does that seem a little excessive to you? I agree it is. On most home loans, late fees do not start until somewhere between 15-30 days late. So why do some banks call after only 7 days?

Simple - they learned from experience. Prior to the foreclosure crisis, lenders only sent a letter or two after a borrower's payment was 30 days past due and became a little more aggressive until the Lis Pendens was filed. During the foreclosure crisis, lenders became more active in collecting missed payments, which led them to more aggressively contacting homeowners earlier and earlier in the default process.

There are a few more facts about the foreclosure process worth mentioning, but those facts relate to why Lis Pendens filings are an excellent lead source and will be discussed in the next article - Lis Pendens Filings as a Lead Source.

Interested in finding and marketing to your local Lis Pendens? Sign up at www.scdistressedhomes.com/pricing.html to receive a free trial of our Lis Pendens Data Lists and start contacting motivated sellers.

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Aaron