In most states, homeowners are required to be notified of many aspects of the legal process of foreclosure. Usually this is accomplished by posting the applicable notice on the property itself, which a sheriff's deputy will do. Certified mail may also be used for some documents, such as the complaint and summons or copies of other court documents.
However, banks foreclosing on a property are also required to post legal notices elsewhere, in case the borrowers are no longer living in the home and to notify any other interested parties of the legal action. State foreclosure laws may state that notices of default or sale must be listed in local newspapers for a period of weeks or even posted right on the door or a bulletin board in the county courthouse.
The first notice most homeowners will receive is the notice of default. This will come from the lender and indicate how long the owners have to reinstate their mortgage before the home will be sold. If the borrowers are able to pay back the amounts listed on the notice of default, they will be able to stop foreclosure from going forward and keep their home. But this is the first official notice they will receive that the home is in danger.
The bank will also have to record this notice of default with the county clerk or recorder's office. This will make the foreclosure proceedings a matter of public record and alert any other parties thinking of buying the house or refinancing the loan that payments on the mortgage or deed of trust are currently in default.
In states that require a lawsuit to bring a foreclosure (also known as judicial foreclosure states), banks may be required to inform homeowners that foreclosure proceedings may be brought into court soon. This usually gives borrowers a few week's notice if they wish to try and negotiate a mortgage modification or other other arrangement with the bank before the lawsuit is filed.
Homeowners, if they are unable to reinstate the loan by the end of the period on the notice of default, will then be sent a notice of sale of the property. This indicates when and where the house will be sold by the county at an auction to satisfy the delinquent mortgage. In most cases, the sheriff sale will be conducted at the county courthouse and there will be few other bidders besides the bank itself.
This information is also usually listed in local newspapers for a number of weeks. The exact number of times a sale is listed depends entirely on the state foreclosure law. Too often, this has been the first indication homeowners receive that they are in foreclosure at all, if they have not been opening mail from the bank or ignoring certified mail and other documents sent to them by the lender.
If the state has a redemption period after the sheriff sale has been conducted, homeowners will receive another notice informing them of their right to redeem and how long they have to do so. Some states have no redemption period, while others have from just a few months to a year for borrowers to attempt to save their home.
Banks must follow all of these notice requirements for the foreclosure process to be valid and legal. If it or the attorneys miss one or another notice, the homeowners may be able to contest the foreclosure for inadequacy of process and have the lawsuit thrown out or the sale halted. This would then require the mortgage company to begin the entire process all over again from the beginning.
